Government to back $306 billion in Citi loans

[IDemo]

Source: Associated Press

updated 6 minutes ago

WASHINGTON - The government unveiled a plan Sunday to rescue troubled Citigroup, including taking a $20 billion stake in the company, whose stock has been hammered on worries about its financial health.

In addition, the government will guarantee as much as $306 billion of risky loans and securities backed by commercial and residential mortgages.

The announcement was made by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp.

The Treasury Department and the Federal Reserve had been in discussions over the weekend to devise a strategy to stabilize the company.

Read more: http://www.msnbc.msn.com/id/27877195/

[kirby]

1. BS! n/t

[Zynx]

2. They're in that much trouble? Good Lord.

I'd say just take it over and split the bastard into about twenty pieces and sell it off.

[PSPS]

3. Probably non-voting stock and continued big bonuses for the fat cats.

Bush and his cronies will make sure that the treasury will be empty and all the credit cards are maxed out before he gets thrown out of town.

Why aren't these people swinging from lamp posts?

[Zynx]

5. In the Bloomberg article on this the government has veto power over executive compensation:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoETqRmWbpuo&refer=home

[Baby Snooks]

39. Why?

"Why aren't these people swinging from lamp posts?"

Probably because Nancy Pelosi took the lamp posts off the table along with impeachment.

Does anyone realize this administration is bankrupting this country? And that Congres will just send the bill to the taxpayers?

Does anyone realize that of course the Democrats will be blamed and the Republicans will take back Congress as a result?

[napi21]

4. I have a Citi bank credit card. I always pay ot off every month.

What does this mean to me? It's not my problem that Citi pushed their CC's on unworthy consumers.

[Selatius]

8. They'll try to find a reason to jack up your interest rates to recoup losses, but...

since you pay off the balance every time a bill comes, they will have trouble making a lot of money on you. Woe be to those who have large balances though.

[Hawkeye-X]

6. Fuck You chimp. THis is YOUR legacy.

Failed banks, failed everything else.

This is NOT Obama's legacy. It's still your administration until Jan 19, 2009. You are NOT blaming this on Obama. No siree Bob.

[rwheeler31]

7. Why ?

[Tandalayo_Scheisskopf]

9. Do we get executive heads,,,

Mounted on plaques and hung on the walls of Washington for this? Seems appropriate enough.

[IDemo]

10. I'm thinking of drawing up a business plan

for "Chop n' Drop" mobile guillotine franchises.

[Ichingcarpenter]

15. The country of Abu Dhabi is the largest shareholder

Look at my other post on more information.


This is so wrong.

[Sultana]

37. Abu Dhabi isn't a country, it's an emirate

and the capital of the UAE.

[Kablooie]

21. Of course not! We can get pictures of their new, bigger mansions though.

[Mojorabbit]

11. I have a feeling we will end up

on the hook for that 306 billion before it is all over.

[Ichingcarpenter]

12. A $20 billion stake in the firm by the Government! Plus $25 billion given before

The $20 billion cash injection by the Treasury Department will come from the $700 billion financial bailout package. The capital infusion follows an earlier one -- of $25 billion -- in Citigroup in which the government received an ownership stake.

In addition, Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.

http://biz.yahoo.com/ap/081124/citigroup.html


The Largest Share Holder in Citigroup is Abu Dhabi Investment Authority owned by a shiek!!!
Citigroup Inc., seeking to restore investor confidence amid massive losses due in credit markets and a lack of permanent leadership, is receiving a $7.5 billion capital infusion from the investment arm of the Abu Dhabi government.

The investment by the Abu Dhabi Investment Authority will help rebuild Citigroup's capital levels, which have been eroded by a credit crunch that began in the summer. Citigroup Chief Executive Officer and Chairman Charles Prince resigned earlier this month after the bank, which had already written off billions of dollars, said it was facing as much as $11 billion more in losses.

Citigroup announced the transaction last night.

As a result of the deal, the investment authority known as ADIA will become one of Citigroup's largest shareholders, with a stake of no more than 4.9%. The stake will exceed that of Saudi Prince Alwaleed bin Talal, long known as one of Citigroup's largest shareholders, according to a person familiar with the situation.

"This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business," said Sir Win Bischoff, the bank's acting chief executive officer, in a statement.

The investment underscores the growing role that Middle Eastern investors are taking outside their home turf. Separately yesterday, an investment company owned by Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, bought a stake in Sony Corp. (See related article1.) ADIA, which has almost $1 trillion under management, this summer bought a small stake in Apollo Management LP.

"This investment reflects our confidence in Citi's potential to build shareholder value," said ADIA's Managing Director, Sheikh Ahmed Bin Zayed Al Nahayan.

In exchange for its investment, ADIA will receive convertible stock in Citigroup yielding 11% annually. The shares are required to be converted into common stock at a conversion price of between $31.83 and $37.24 a share over a period of time between March 2010 and September 2011. The investment, which came together in about a week, is expected to close within the next several days.

Citigroup Inc., seeking to restore investor confidence amid massive losses due in credit markets and a lack of permanent leadership, is receiving a $7.5 billion capital infusion from the investment arm of the Abu Dhabi government.

The investment by the Abu Dhabi Investment Authority will help rebuild Citigroup's capital levels, which have been eroded by a credit crunch that began in the summer. Citigroup Chief Executive Officer and Chairman Charles Prince resigned earlier this month after the bank, which had already written off billions of dollars, said it was facing as much as $11 billion more in losses.

Citigroup announced the transaction last night.

As a result of the deal, the investment authority known as ADIA will become one of Citigroup's largest shareholders, with a stake of no more than 4.9%. The stake will exceed that of Saudi Prince Alwaleed bin Talal, long known as one of Citigroup's largest shareholders, according to a person familiar with the situation.

"This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business," said Sir Win Bischoff, the bank's acting chief executive officer, in a statement.

The investment underscores the growing role that Middle Eastern investors are taking outside their home turf. Separately yesterday, an investment company owned by Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, bought a stake in Sony Corp. (See related article1.) ADIA, which has almost $1 trillion under management, this summer bought a small stake in Apollo Management LP.

"This investment reflects our confidence in Citi's potential to build shareholder value," said ADIA's Managing Director, Sheikh Ahmed Bin Zayed Al Nahayan.

In exchange for its investment, ADIA will receive convertible stock in Citigroup yielding 11% annually. The shares are required to be converted into common stock at a conversion price of between $31.83 and $37.24 a share over a period of time between March 2010 and September 2011. The investment, which came together in about a week, is expected to close within the next several days.

[pam4water]

48. Yeah, Dubai needs more of our money >< n/t

[Duppers]

84. link to bottom portion of your post please

It wasn't at the link you gave (my email list insist on documenting everything sent to them and THIS is SO worthy of sending out).

Great catch. Thanks for this info.

[Seldona]

13. The numbers just keep going up, and up, and up.

At least it looks like the attention being paid is resulting in more oversight being built into the deals. But damn, another 306 billion just for Citigroup? Unbelievable anyone in managment still has a job.

[BrklynLiberal]

14. So now, how about Citigroup investing some money in the auto industry?

[Ichingcarpenter]

16. Saudi Arabia and the Middle East are the major shareholders Folks

This is so wrong.

[Raschel]

28. And conservatives are worried that Obama's middle name is Hussein. What a joke.

[sandnsea]

29. Because they bailed Citi out back in 1990

after the last time the Bush's fucked up the mortgage market and the economy.

[lonestarnot]

54. So let those fuckers bail them out!

[dipsydoodle]

66. Wrong ?

Why so ? See Reply # 22.

[pampango]

76. Obviously, they are not 'Muricans. Duh.

You must be from the "old school" and think that foreigners who invest in US companies should receive the same protections as Americans get. Get with the program, man! We gotta screw them before they screw us (or since they screwed us - that part of the argument varies). :)

[Bozita]

17. Former SoL Robert Reich: Why CitiGroup is About to Be Bailed Out and Not General Motors

http://robertreich.blogspot.com/2008/11/why-citigroup-is-about-to-be-bailed-out.html

So why save Citi and not GM? It's not clear. In fact, there may be more reason to do the reverse. GM has a far greater impact on jobs and communities. Add parts suppliers and their employees, and the number of middle-class and blue-collar jobs dependent on GM is many multiples that of Citi. And the potential social costs of GM's demise, or even major shrinkage, is much larger than Citi's -- including everything from unemployment insurance to lost tax revenues to families suddenly without health insurance to entire communities whose infrastructure and housing may become nearly worthless. I'm not arguing that GM should be bailed out; as I've noted elsewhere, GM's creditors, shareholders, executives, and workers should have to make substantial sacrifices before taxpayers should be expected to sacrifice as well.

Nonetheless, Citi is about to be bailed out while GM is allowed to languish. That's because Wall Street's self-serving view of the unique role of financial institutions is mirrored in the two agencies that run the American economy -- the Treasury and the Fed. Their job, as they see it, is to keep the financial economy "sound," by which they mean keeping Wall Street's own investors and creditors happy.

more...

[Ichingcarpenter]

19. This is a move to save investors and stocks not the banking house of cards

The statement by Dr. Reich and the the comment section are well worth reading.
Thanks for the link.

[Lucky Luciano]

61. Stocks were already fucked - C was down over 90% on the year

It is Citi's creditors that they are concerned about.

[kirby]

18. Scary....Read this...

http://www.bloomberg.com/apps/news?pid=20601110&sid=aDqw8_eMzrhU

Bernanke’s Fed is responsible for $4.4 trillion of pledges, or 60 percent of the total commitment of $7.4 trillion, based on data compiled by Bloomberg concerning U.S. bailout steps started a year ago.

“Too often the public is focused on the wrong piece of that number, the $700 billion that Congress approved,” said J.D. Foster, a former staff member of the Council of Economic Advisers who is now a senior fellow at the Heritage Foundation in Washington. “The other areas are quite a bit larger.”

[Hawkeye-X]

22. We need to seize Abu Dhabi, Saudi Arabia and Carlyle Group

and freeze their illegitimate assets and transfer the two countries' treasury to the US Treasury. In return, they can have Citigroup moved to Abu Dhabi and done business there, and a complete amnesty for all cardholders that have debt within the United States, transfer all debts to Abu Dhabi and Riydh.

There. Problem solved. US Treasury will be flush with cash, and UAE and Saudi Arabia left holding the bag where it really belongs.

Hawkeye-X

(And I don't care much for their culture, just leave US alone)

Hawkeye-X

[Kalyan]

43. no way

... prompting the arab sheiks to cut oil supply to US ...

How do you retaliate? Invade UAE? How would you be any different that the outgoing Bush administration?

WRT Citi, GM & all other companies taking private Gulfjets to come to DC with a begging bowl - why should the taxpayer foot the bill for their party?

[Hawkeye-X]

79. Well, it forces us to put more $$ on alternative energy research

Why the fuck do we need to continue to suck ME oil tits?

Let Russia have it.

Hawkeye-X

[KansDem]

81. "How do you retaliate?"

Well, we could fly jetliners into their buildings. It's worked so well for them...

[dipsydoodle]

62. Presumably you want to have your cake

and eat it too.

The USA has benefited hugely from the petrodollar recycling program since the seventies- the world largest supply of unbacked fiat money. The recipients/holders are obliged to reinvest petrodollars back in the USA. Whatever they own is just chickens come home to roost.

So - just deal with it.

[Hawkeye-X]

80. The petrodollars are staying in the ME.

These fatcats are of NO help to the U.S. - in fact, we need to invest more $ to alternative energy research or higher CAFE standards. Why do we need to keep sucking ME oil tits, seriously?

The refineries hasn't been built in OVER 20 YEARS - under Chimp/Clinton/Poppy administration. Thus the prices are high.

The more refineries we make, we keep costs down, and giving more jobs to the US folks - but ME is not investing any $ towards refineries - they'd rather keep the profits in their damn pockets.

We are ALL about getting off the dependence, are we not?

[Kablooie]

20. Oh goody! More gifts to the wealthy.

The U.S. will be so far in debt by the time Obama takes over, there won't be much of a country left for him to run.

[KillCapitalism]

23. Damn, it's kinda like this with the Fed & Treasury.

"Big corps, take a number please and a place at the back of the line to get your bailout."

[NoAmericanTaliban]

24. Bush & Co. are the biggest Socialist around

as long as it is for corporate welfare it's all good, but if it is for main street then it is all wrong.

[McCamy Taylor]

36. Corporate welfare is FASCIST. Socialist is welfare for the people.

[NikolaC]

64. No, They Are

Bank robbing, scam artists.

[SOS]

25. What happens when Wall Street fraud bankrupts the US Treasury?

:shrug:

[Hestia]

70. Personally, I think that we do not pay one dime in interest to the Federal Reserve - period.

That is what our debt is = interest. Why ITMFH should we pay these private investors one friggin' dime? No - part of this payout/bailout package is the demise of the Federal Reserve, bring our currency back to the Treasury where it belongs.

[Veritas_et_Aequitas]

26. And how are we going to pay for this?

Just another step towards the re-emergence of serfdom.

[Sen. Walter Sobchak]

27. And who is going to back the US Treasury?

The federal government was bankrupt BEFORE the bailouts began, at some point checks will start bouncing.

[JDwho]

30. I just read this; will the bailouts of big banks ever stop? What about our auto industry!

[JDwho]

31. Oh, K&R! on this BS

[democracy1st]

32. Nuts want to kill the US manufacturing base

[JDwho]

33. Scary times, folks. The rethugs are technically still in charge of the purse-strings.

[NikolaC]

65. Scorched Earth Practically

Steal all that you can, destroy all that you can, create as much fear and desperation as possible as well well as a nation chock full of slave labor and ride off into the sunset with ill gotten gains. They will just leave the pieces for Barack's administration to try to pick up.

[Festivito]

34. We get 20B for 306B, maximum, but 306B. ARE WE NUTS?

We do get to own the little bit of property that built the 306B our real tax dollars will pay don't we?

This is maddening.

[McCamy Taylor]

35. How can people who charge 20 plus % interest on credit card debt be in trouble?

God lord! They should just turn these companies over to the Mafia and have the loan sharks run them since that is what they are.

[TomClash]

42. CDS nt

[Sultana]

38. Where the fuck is the money coming from?

These SOB are sucking us dry :grr:

[truthisfreedom]

40. Corporate theft of the Treasury. Plain and simple.

Time to riot.

[pjt7]

41. This is the final straw

.

[HughBeaumont]

44. Oh great. Again . . . an example of US paying for our own FIRINGS.

Not only are the thousands of Citicorp workers going to get FIRED (not downsized, rightsized, outsized, shitsized, but FIRED FIRED THE F WORD FIRED!!!), but we're footing the BILL for those firings. And what are those FIRINGS representing? You guessed it: each one means MORE drain on the US Treasury, absolutely NO much-needed revenue going INTO the economy and Vikram fucking Pandit getting perks, options and bonuses for it all.

Drag these sons of bitches through the street to send a message to the remaining ones: we're NOT fucking around and we WILL NOT ACCEPT this plutocrat bullshit forever!!

But hey, as long as 75% of America still remains unaffected by all of this (many of whom were poor to begin with, so they really have nothing to lose), we don't care.

And that's why they get away with it. Because we. don't. CARE.

[BootinUp]

45. We only get a 20 bil stake? Shit we should own that bank outright. nt

[Roland99]

46. But less than 10% of to the auto industry is enabling greedy unions. Gotcha.

Fucking Repukes.

[geckosfeet]

47. What are the terms god dammit? These bastards are just backing their

trucks up to the treasury department and bUsh and cheNey are smiling and waving to them.

We hear about the cash giveaways. Why don't we hear about groundbreaking innovative 21rst century financial reform efforts devised by the corporations and the government? Surely there has to be one working brain between them.

[pam4water]

49. Why do these bail outs always occur in the middle of the night on a weekend?

[D-Lee]

50. Maybe the "mark to market" rule should be suspended?

A lot of intelligent economic commentators say, the "mark to market" rule is causing the internal deficiencies in the bank balance sheets.

It would cost NO MONEY to suspend the rule.

And there is no "investing public" to protect because everyone knows about the problem by now.

Worth a thought.

[Lucky Luciano]

63. VERY slippery slope...

[ixion]

51. they're selling us down the river

every time they spend another half-trillion on more bailing out a fraudulent, corrupt banking institution, they make it that much less likely that we'll be able to dig our way out.

[Romulox]

52. No money for working people in Detroit; we need it to bail out wealthy Sheiks! nt

[blue_onyx]

82. Yeah, US auto companies only employs average Americans

Apparently the wealthy are the only ones the President and Congress have an interest in "helping." I'm pissed that Democrats aren't standing up to this BS. Where were Pelosi and Reid when the 700 billion was passed? They saved all their indignation for the auto industry but the financial institutions get a pass. Citigroup already got a bailout and now it's getting more. Seriously....this is messed up. I wonder what Pelosi and Reid will say about this today. The Dems need new leadership.

[BobRossi]

53. 10 Page report first?

Why must the auto execs be publicly humiliated and the fat-cat bankers skate?

[NikolaC]

67. Maybe Because They

knew that they were going to bail out Citigroup a while ago and they wanted us to pay attention to the greedy car makers. Drum up a little outrage over the excesses and stupidity of the auto company execs and then do the underhanded Citi bailout like the little thieves in the night that they are. "Pay attention to what is going on over there, not what is going on here while we rob you blind again."

[City Lights]

55. I wonder if citibank was required to present a plan before getting the cash, or

is that just a requirement if you're requesting a loan while in the auto-making business...

[pampango]

58. The reports I have seen indicated that their bailout "plan" included

government veto over executive compensation, dividend payments and, at least partial, government ownership of Citi. I'm no sure if those condition represent a "plan", but did the Auto execs offer to similar conditions.

If a bailout "plan" is worked out with the auto industry (and I hope it is), some of the same elements (and some new ones specific to the auto industry) should be in that "plan".

http://biz.yahoo.com/ap/081124/citigroup.html

[bluecollarcharlie]

56. Well, where are you???

You know who you are. The "No auto bailout" apologists. The phony progressives that hide on this board, where are you? Can you justify the absolute thievery of this action? All we autoworkers wanted was $25 billion. To make things. Things that you can see with your very eyes. Things that you can touch and feel. Things that put food on somebody table. Things that have real people behind them. Not some faceless automaton shuffling paper in a Midtown Manhattan showpiece or moving money with the press of a button. When i first heard this i was in absolute shock and then i thought they couldn't possibly have the gall. Then i went to bed.
And i woke up wrong. And they want to deny us the chance to survive.
I'm absolutely, fucking' pissed. I'm stunned. Stunned. And yet i'm sure you people will still say no. This is not my country anymore.
We deserve to got to hell in a hand-basket. We really do.

[SammyWinstonJack]

60. !

:thumbsup:

[pampango]

68. For the sake of the auto workers, I believe that the bailout (while necessary) HAS

to be tied to conditions that will force industry executives and investors to pay a price AND to require the industry to become viable in the long run.

If that means limits on executive compensation, dividend payments, and the sale of stock to the government (as in the Citi bailout) then so be it. Just to loan the Big 3 $25 billion with no conditions, means that we will have missed an opportunity to force the Big 3 to change the way they do business and will have allowed them to continue with business as usual which is not a good for the long term future of auto workers' jobs.

[Raineyb]

57. 306 billion dollars? That's over 12 times more than the auto industry was asking for

And we can't spare the 25 billion? Bloody typical. When it comes to bailing out their cronies, stomping down on workers, and waging war there's always money available with few if any strings attached but when it comes to spending on things that benefit everyone there's never any fucking money. These people really make me sick!

Regards

[4dsc]

59. Christmas came early for these lousy fuckers..

Let them rot!!

[sarcasmo]

69. Class Warfare, it's ON!

[bluecollarcharlie]

86. Enabled by the weak as water, backstabbing Democrats....

...and a lot of the intellectual class here on DU.

[L0oniX]

71. If only they would stop sending me tons of credit card apps they could save $20,000,000

I swear they've sent me soooo many apps that I've blown up 3 shredders because of them. I'll never sign up with them. Damned asscarrots!

[NOW tense]

72. Does that $20 Billion have a 30% interest rate?

Do they have to pay us by the 15th of every month?
Do we citizens get to act as the people that call if they don't pay after the 15th?
What is their late payment fee?

[pjt7]

73. BTW Citigroup's

Solomon Smith Barney occupied the top 20 floors of WTC7.

[NOW tense]

77. I don't mean to sound callous

but why does that pertain to what I said?

[abelenkpe]

74. rewarding a corporation that just laid of 53,000 workers

I think it's pretty clear that these financial 'rescues' are for someone other than the average bear.
I don't want my taxpayer dollars used in this way. If Citi is this messed up nationalize them, or let them declare bankruptcy, or split them up and sell them off to better banks or anything else.

[olddad56]

75. why not just give the money to the people who owe it to Citi bank.

and they can pay off their bad loans.

[KansDem]

83. That's what I was thinking when this whole charade started...

Give the money to American consumers. Hell, charge something like 3%, but give them the money to take care of those high-interest debts.

I need a new car and would jump at the chance of buying one with a low-interest loan.

But why take our tax money to give to a bank so that bank can continue to charge us outlandish interest? It's like we're paying them twice! :crazy:

[natrat]

78. the barney frank street walikng whore will soon endorse this with no strings

[Duppers]

85. why do they always cave?

what's in it for these spineless capitulators?