Add another $308 billion in balance sheet guarantees and another $27 billion more in invested capital to the $100 plus billion which has gone into AIG (NYSE: AIG) and the $250 billion or more that the Treasury has put into a number of large banks. That is what Citigroup NYSE: C) is getting as a bailout. The $308 billion will be to back Citi toxic funds. The bank will have to take the first $29 billion on losses from these. The $27 billion will buy preferred stock in Citi. The money will carry an 8% coupon.
Will the money save Citi? It is still too early to tell. Not included in the deal is the bank's huge credit card portfolio which could show massive losses as the recession causes consumers to default on the obligations.
According to The Wall Street Journal, "In addition to $2 trillion in assets Citigroup has on its balance sheet, it has another $1.23 trillion in entities that aren't reflected there. Some of those assets are tied to mortgages, and investors have worried they could cause heavy losses if they are brought back on the company's books.'
Are the gargantuan losses at Citi over? They may not be. The Treasury now has to hold its breath and hope it will not have to keep writing checks to Citi to back its initial investment.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
11-24-2008 @ 5:58AM
C Funge said...
It was definitely a welcome boost of confidence this weekend that the Govt helped bail out Citigroup. It's just amazing to think that such a financial powerhouse had to be bailed out in the first place. I just hope that this may be the confidence boost that is required to put some normality back to the markets.
From the editor's desk of www.LearnAboutWallStreet.com
11-24-2008 @ 8:18PM
Scott said...
Sure bail out corporate america instead of the actual living people in this country that pay the bill for the bailouts.. In God we trust is rapidly turning into in corporation we trust.. New World Order??? or just the same old government hop scotch?
11-28-2008 @ 8:37PM
SMRTNUP said...
Yeah !!! . . . But, . . .What in the HELL can "WE" do about it ????? . . .
What can I personally DO to stop Socialism from taking over AMERICA ??? . . .
Who in the HELL do you fight against ??? . . . How do we STOP it ??? . . .
I'm exhuasted from worrying about it all . . .
. . . . I feel helpless and WORTHLESS !!! . .
. . . . . . A U.S. VETERAN. . .
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