In a post last week I suggested that Citigroup (NYSE: C) was too big to fail. Knowing that the government was likely come to its rescue, I suggested that C was a buy.

However, I had no idea that the government would step in so quickly. And step in it did, letting the world know that Citigroup was indeed too big to fail.

Over the weekend, the government negotiated a deal with Citigroup that should go a long way in helping the company find its footing in this crazy market environment.

The deal announced on Monday provided a boost to C shares. The stock traded up between 50% and 60% throughout the day.

It has been a spectacular rally indeed, but at what cost?

Is government assistance really good for shareholders? The jury is still out, but there is one very compelling reason to believe that the end of the credit crisis may finally be near.

Specifically, the government is injecting $20 billion of capital, but it is also providing a backstop on up to $306 billion of risky loans on Citigroup's balance sheet. In return, taxpayers will receive $7 billion in preferred shares and warrants to buy up to $254 million shares of common stock at a price of $10.61.

Continue reading Do Citigroup warrants signal the end of the credit crisis may be near?

Do Citigroup warrants signal the end of the credit crisis may be near? originally appeared on BloggingStocks on Mon, 24 Nov 2008 17:33:00 EST. Please see our terms for use of feeds.