Is this unbelievable or what? Millions of jobs on the line and Congress puts the auto industry through hell yet Citigroup stock drops and the Government immediately comes to their rescue.
One option being considered is taking some of the risky assets held by Citigroup off its balance sheet, a move that would give the company more breathing room and put it in a better position to raise capital. It was unclear, however, exactly how that option might be structured, the people said. Another option would be for the government to make another cash injection into the company.
Let's see, Citigroup has already received $25 Billion at which point they went out looking to buy another bank.
Then, they outsourced jobs with a $2.5 Billion dollar contract all the while firing 53,000 workers.
So, now they get immediate help while the auto industry who between 3 different corporations wants a loan, a bridge loan, which means it should be paid back and is the same amount of money Citigroup already got.
Now what is wrong with this picture? I guess Ford, GM and Chrysler simply are not good pals with Hank!
Update: The Wall Street Journal is reporting the deal is done.
- Guarantee $300 Billion of Toxic Assets
- Immediate Capital Injection of $20 Billion
In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed.
Unbelievable. Take from the taxpayer and give to your friends. I'm sorry this is just unbelievable.
The New York Times has an in depth article on the history of Citigroup and it's one frightening read.