Sources: Government working on Citigroup rescue

[SavageOrangeJug]

Are we going to bail out every corporation in America?

WASHINGTON – The government was weighing a plan on Sunday to rescue Citigroup Inc., whose stock has been hammered on worries about its financial health.

The Treasury Department and the Federal Reserve have been in discussions over the weekend to devise a strategy to stabilize the company, according to people familiar with the talks. They spoke on condition of anonymity because the discussions were ongoing.

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.

A spokesman for New York-based Citigroup declined comment.

The company has seen its shares lose 60 percent of their value in the past week, reflecting a crisis of confidence among skittish investors. They are worried all the risky debt on Citigroup's balance sheet will turn into losses as the economy worsens and the markets stay turbulent — losses that could be nearly impossible to reverse.

Citigroup is such a large, interconnected player in the financial system that if it were to collapse it would wreak havoc on already fragile financial and economic conditions. The company has operations stretching around the globe in more than 100 countries.

Analysts consider Citigroup the most vulnerable among the major U.S. banks — especially after it failed to nab Wachovia Corp., which was bought instead by Wells Fargo & Co. That was a missed opportunity for Citi to gets its hands on much-needed U.S. deposits that would bolster its cash position.

Citigroup was especially hard hit by the meltdown in risky, subprime mortgages made to people with tarnished credit or low incomes. Foreclosures on those mortgages spiked, leaving Citi and other financial companies wracking up huge losses on the soured investments. The company has failed to turn a profit during the past four quarters.

The company has already received a $25 billion from the Treasury Department's $700 billion financial bailout program. In return for the cash infusion, the government gets a partial ownership stake.

SOURCE: http://news.yahoo.com/s/ap/20081123/ap_on_bi_ge/citigroup

[superdave1984]

I sure hope so because I still have my LLC. And it hasn't made a dime in 3 years.

[VolsNSkinsFan]

This is going to be one interesting Monday

[Rasputin_Vol]

The company has already received a $25 billion from the Treasury Department's $700 billion financial bailout program. In return for the cash infusion, the government gets a partial ownership stake.

Is this socialist?

[615 Vol]

Originally Posted by Rasputin_Vol

Is this socialist?

Do they intend to keep it or is it temporary?

[Vol Mania 21]

if i'm not mistaken they also now have part ownership of AIG as well

[droski]

they only took 5% more of citi. basically screwing the shorts.

[BigPapaVol]

they pounded all of the shorts.

First thing I've ever seen from Obama that makes me believe he might make decisions rather than lean upon an agenda.

I think the markets might actually force the man to relinquish some of his pet ideas and think toward making this a better economy.

His comments about holding off on taxes for at least two years was a huge help.

[UT IE 95]

Originally Posted by BigPapaVol

they pounded all of the shorts.

First thing I've ever seen from Obama that makes me believe he might make decisions rather than lean upon an agenda.

I think the markets might actually force the man to relinquish some of his pet ideas and think toward making this a better economy.

His comments about holding off on taxes for at least two years was a huge help.

Whether you voted for him or not, you must admit that Obama's approach to the job, appointments, and actions are an encouraging change.

[BigPapaVol]

Originally Posted by UT IE 95

Whether you voted for him or not, you must admit that Obama's approach to the job, appointments, and actions are an encouraging change.

and that's what I said.