Once More into the Bailout Breach, This Time for Citigroup
Bailouts, it seems, are like potato chips. You just can't have one:
Rushing to rescue Citigroup, the government agreed to shoulder hundreds of billions of dollars in possible losses at the stricken bank and to plow a fresh $20 billion into the company.
Regulators hope the dramatic action will bolster badly shaken confidence in the once-mighty banking giant as well as the nation's financial system, a goal that so far has been elusive despite a flurry of government interventions to battle the worst global crisis since the 1930s.
Wall Street investors appeared encouraged by the effort. The Dow Jones industrials were up around 90 points in morning trading, and stock markets in Britain and Germany gained more than 4 percent in afternoon trading. Citigroup shares themselves climbed 49 percent to $5.62 in morning trading.
"If they didn't help, the damage would be beyond imagination," said Teck-Kin Suan, economist at United Overseas Bank in Singapore.
More here. Indeed, this isn't even the first bailout for Citi:
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 also received an ownership stake.
As part of the plan, 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.
I await the coming war between renters and on-time mortgage payers and the rest of America.
And, as someone who has credit card debt, a mortgage, and a freaking 1999 Buick in the driveway (and is a frequent flier to boot), I continue to ask, Where's My Bailout?: