Citigroup gets government guarantees on $306 billion of assets

November 23, 2008 by · Leave a Comment
Filed under: Industry News 

Why do we even allow banks to get to a size where we actually think they are “too big to fail”?  It would seem logical if any bank got to this size that we should stop this progression so they will no be a systemic risk to our financial system.  Now we the taxpayers are now on the hook for Citigroup’s bad decisions, guess Christmas came early this year.

Language is a funny thing, in the article they mention “$300 billion of troubled mortgages and other assets”.  When they say “other assets” I know they mean derivatives and most likely credit-default swaps.  So now if some other companies fail that were insured by Citigroup, we instead will come in and monetize their exposure.  More and more I think hyper-inflation may actually become a reality in this country.  When we run out of foreign investment capital to purchase our treasuries (T-Bills) then we will see the Federal Reserve monetize that debt and just issue/print the currency it needs to meet these obligations.   Why anyone would want to back this fraud that has been handed to the American people still boggles me.



Citigroup Inc. will have more than $300 billion of troubled mortgages and other assets guaranteed by the U.S. government under a federal plan to stabilize the lender after its stock fell 60 percent last week.

Citigroup also will get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend.     

Source: Bloomberg


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