The term sheet is included here also…
The U.S. government is committed to supporting financial market stability, which is a prerequisite to restoring vigorous economic growth. In support of this commitment, the U.S. government on Sunday entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital.
As part of the agreement, Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup’s balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.
In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury. Citigroup will comply with enhanced executive compensation restrictions and implement the FDIC’s mortgage modification program.
With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy.
We will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks. The following principles guide our efforts:
* We will work to support a healthy resumption of credit flows to households and businesses.
* We will exercise prudent stewardship of taxpayer resources.
* We will carefully circumscribe the involvement of government in the financial sector.
* We will bolster the efforts of financial institutions to attract private capital.
Here is the term sheet for the Citi (C) deal..
This means that JP Morgan (JPM), Wells Fargo (WFC) and USB (USB) are essentially the only large investment grade banks left..
Disclosure (“none” means no position):none
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8 replies on “Fed and Treasury Comment on Citi Bailout ($c)”
Todd do you think Citi will eventually merge with someone.
Ken Heebler just bought a massive amount of Citi as well as Carl Iacon.
CITIGROUP AND BANK OF AMERICA FUTURE MARRIAGE.
they do not the ability to be a buyer and not sure who’d want them as a partner..
MASSIVE BUYING FROM HEDGE FUNDS MANAGERS INCLUDING ADDING TO THEIR POSITION.
NOTE THEY BOUGHT ABOVE $15 A SHARE.
LAMPERT STILL HOLDING HIS SHARES.
CITIGROUP STOCK
Todd, I was wondering when and why you sold your Citi shares? I have noticed that you no longer disclose any position in C at the end of any relevant posts. It wasn’t too long ago that you commented that long-term investors would enjoy solid returns from C. In fact, you stated you were buying positions in C for your kids’ educational plans. What changed?
Chris
so, if Citi goes bankrupt, will that cancel out the small fortune worth’s of debt I have stored up on my trusty Citi-card? (can’t blame a guy for hoping)
swapped it out for WFC when C was at $14 after halloween.
i liked that wfc tried to refuse the tarp $$ and was worried c kept trying to raise $$..
once c lost the wb deal & needed gov't help to do it vs wfc, i went that direction….
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