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U.S. Putting Together Rescue for Citigroup
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Contributor | ArmyDem |
Last Edited | ArmyDem Nov 23, 2008 09:53pm |
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Category | News |
Media | Newspaper - Washington Post |
News Date | Tuesday, November 25, 2008 03:00:00 AM UTC0:0 |
Description | Aim Is to Restore Confidence in Critical Bank
By Neil Irwin and David Cho
Washington Post Staff Writers
Monday, November 24, 2008; Page A01
The government was moving ahead last night with a new rescue for Citigroup, revising emergency efforts yet again to head off the failure of a company more deeply intertwined with the financial system than nearly any other, sources said.
The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. were finalizing the details of a plan to make billions of dollars in government money available to Citigroup, one of the nation's largest banks, if troubled assets on its books were to lose significantly more of their value, said a government official and an industry source. They spoke on condition they not be named because the deal was still being crafted last night.
The goal would be to give investors and lenders faith in Citigroup's ability to continue operating, after a week in which Citigroup's stock fell about 60 percent, to $3.77. The government has already invested $25 billion in Citigroup this fall to shore up its capital, but those urgent efforts are no longer preventing a dramatic erosion of confidence in the company.
An announcement of the federal plan was expected as early as last night, sources said.
Under discussion last night was the creation of a so-called "bad bank" into which Citigroup could offload billions of dollars of distressed assets. The goal would be to cleanse Citi's books of these investments, which represent a fraction of the company's overall assets. The toxic assets that have provoked such great concern include securities backed by mortgages and commercial real estate loans. |
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