Via the BBC: US rescues ailing Citigroup bank
The US Treasury is set to invest $20bn (£13.4bn) in return for preferred shares in Citigroup.
The Treasury and the Federal Deposit Insurance Corp will also guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup’s books.
The plan follows a $25bn injection of public funds in the bank last month.
Citigroup’s market value fell to $20.5bn on Friday, compared with $270bn in 2006.
I have largely not commented on this ongoing process, as I am hardly an expert on finance nor financial institutions. However, I thought I would note that I have this terrible feeling that they are making it up as they go, and not in a good way. The basic criterion seems to be the rather nebulous “too big to fail” category and not much else beyond that. I recognize that I am being a bit glib, but after Secretary Paulson and friends launched forth with their message of doom and panic, they sort of let on that they had a plan. However, the plan seems to have been “give us a boatload o’cash and we’ll figure something out.”
Which, at the end of the day, seems to have been the basic policy paradigm for the Bush administration…
The NYT’s write-up, wherein they call the Citigroup plan “radical” can be found here: U.S. Approves Plan to Help Citigroup Cope With Losses.
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November 25th, 2008 at 9:52 am
[...] Taylor over at Poliblogger makes, what I think, is a very good observation about these bailouts: I have largely not commented [...]