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Monday, November 24, 2008

Now it's called "a plan to help [f***ed company] weather losses"
Posted by Jill | 5:14 AM
Yes, indeedy, folks, time to get with the program. When the Federal government bails out a horrifically mismanaged company, it's no longer called a "bailout", it's called "a plan to help Citigroup weather losses":
Federal regulators approved a radical plan to stabilize Citigroup in an arrangement in which the government could soak up billions of dollars in losses at the struggling bank, the government announced late Sunday night.

The complex plan calls for the government to back about $306 billion in loans and securities and directly invest about $20 billion in the company. The plan, emerging after a harrowing week in the financial markets, is the government’s third effort in three months to contain the deepening economic crisis and may set the precedent for other multibillion-dollar financial rescues.

Citigroup executives presented a plan to federal officials on Friday evening after a weeklong plunge in the company’s share price threatened to engulf other big banks. In tense, round-the-clock negotiations that stretched until almost midnight on Sunday, it became clear that the crisis of confidence had to be defused now or the financial markets could plunge further.

Whether this latest rescue plan will help calm the markets is uncertain, given the stress in the financial system caused by losses at Citigroup and other banks. Each previous government effort initially seemed to reassure investors, leading to optimism that the banking system had steadied. But those hopes faded as the economic outlook worsened, raising worries that more bank loans were turning sour.

Under the agreement, Citigroup and regulators will back up to $306 billion of largely residential and commercial real estate loans and certain other assets, which will remain on the bank’s balance sheet. Citigroup will shoulder losses on the first $29 billion of that portfolio.

Any remaining losses will be split between Citigroup and the government, with the bank absorbing 10 percent and the government absorbing 90 percent. The Treasury Department will use its bailout fund to assume up to $5 billion of losses. If necessary, the Federal Deposit Insurance Corporation will bear the next $10 billion of losses. Beyond that, the Federal Reserve will guarantee any additional losses.

In exchange, Citigroup will issue $7 billion of preferred stock to government regulators. In addition, the government is buying $20 billion of preferred stock in Citigroup. The preferred shares will pay an 8 percent dividend and will slightly erode the value of shares held by investors.

Citigroup will also agree to certain executive compensation restrictions, which will be reviewed by regulators. It will also put in place the F.D.I.C.’s loan modification plan, which is similar to one it recently announced.


"...certain executive compensation restrictions". That's all Citigroup had to concede in order to receive a $300 billion bailout. These fuckers shouldn't get one damn dime of compensation if we have to bail them out.

It's clear that the Bush Administration is planning to metaphorically burn Tara to the ground and sow every acre with salt before allowing the black Democrat who won the election to come in and show America how it's done when you elect a guy with a brain instead of an idiotic fratboy who's been the Family F***up his entire life. He's making damn sure that there's absolutely nothing that can be done to rescue a once-great nation that he, along with Dick Cheney, Condoleeza Rice, Donald Rumsfeld, Colim Powell, and his Oldest Established Permanent Floating Crap Game of economic advisers, managed to ruin in eight short years. And the "Blame Obama" movement has started already, as Republicans and the fools of right-wing talk radio begin to rewrite history so that the Bush Administration never happened.

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4 Comments:
Anonymous Anonymous said...
Welcome to Citibank, the new State Bank of America. (apology to Aaman Lamba)
11/24/08, 11:10 AM  
Blogger Bob said...
What do we call this; "trick down socialism"?
11/24/08, 1:16 PM  
Anonymous Anonymous said...
Isn't this somehow up there with Fascist Italy declaring numerous industrial concerns to be "in the national interest" so as to justify heavy subsidies serving only to protect waste and inefficency?
11/24/08, 1:41 PM  
Anonymous Anonymous said...
I thought corrupt leader told us
the fundamentals of the economy were sound. Aren't banks part of
the fundamentals? What BS! Now
The Big BO is going to allow wealthy tax cuts stay in place.
Is this all prearranged? Are we
just mere pawns? We are F...kd.
My word verification is SOMPUS
Sump puss! That sums it up for me.
Didn't like that so now it's recklash...how fitting.
11/24/08, 10:54 PM  
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