CHESSNOID

The stock plummeted and the company was soon becoming a penny stock.  This giant corporation just laid off over 50,000 world wide.  As a reward for this soon to become bankrupt bank, they get a bailout.  Is this a surprise?  It shouldn’t be and it was expected.

SAN FRANCISCO (MarketWatch) –

The U.S. government agreed Sunday night to rescue Citigroup Inc. with a huge bailout plan that includes a $20 billion capital infusion, guarantees for up to $306 billion of Citi’s troubled assets – and control of executive bonuses.
The agreement with beleaguered Citi (C:
Citigroup, Inc
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Last: 3.77-0.94-19.96%
4:01pm 11/21/2008
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C 3.77, -0.94, -20.0%) , whose stock had dropped more than 60% in the past week to a 16-year low, and which had lost $160 billion of its $180 billion market capitalization in the past year, came after intense weekend negotiations with the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp., according to media reports.
These are the key provisions of the bailout: See Treasury Department statement

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The Treasury will inject an additional $20 billion in capital and will charge a higher interest rate, 8% for the first few years, than is charged to dozens of other banks borrowing money under the government’s $700 billion rescue package approved by Congress in October, according to The Wall Street Journal.
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The government agrees to backstop a roughly $306 billion pool of Citi’s troubled asset, including mortgage-backed securities. Citigroup must absorb the first $29 billion in losses and 10% of anything beyond that. Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed. The guarantees will be for 10 years for residential assets, five years for nonresidential assets.
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Citi will offer the government preferred shares in return for the capital infusion.
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Citigroup would also agree to work to modify, if possible, troubled mortgages held in the $300 billion pool, using standards created by the FDIC after the collapse of IndyMac Bank.
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The government must approve all executive compensation, including bonuses..

Citigroup previously agreed to issue the government preferred shares in return for the $25 billion the bank received as one of the first nine companies to get capital infusions.

So who is next and how did this giant company take cuts in front of the auto companies? I guess GM is the next bailout project. What do you think? Bailouts are the answer to all our countries’ financial woes. It doesn’t make any sense, but that seems to be all the current government knows how to do. Will it be any different under the new administration come January? Let’s hope so, but I get the feeling it won’t be. With that… Hope for the best, but prepare for the worst!