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View Full Version : Breaking: US Gov't to guarantee $300B in Citigroup assets, loan $20B more



OwlMBA
11-23-2008, 11:46 PM
The federal government agreed Sunday night to rescue Citigroup Inc. by helping to absorb potentially hundreds of billions of dollars in losses on toxic assets on its balance sheet and injecting fresh capital into the troubled financial giant.

The agreement marks a new phase in government efforts to stabilize U.S. banks and securities firms. After injecting nearly $300 billion of capital into financial institutions, federal officials now appear to be willing to help shoulder bad assets, on a targeted basis, from specific institutions. (Terms of the deal)
[Citibank] Bloomberg News/Landov

Pedestrians walk past a Citibank branch in New York.

Citigroup is one of the world's best-known banking brands, with more than 200 million customer accounts in 106 countries. Its plunging stock price threatened to spook customers and imperil the bank.

If the government's rescue plan is a success, it could help bring stability to the entire financial system. If it doesn't, even deeper doubts about the industry's future could spread.

After a weekend of marathon talks between Citigroup executives and top federal officials, the parties late Sunday night nailed down a package in which the government will help protect the company from its riskiest assets.

Link (http://online.wsj.com/article/SB122747680752551447.html)







No other info. I will post a link once one becomes available. This just broke on Reuters.

OwlMBA
11-23-2008, 11:49 PM
http://online.wsj.com/article/SB122747680752551447.html

marinejcksn
11-24-2008, 02:20 AM
Wait wait wait....is this 300 Billion coming out of the so called 700 Billion? Or is this an entirely new transaction that Shifty Paulson is going to shovel out the backdoor?

marinejcksn
11-24-2008, 02:23 AM
Wait even more: I just started reading....this crap says the Fed is going to be insuring Citigroups potential future losses? So the American taxpayer is somehow now responsible if their crap turns into shit? (which you know it will) :mad:

OwlMBA
11-24-2008, 02:45 AM
Wait even more: I just started reading....this crap says the Fed is going to be insuring Citigroups potential future losses? So the American taxpayer is somehow now responsible if their crap turns into shit? (which you know it will) :mad:

Correct.

Citi cannot fail.

However, I personally believe that banking should be federally controlled. The banking system is one of the few things that absolutely, positively HAS to be funded and work perfectly - like the military, our power grid, and possibly the Internet.

Some business can fail (like the automakers). Some cant (like banking). But rather than bailout private banks indefinitely, we should probably just bite the bullet and create a nationalized banking structure.

marinejcksn
11-24-2008, 03:05 AM
See I don't know if I can bite off on that. Nationalized anything just sends chills down my spine as being the beginning of the end for freedom. I know the banking institutions shouldn't fail but Hoover's increased Government intervention is what helped bring on the Depression in the first place.

I gotta go listen to some Tool and try to maintain my sanity now thanks to this bs. It's almost pitchforks & torches time 'round here.

OwlMBA
11-24-2008, 04:12 AM
See I don't know if I can bite off on that. Nationalized anything just sends chills down my spine as being the beginning of the end for freedom. I know the banking institutions shouldn't fail but Hoover's increased Government intervention is what helped bring on the Depression in the first place.

I gotta go listen to some Tool and try to maintain my sanity now thanks to this bs. It's almost pitchforks & torches time 'round here.

I understand, but even the most hardcore conservatives (like me) understand that some things need to be run by the government. Roads, dams, the military, police, and fire come to mind. I think banking is going to fall into that category. At least to some level. Maybe they will end up like our Utilities - private businesses but heavily government regulated.

One thing is for sure, we can't have bank failures again. This is ridiculous. All of the pain we are feeling now was out of lack of regulation in banking that led to a failure in inter-bank and business lending. And here we are.

If we have a widespread banking failure, our currency becomes worthless and credit cards stop working. Then what do you do? Buy food with what?

Constitutionally Speaking
11-24-2008, 09:39 AM
I understand, but even the most hardcore conservatives (like me) understand that some things need to be run by the government. Roads, dams, the military, police, and fire come to mind. I think banking is going to fall into that category. At least to some level. Maybe they will end up like our Utilities - private businesses but heavily government regulated.

One thing is for sure, we can't have bank failures again. This is ridiculous. All of the pain we are feeling now was out of lack of regulation in banking that led to a failure in inter-bank and business lending. And here we are.

If we have a widespread banking failure, our currency becomes worthless and credit cards stop working. Then what do you do? Buy food with what?

The problem with our banking system is we used government to give incentives for and when that failed, to FORCE them to make decisions that they would not have done under normal circumstances.

We compounded it by removing the risk they had for making those bad decisions via the GSE guarantees through ginny mae, freddi mac and fannie mae.

The combination of rewarding bad decisions, removing the risk for those bad decisions and then FORCING bad decisions, is what led to the issues we have in the financial markets.

THAT loaded the gun. Oil prices and the inflation that they set off sapped the disposable income and ate into the mortgage payments was the match that set it off

In EVERY CASE, it was government interference with the free market that caused or contributed GREATLY to the problem.

Odysseus
11-24-2008, 10:42 AM
Correct.

Citi cannot fail.
However, I personally believe that banking should be federally controlled. The banking system is one of the few things that absolutely, positively HAS to be funded and work perfectly - like the military, our power grid, and possibly the Internet.
Some business can fail (like the automakers). Some cant (like banking). But rather than bailout private banks indefinitely, we should probably just bite the bullet and create a nationalized banking structure.
Banking as a whole will not fail, provided the market is permitted to weed out the inefficiencies. Individual banks will fail, as they have since the first Sumerian started keeping records on clay tablets, but the basic premise, the transactions of data in lieu of actual currency, is more viable now than ever. All that government control of banks will do is insert political consideration in place of financial ones. That's bad for everyone.

The problem with our banking system is we used government to give incentives for and when that failed, to FORCE them to make decisions that they would not have done under normal circumstances.

We compounded it by removing the risk they had for making those bad decisions via the GSE guarantees through ginny mae, freddi mac and fannie mae.

The combination of rewarding bad decisions, removing the risk for those bad decisions and then FORCING bad decisions, is what led to the issues we have in the financial markets.

THAT loaded the gun. Oil prices and the inflation that they set off sapped the disposable income we had was the match that set it off.

In EVERY CASE, it was government interference with the free market that caused or contributed GREATLY to the problem.
Exactly. The subprime mess is entirely the result of the mandates of the Community Reinvestment Act and the subsequent manipulation of the markets by the Dems.

marinejcksn
11-24-2008, 04:15 PM
I understand, but even the most hardcore conservatives (like me) understand that some things need to be run by the government. Roads, dams, the military, police, and fire come to mind. I think banking is going to fall into that category. At least to some level. Maybe they will end up like our Utilities - private businesses but heavily government regulated.

One thing is for sure, we can't have bank failures again. This is ridiculous. All of the pain we are feeling now was out of lack of regulation in banking that led to a failure in inter-bank and business lending. And here we are.

If we have a widespread banking failure, our currency becomes worthless and credit cards stop working. Then what do you do? Buy food with what?

Banking is one of the most heavily regulated industries in our country as it is though. The whole "de-regulation" arguement is propaganda by idiots like Barney Frank and Chris Dodd. The CRA, along with poor business practices got us in the situation we're in now. Banks were over regulated under Clinton to loan to idiots with no real means of payment, and the whole thing snowballed.

Odysseus
11-24-2008, 06:52 PM
Banking is one of the most heavily regulated industries in our country as it is though. The whole "de-regulation" arguement is propaganda by idiots like Barney Frank and Chris Dodd. The CRA, along with poor business practices got us in the situation we're in now. Banks were over regulated under Clinton to loan to idiots with no real means of payment, and the whole thing snowballed.

Exactly. And the efficacy of the bailouts should be obvious, since each one has led to another and another. I heard today on Rush Limbaugh that the deficit this year will be over $1.3 trillion. I'd be investing in canned goods and shotguns about now.

wiegenlied
11-24-2008, 07:43 PM
Here is the gentleman banker's code:
"The private banker is a member of profession which has been practiced since the middle ages. In the process of time there has grown up a code of professional ethics and customs, on the observance of which depend his reputation, his force, and his usefulness to the community in which he works. If in the exercise of his profession, the private bankers disregard this code, which could never be expressed in any legislation, but has a force far greater than any law, he will sacrifice his credit. This credit is his most valuable possession, it is the result of years of faith and honorable dealing and while it maybe quickly lost, once lost cannot be restored for a long time, if ever."

Slowly, gradually, the gentleman bankers' world was being bureaucratized.

wiegenlied
11-24-2008, 07:52 PM
The government will soon take the power away from the hand of businessmen and bankers, but hopefully this will not lead to the extinction of all wealth and earning power. If the new government is about to raise taxes to finance all of the "changes" programs- in the midst of all these financial turmoils- that would be the perfect medicine to kill all the patients.

marinejcksn
11-24-2008, 08:23 PM
Exactly. And the efficacy of the bailouts should be obvious, since each one has led to another and another. I heard today on Rush Limbaugh that the deficit this year will be over $1.3 trillion. I'd be investing in canned goods and shotguns about now.

Remember the 3.5 Trillion (with a T) reported to be the actual cost of this so-called $700 billion bailout Sir? Drudge Report ran a story from Bloomberg today that I saw on Glenn Beck: make that 7.7 Trillion now.

http://bloomberg.com/apps/news?pid=20601109&sid=arEE1iClqDrk&refer=home :mad:

I'm putting my money in pitchforks and torches.

OwlMBA
11-25-2008, 01:11 AM
Here is the gentleman banker's code:
"The private banker is a member of profession which has been practiced since the middle ages. In the process of time there has grown up a code of professional ethics and customs, on the observance of which depend his reputation, his force, and his usefulness to the community in which he works. If in the exercise of his profession, the private bankers disregard this code, which could never be expressed in any legislation, but has a force far greater than any law, he will sacrifice his credit. This credit is his most valuable possession, it is the result of years of faith and honorable dealing and while it maybe quickly lost, once lost cannot be restored for a long time, if ever."

Slowly, gradually, the gentleman bankers' world was being bureaucratized.

Yea, right.

The average age of the "bankers" at both of my banks is probably 22 or 23. Average education is a high school diploma.

Not exactly the epitome of success.

wiegenlied
11-25-2008, 03:13 AM
Yea, right.

The average age of the "bankers" at both of my banks is probably 22 or 23. Average education is a high school diploma.

Not exactly the epitome of success.

You can be the pioneer, OwlMBA :)

Odysseus
11-25-2008, 10:19 AM
Yea, right.
The average age of the "bankers" at both of my banks is probably 22 or 23. Average education is a high school diploma.
Not exactly the epitome of success.

Those aren't the bankers, those are the tellers. It's like confusing the varsity players with the coach. BTW, the average age of a second lieutenant in the army is 22 or 23, and we trust them with the lives of anywhere up to fifty Soldiers. I put a higher premium on that than I do on money.

Goldwater
11-25-2008, 12:01 PM
And the Democrat hasn't even started yet.

BadCat
11-25-2008, 12:07 PM
And the Democrat hasn't even started yet.

Look at it this way, the price of guitars is bound to come down.

wiegenlied
11-25-2008, 02:28 PM
And the Democrat hasn't even started yet.

If they're starting, private benevolence will metamorphose into government benevolence, because Obama has promised to tax all philanthropists (since all of them earn > 200K) and then his government will be the one to build schools, roads, dams, hospitals, etc...etc... Does it sound like what is going on in China or Soviet?

wiegenlied
11-25-2008, 02:38 PM
Those aren't the bankers, those are the tellers. It's like confusing the varsity players with the coach. BTW, the average age of a second lieutenant in the army is 22 or 23, and we trust them with the lives of anywhere up to fifty Soldiers. I put a higher premium on that than I do on money.

The average IB analysts are also 22/23 I think, recent college grads. I give my respects to young ppl who serve in either military or banking. I think they are awesome.

THE RESISTANCE
11-25-2008, 09:46 PM
These bailouts are madness. Let these banks and financials fail. Ain't that the way it is suppose to work if you stink at business?

The Government needs to look up it is in a deep hole and needs to stop digging no mater what the Globalist Puppet masters tells them to do.