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The Citigroup Bailout

It looks like we have a solution to Citi’s crisis. The U.S. Government agreed to bailout Citigroup, backing $306 billion of debt in exchange for preferred equity and warrants plus a host of other details I will enumerate below. On the whole this looks to be a better deal for the U.S. Government and American taxpayers than the AIG deal. However, it is yet another ad-hoc band-aid when a comprehensive solution is preferable.

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Citigroup: Panics, Banking Confidence, Bailouts and Fractional Reserves

Citigroup is in serious trouble. The storied institution with $2 trillion in assets has seen its shares collapse and its reputation is in tatters as it goes cap in hand to the U.S. government for a bailout. Indeed, a solution must be found as Citi is a monster of a bank, three times the size of Lehman Brothers, whose collapse caused untold damage two months ago. As I write this, Citigroup is meeting with U.S. Government officials to hammer out an agreement to set the firm on the right path. We can only hope these talks bear fruit.

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Obama White House: Add Larry Summers and Robert Gibbs

Yves Smith at Naked Capitalism is reporting that Larry Summers is to be tapped to head Barack Obama’s National Economic Counsel.  Summers had been considered for the Treasury position, one that looks likely to go to Tim Geithner, the head of the New York Fed.  It is notable that Robert Rubin held Summers position in the Clinton Administration before heading […]

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Citigroup talks with US Government as bankruptcy looms

Reuters is reporting that persons familiar with the matter have indicated that Citigroup began talks with the U.S. Government as contingency planning. With Citigroup’s share price having plunged dramatically in recent days, rumors have been circulating about the firm. Yesterday, the Board of Directors met to discuss strategic options including a sale of all or part of the firm. It is now evident that the government may need to get involved.

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GM Board: Bankruptcy is an option we will consider

In direct conflict with the statements in Washington by its Chief Executive Rick Wagoner, the General Motors Board of Directors is willing to consider bankruptcy as one of many options. The Wall Street Journal released a story late last night attesting to this fact. Below is a snippet of that story. Members of General Motors Corp.’s board of directors are […]

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Bankruptcies: US Bancorp takes over at Downey and PFF

Another Friday and another three FDIC Friday Night Specials. This time, the notables were Downey Savings and Loan Association and PFF Bank & Trust which were seized by the FDIC. Downey is especially notable as it has been in the news a lot recently with many speculating about the demise of the parent company Downey Financial. Earlier this evening, Community Bank of Loganville, Georgia was also declared insolvent and seized by the state regulator.

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Geithner is the man at Treasury, Richardson and Clinton also in

So I go away for a few hours and the whole world changes? Apparently Barack Obama has made a decisive move to fill out his cabinet and we are about to witness three appointments: Tim Geithner at Treasury, Hillary Clinton at State, and Bill Richardson at Commerce. All three come steeped in experience on Capitol Hill and the U.S. Government. However, all three are fairly safe picks too. Whether this is change we can believe in is only time will tell. At a minimum, we know that Obama is going to make swift and reasoned if conventional decisions as President.

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Obama Team considering a pre-pack Auto bankruptcy

Bloomberg is reporting that Obama’s transition team is exploring a pre-packaged bankruptcy filing for the US automakers as a solution to the stand-off in Washington. Apparently, Obama has some pretty savvy people in his transition team because they seem to be much more on the case than the Bush Administration when it comes to a solution for the Big Three Automakers.

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News round-up: 21 Nov 2008 – Countries, Citigroup, and Corporates

News round-up: 21 Nov 2008 – Countries, Citigroup, and Corporates

Today’s round-up is going to principally be about the three CCC’s of Countries, Citigroup and Corporates.  But I also have some tidbits on other topics as well.  So let’s jump right in. Yesterday sucked. Markets fell everywhere from Australia to Hong Kong to France to the U.S.  The U.S. fell to a 11-year low (adjusted for inflation this would be […]

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Willem Buiter to become a bank

Since everyone and his sister can become a bank, why not a central banker cum professor and his wife? Willem Buiter understands the absurdity of granting any financial institution in America bank holding status. He understands this is one big handout to financial services. Therefore, he has decided to become a bank too.

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Should we let GM fail?

The issue of GM cannot be divorced from the broader issue of health care. Companies like Honda operate out of countries that made health and retirement benefits a national responsibility. And the perennially high price of gasoline, a product of high gas taxes in virtually all other highly developed countries, has ensured a steady market for their smaller, more fuel-efficient vehicles. There’s no reason not to treat U.S. car companies, and car owners, the same way. So we have to address the broader issue of health care as well as the obvious demands for producing more fuel efficient cars.

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U.S. stocks at lowest level since 1997

U.S. stocks at lowest level since 1997

Things were actually looking fairly good during midday given how horrible the credit markets (high yield, asset-backed and corporate) have become.  Sure, the bank stocks sold off, but the stock market in the U.S. was holding its own after selloffs abroad.  But then, all of a sudden, the bottom dropped out with the S&P 500 breaking well through 2002 lows […]

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