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.

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.

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.

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 [...]

Citibank has to be the worst run of the major banks. The result of ridiculous mergers of Citicorp, Travelers, Smith Barney, Salomon Brothers, this unwieldly mess was a disaster that should never have happened. Now, Citigroup has a market cap lower than U.S. Bancorp, a company with only one-eighth the asset base as Citi. Paul Volcker recently said banks of this size pose a threat to the county and should not exist.

Wachovia Corporation has agreed to be bought out by Citigroup in a deal supported by the U.S. government. Exact terms of the deal are still forthcoming, but this could be seen as a best case scenario for a bank which was increasingly under stress due to the global credit crisis.
In 2006 Wachovia’s shares changed [...]

Not every financial services sector company is a basket case destined for bankruptcy. There are many well-run lower risk organizations in the bunch. Moreover, let’s not blame the banking model for individual companies’ woes. The Economist had a good article this weekend highlighting the fact that it is not the universal banking model which [...]

The blog site EconomPic Data has some nice pictures of Citi’s writedowns to date. Here is one. Check out the site for another nice breakdown.

According to Bloomberg, Citigroup has written down over $50 billion so far. Click here for a full list of Citi’s writedowns. There have been $474 billion in writedowns [...]

With the earnings season only halfway done, it is clear who the big losers are: Merrill Lynch and Citigroup. They have reported over $15 billion in additional writedowns for the quarter. What is increasingly clear is that those who had large exposure to the affected asset classes before the writedowns occurred will continue [...]

The global economy is gripped by its worst financial crisis since the Great Depression. People are losing their homes and their jobs, banks are going bankrupt, and stock markets in the U.S. and elsewhere have fallen significantly from recent highs. Yet, I am more optimistic than I have been for some time. [...]