Sunday, November 23, 2008

First Reaction - Cititgroup Rescue

From Reuters:

Citigroup agreed to absorb the first $29 billion of losses on the $306 billion portfolio, plus 10 percent of additional losses, for a maximum total exposure of $56.7 billion. The Treasury Department could end up absorbing $5 billion, the Federal Deposit Insurance Corp $10 billion, and the Federal Reserve the rest.

It's getting a bit tiresome that the Federal Reserve is taking on more and more potentially huge losses, yet no external body or individual is allowed to doublecheck the portfolios involved or the current markings being used. If it's anything like AIG, the markings are fantasy, and Citibank will in short order have to absorb 29 billion of losses, putting the U.S. government at risk.

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