Extraordinary Financial Assistance Provided to Citigroup, Inc., SIGTARP – Office of the Special Inspector General for the Troubled Asset Relief Program, January 13, 2011
In November 2008, worried that Citigroup would fail absent a strong statement of support from the U.S. Government, and that such failure could cause catastrophic damage to the economy, federal officials decided to rescue one of the largest financial institutions in the world. Late on November 23, 2008, following a frantic few days dubbed Citi Weekend, Citigroup agreed to a Government proposal that would provide Citigroup asset guarantees and a $20 billion capital infusion in exchange for preferred shares of Citigroup stock. The essential purpose of the deal, as then-Treasury Secretary Henry Paulson and then-Federal Reserve Bank of New York President Timothy F. Geithner later confirmed to SIGTARP, was to assure the world that the Government was not going to let Citigroup fail. SIGTARP found that the Government constructed a plan that not only achieved the primary goal of restoring market confidence in Citigroup, but also carefully controlled the risk of Government loss on the asset guarantee. The Government summarily rejected Citigroups initial proposal and made a take-it-or-leave-it offer that Citigroup only reluctantly accepted, against the advice of Citigroup insiders who considered the Governments terms too expensive in light of the assistance provided. In the end, Citigroup accepted the deal chiefly because of its expected impact on the markets perception of Citigroups viability.”
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