Yesterday, the Treasury Department, the Federal Reserve, and the FDIC issued a joint statement announcing a package of guarantees, liquidity access, and capital for Citigroup. This package will include:
- Treasury and the FDIC protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.
- An unvestment of $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury.
The full text of the Joint Statement is available at: http://www.treas.gov/press/releases/hp1287.htm
The Term Sheet for this guarantee package is available at: http://www.treas.gov/press/releases/reports/cititermsheet_112308.pdf
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