Word: city
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...federal government does have to make another large series of investments in this industry, companies like Citi will end up like AIG (AIG), Fannie Mae (FNM), and Freddie Mac (FNM), vassals who toil in the fields guided by the whims of Congressional committees and the financial arms of the administration...
...case that the equity value of firms including Citigroup(C) and Bank of America (BAC) has dropped to nothing is compelling. Once the government said it would back losses of over $300 billion from the Citi balance sheet, it was a tacit way of saying that Citi was no longer independent. Its market cap is now down to $15 billion, and at $2.80 its stock is a day-trader's dream...
...Over the last several days, the incoming administration has moved toward the idea of creating one federal agency which would have the purpose of taking most of the toxic assets off bank balance sheets. Since the figure at Citi is probably at least as large as the $300 billion pool that the government is guaranteeing, the combination of bad paper from Bank of America, Wells Fargo (WFC), JPMorgan (JPM), and the next tier of large US banks is almost certainly close to $1 trillion...
...Under the government's aid program for Citi the government will share losses on over $300 billion in assets, with a term on the guarantees up to ten yeas. Citi will immediately separate its banking unit from its brokerage and money management units. There is simply too much risk in the investment operations to keep them married to a commercial bank...
...Citi will have access to loans from the Federal Reserve in addition to the loss sharing program. This federal support is based on extremely complex rules, but the net of it is that the bank will have access to the cash it needs to keep from failing...