Word: optional
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Dates: during 2000-2009
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...avoid the fate of Lehman or Bear, the firm's board may feel like it needs to do something to boost it's stock price. One option would be to boot chief executive Vikram Pandit. Some on Wall Street believe Pandit has not been quick enough to react to the problems of the firm and could still be in denial. On Friday, Pandit told top executives that he doesn't believe Citi needs to sell off parts of its business to raise capital. Investors don't seem to agree. The stock fell on the news...
...Another option could put more money into the firm from the TARP program. The problem with that plan is Citigroup may need more money than the Treasury could inject into the firm. Paulson only has $60 billion left of the initial $350 in TARP funds that he can spent without having to face a review from Congress. More importantly, the government does not want to end up owning Citigroup. Then taxpayers would be on the hook for all of the bank's debt. So the most the government could invest in Citigroup would be $20 billion, which is the amount...
Rick Wagoner, CEO of General Motors, the automaker in most imminent danger of failure, gave lawmakers three reasons Chapter 11 isn't an option. First, the special financing that usually tides companies over through reorganization is so scarce right now that GM might not be able to get enough to keep functioning. Second, the stigma of bankruptcy would deter consumers from buying GM cars. Third, GM is already in the midst of a dramatic reorganization that will pave the way to a profitable future...
There's a third option, between a no-strings bailout and Chapter 11--what some call conservatorship. It's bankruptcy-by-another-name, in which the government loans money to the automakers in return for equity stakes and concessions from creditors and workers. It's been done before--the 1979 Chrysler bailout followed such lines--but getting it right could be hard. "You're not very good at reworking companies," University of Maryland business professor Peter Morici told members of the Senate Banking Committee. "That's why we have bankruptcy courts...
Faced with the choice of bailing out the ailing auto industry or letting it fail, Congress picked a brave third option: procrastination...