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...losing money on Citi's bonds skyrocketed, signaling a lack of confidence in the bank's ability to survive. Bankruptcy rumors circulated, and fears grew that people doing business with Citi - including its retail banking customers - would pull their money. At that point, regulators felt they had no other option but to step...
Citi is not the first bank to hit the wall. When Washington Mutual, which had a balance sheet less than a third the size of Citi's, went down, the FDIC immediately flipped the company to JPMorgan Chase. But marrying off Citi was not a viable option. "There isn't anyone to hand Citi to," says Roy Smith, a professor of finance at New York University's Stern School. "This is the King Kong of banks." (See pictures of the global financial crisis...
...same time, Chávez's feckless foes should realize that they're still weak enough for El Comandante to consider the constitutional issue a still viable option. Chávez, a former army paratrooper officer who led a failed coup attempt in 1992 before winning the presidency in the 1998 election (and a special race in 2000 under a rewritten constitution), has benefited greatly from a dysfunctional opposition led largely by leftovers from the old guard that pilfered Venezuela's oil wealth and left more than half the population in poverty; it thwarted Chávez last year only...
...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...