Bismarck Bailout

Picture Source: Bloomberg.com
The US Government has finally saved the Bismarck from sinking by stepping in to secure a huge load of its troubled assets.
Bailout Plan
- $306 billion of troubled mortgages and toxic assets guaranteed by the U.S. government under a federal plan.
- $20 billion cash infusion from the Treasury, adding to $25 billion it received last month under the TARP.
- Citi to swallow first $29 billion of losses on the $306 billion pool
- After that, government covers 90% of losses, Citigroup covers other 10%
- CEO Vikram Pandit keeps his job

Price for Citi
- Government to get $27 billion of preferred shares with an 8% dividend
- Warrants to buy 254 million Citigroup shares @ $10.61 each

“The Achilles heel with Citi is their exposure to emerging markets and what’s going to happen when emerging markets turn down, as they’re doing now.”

Here is the entire article on Bloomberg.

PS: Seems like the government does work the weekends and late into the night.