WASHINGTON, November 24, 2008 (AFP) – The US government late Sunday vowed to protect struggling banking giant Citigroup against “unusually large losses” and give it 20 billion dollars from a financial rescue package approved by Congress.
The announcement came after the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation reached an agreement with Citigroup to provide a package of guarantees to the struggling banking giant.
In a joint statement issued after the talks, the three agencies said they will provide Citigroup “protection against the possibility of unusually large losses on an asset pool of approximately 306 billion dollars of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup’s balance sheet.”
In addition, the Treasury Department will invest 20 billion dollars in Citigroup from the Troubled Asset Relief Program, a 700-billion-dollar package approved by Congress earlier this year to soften the banking crisis, in exchange for preferred stock with an eight-percent dividend to the Treasury, officials said.
Citigroup, on its part, has agreed to comply with unspecified “enhanced executive compensation restrictions” and