“…Citigroup will absorb up to $42 billion of losses in the deal…Citigroup also will grant the FDIC $12 billion in preferred stock and warrants” Holy cow. C has a market cap of $120B (or whatever - too lazy to look). That’s a pretty serious chunk out of the company.
I guess…next is Citi to go down and then might be Fed’s number…
holy f - is this worth the risk / good move for Citi?
well, the plan is to sell the worst crap to taxpayers if not, c is taking one for the team. they knew if wb fails, they are screwed anyway.
“S&P said the action reflects Citigroup’s write-downs and market-disrupted assets, noting the Wachovia (WB) acquisition does not materially add to the risk of Citi.” Help me out on this. How could promisising to absorb $42B worth of losses not materially add to risk?
JoeyDVivre Wrote: ------------------------------------------------------- > Help me out on this. How could promisising to > absorb $42B worth of losses not materially add to > risk? They already booked a $30 billion loss today. The loss was part of the purchase agreement. It sounded to me like they just wrote down the goodwill on WB’s balance sheet by $30 billion for the loss. I’m not sure if I have a good understanding of that part though. So they have provisions to potentially realize $4 billion of losses in each of the next 3 years from the deal - totalling $12 billion. They are insured for any losses past this amount.
have contact in citi, of course he has the lens on, rosy ones. bottm line: C was very close to eating WAMU, when one broad is gone, you bang her best friend. so citi went for the next best looking girl