Government Tax Relief Fund | Tax Amnesty

ANSWER:
Citibank s stock has fallen about 93% from May 2007 to November 21, 2008.

Here s the deal:

1.The U.S. Gov will take a new Billion equity state in CitiGroup.

2.The U.S. Gov already took a Billion equity state in CitiGroup in October 2008.

All of this Billion will have come from the 0 Billion Troubled Asset Relief Program (TARP). Of that fund, there would be a little less than 0 Billion remaining, all of which is borrowed money to begin with.

3.The US Government, through the U.S. Treasury and FDIC will also guarantee up to 6 Billion of higher risk loans and mortgage backed securities that CitiGroup is holding. CitiGroup accepts the first billion in losses, and 10% thereafter. The USG, The Treasury and the FDIC will take on 90% of the risk thereafter.

What do we (tax payers get)?

4.About Billon worth of CitiGroup preferred stock with 8% dividend, plus warrants for about 254 million shares of CitiGroup common stock with a strike price of .61 per share. The US Treasury and the FDIC will receive this deal.
5.The USG will also have control over executive bonuses.

Complete Deal Terms:
http://www.citigroup.com/citi/press/2008/081124a.htm
http://www.citigroup.com/citi/fin/data/citi_term_sheet.pdf?ieNocache=321

Why this bailout plan is bad deal for U.S. tax payers.

The US government under FDIC banking rules could have just decided to take over all of CitiGroup for its Friday s closing market value of about .54 Billion. Instead, the US Governments hands CitiGroup another Billion on top of the Billion last month, and then guarantees 6 Billion more.

Anyone could have just as well as bought CitiGroup for Billion based on last Friday s close. But no, expert government negotiators made sure that not only should US tax payers nearly pay the full market value for CitiGroup on top of the Billion loan last month, plus guarantee over 0 Billion more in exchange for part interest in CitiGroup?

Part Interest ownership? This look like a bailout of massive proportions, potentially three times the size of the AIG bailout.

The USG paid100% of the total market value for CitiGroup (approx. Billion), and got back Billion of preferred stock, and some 254 million warrants for CitiGroup common stock. Those warrants won t be profitable for the taxpayers unless CitiGroup s common stock jumps 181% from 11-21-2008 s close.

What?

Let me see if I understand this. We basically pay Billion (approximately the full market value of CitiGroup add about billion and there is the full value of the stock). Now, on top of that, we loaned you Billion last month (now we have loaned you billion), and we are also guaranteeing over 0 Billion more.

And what we get in return is Billion of preferred stock, and a handful of warrants which will only be profitable if you stock soars 181% and at that point we only break even?

On top of this, Citigroup is NOT required to loan 1 penny of this money; they have full discretion of what to do with it.

Want more?
The people who helped run Citigroup in the ground were not required to leave. So the same mismanagement that plunged Citigroup to failure, are still running the company with more tax payer bailout money. And is billion in bail out enough?

For those who missed the last Billion we loaned to CitiGroup, here are the terms:

http://www.citigroup.com/citi/fin/data/fs081031a.pdf?ieNocache=216

These terms benefit Citigroup, not the lender the US taxpayers.

Who negotiated this deal for the tax payer? Fire them too.

And to satisfy the public s concern over executive compensation, CitiGroup agrees that the USG will control the bonuses. Control the bonuses? CitiGroup has failed by any accounting measurements, and we are glad that we can control bonuses?

Why not say, Look, CitiGroup. We just took you over under FDIC authority. We declare you as insolvent, and taking you into receivership. You can still operate, but under our rules. Forget bonuses, no one deserves them or will be getting them until you repay all your debt back to the taxpayers with interest, and your stock has reached its previous all time high.

You re on the hook for your debt. You named the bad loans, bad investments, now eat it like everyone has. Starting putting up some assets for sale to reduce your liabilities. You said Friday, 11-21-08 that you did not want to sell Smith Barney, and you did not want to spin off the bank including Travelers Insurance. Tough. We the US tax payers - own, you and the assets are now for sale.

By the way, the entire Board of Directors, and all top management is technically fired. They will all be replaced shortly. You can continue working until then, and we are adjusting your pay based on performance. Since we have minimum wage laws, that is about what you will be getting.

The people who run this bank are about as idiotic for not being able to see that their own industry was falling apart. And the people who think they can

Source: http://sumgait.net/uncategorized/government-tax-relief-fund/

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