Is there a third bailout for Citigroup in the making?
On October 13, after Paulson had abandoned the original intent of the TARP program, Citigroup became one of the first nine banks to receive capital injections from the Treasury; for Citigroup it was to the tune of $25 billion.
Just over a month later, on November 24, as shares of Citigroup had plunged nearly 75% in a little over two weeks to $3.77, the Treasury was once again forced to step in in order to prevent the bank from failing. This time it was to the tune of a $20 billion capital injection and an additional $300 billion guarantee on their losses of risky assets.
And here we are on January 14th, just under two months later, and Citigroup is once again flirting with the $5 a share price, a price that many believe if breached for an extended period of time, could result in massive selling.
Now ordinarily, in this era of government bailouts and TARP money, I don't doubt that Pauslon would be willing to write another billion dollar check to Citigroup, I do however question this time around as to whether there is any money left in the first TARP tranche after the automakers just got their own bailout.
All of which lead me to say that the next couple of days will be an interesting time to watch Citigroup to see if first of all if they are going to need more capital, second of all, where is it going to come from, and finally, if they need it, how soon will they will be able to get it as this could very well depend on the expediency of Congress, something that nobody wants to make a bet on.
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