U.S. Gov't To Back $306 Billion Citigroup Mistakes

Late this evening (or morning now) the deal reached between the government and Citigroup became official. Rumors had been swirling all weekend, but now we find out just how far our government is willing to go to save the banks built too big to fail.

From Bloomberg News:

Nov. 23 (Bloomberg) -- The U.S. government agreed to protect $306 billion of loans and securities on Citigroup Inc.‘s books against losses, as it seeks to shore up investor confidence in the bank.

Citigroup will, as a fee for the guarantee, provide preferred shares to the Treasury and Federal Deposit Insurance Corp., the regulators said in a statement. The government will also inject $20 billion into the bank from the Treasury’s $700 billion Troubled Asset Relief Program.

Of course conservatives are trying to drag out a fight to save millions of autoworkers jobs for $25 billion, but hardly a peep is heard for $306 billion in guarantees for loans and securities. Oh and a mere $20 billion of straight cash that virtually doubles the current market value of Citigroup, pegged at $20.5 billion at the end of last week. I hope this helps them save some of those 52,000 layoffs from going through, but I doubt it goes to doing good for the workers who have been punished for the executives' greed. People like Charles Prince should go to jail for their recklessness and stripped of the wealth made from the risky deals that brought misery to us all.

Twenty Banks Have Gone Down This Year

We all know bad economic times are fully upon us and unfortunately it is just beginning. When Paul Krugman says stuff like this, it isn't a good sign. When twenty banks fail in less than a year, that is bad news. The latest victim to fall is the Community Bank of Georgia.

From ABC News:

The Federal Deposit Insurance Corp. was appointed receiver of the bank, located in Loganville, Ga. It had $681 million in assets and $611.4 million in deposits as of Oct. 17.

The FDIC said all the bank's deposits and about $84.4 million of its assets will be acquired by Bank of Essex, of Tappahannock, Va. Its four branches will reopen Monday as offices of Bank of Essex.

The agency said depositors of The Community Bank will continue to have full access to their deposits.

The FDIC estimated that the resolution of The Community Bank will cost the federal deposit insurance fund between $200 million and $240 million.

Thankfully the FDIC can help customers from their bank's bad practices, but we all share the burden because the money ultimately comes from the taxpayers. Nearly a quarter of a billion dollars can go to a lot of good programs or pay down our debt. Instead it is spent to fix the damage of banks that got too greedy and made themselves collapse. Oh the billions trillions we must spend to get us out of this hole!