The US government moved to bail out Citigroup Inc, agreeing to shoulder most potential losses from $306 billion of its toxic assets and inject $20 billion of new capital.
This is the Fed's biggest effort yet to prevent a big bank from failing. Obviously, Citibank is too big to be allowed to fall and CEO Chandrakant Pandit gets to keep his job, albiet with a pay cut.
The Citibank bailout, announced on Sunday will give the US government a 7.8 per cent equity stake and marks the latest government effort to contain a widening financial crisis that has already brought down Bear Stearns, Lehman Brothers Holdings Inc and Washington Mutual Inc.
Shares of Citigroup surged as much as 72 per cent on the new on Monday.