Feds Plans $306 Billion for Citigroup: Detroit Gets Kicked to the Curb

Monday, November 24, 2008

Someone smarter and wiser than me will have to explain what makes Citigroup more important than the Big Three Automakers?

Last week, the CEOs of Ford, G.M. and Chrysler received a chilly reception from Congress for a relatively small request for a $25 billion dollar bridge loan that would allow Detroit to remain operational into 2009. Sen. Majority Leader Harry Reid gave the Big Three Automakers a Dec. 2 deadline to present a plan that shows a path to survivability and raised the possibility their request would be revisited when the Congress meets on Dec. 8 and possibly approve a rescue.

Meanwhile, it was announced late Sunday night that Federal regulators approved a radical $306 billion plan for Citigroup whereby the government could soak up billions of dollars in losses at the struggling bank through a series of loans and direct investments of residential and commercial real estate loans and certain other assets. Citigroup is widely viewed, both in Washington and on Wall Street, as too big to be allowed to fail.

Citigroup employs approximately 358,000 around the world.

Ford, G.M. and Chrysler employ approximately 3 million U.S. workers and as many as one-in-ten American jobs are directly or in-directly tied to the Big Three Automakers.

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29 Responses to Feds Plans $306 Billion for Citigroup: Detroit Gets Kicked to the Curb

  1. Adirondacky says:

    The elites who run this country have contempt for the manufacturing base. These jobs are largely blue collar, labor-intensive and not “sexy.” But Wall Street, suits, ties and cubicles, have more value to the Congress even though the value of white collar jobs contribute very little to our nation’s bottom line.

  2. Estacada says:

    Where is this latest $300 billion coming from?

    China isn’t making new loans to the U.S. because their economy is starting to slow.

    Are we going to get it from Venezuela? Russia? Or, are we printing funny money, a la, Argentina in the early 1970’s that had zero value and contributed to the collapse of the Argentine economy?

  3. Harry says:

    The hostility to Detroit was on display last week for all to see. I don’t understand it.

  4. feminazi says:

    America’s manufacturing base is almost a thing of the past anyway, some anachronism from the 19 century, so my guess is, Washington can’t be bothered to help protect it. I find it disgusting to see Harry Reid of all people standing tough against Detroit while he couldn’t stand up to Lieberman. I think we need new Congressional leadership and this would include both Reid and Pelosi.

  5. Prairiedog says:

    Let me get this straight.

    Citigroup employs 358,000 but Ford, G.M. and Chrysler employs 3 million U.S. workers?

    Citigroup gets $304 billion. Ford, G.M. and Chrysler gets nothing. So, according to the Feds, the 358,000 jobs at Citigroup have roughly 10 times more worth than the 3 million jobs at Ford, G.M. and Chrysler?

    Has anyone asked, how many members of Bush’s family are employed at Citigroup?

    Just saying.

  6. Bill Hussein O'Reilly says:

    It’s very simple.
    Goldman Sachs’ former CEO, Henry Paulson, is the U.S. Treasury Secretary.
    Paulson screwed the country in the ass without any lubrication.
    That’s all you need to understand.

  7. Neeraj says:

    I think:
    If Citi bank will remain, then Ford / G.M. / Chrysler will run properly by taking more loans, hence working on roots is important for nourishment !!!

  8. VicoDANIEL says:

    Citi Group asks for 40 virgins and the Congress says, “of course, do you want blondes or an assortment of blondes, redheads and brunettes?”

    But the struggling US auto industry asks for a paltry $25 billion and the Congress makes them jump through hoops and attaches conditions to any help.

    So let’s be clear. CNBC reported:

    “Federal Reserve Chairman Ben Bernanke and Timothy Geithner, president of the New York Fed, were both involved in the weekend talks over Citigroup’s fate, according to government officials. Geithner is expected to be nominated to be Treasury Secretary by President-elect Barack Obama.”

    We need to begin including Barack Obama’s economic team in these decisions. It isn’t all Paulson’s doing.


  9. Matteo says:

    Robert Reich says money is more important than jobs. Seriously, you can read his take here:

    Why CitiGroup is About to Be Bailed Out and Not General Motors


    Citigroup was once the biggest U.S. bank. General Motors was once the biggest automaker in the world. Now, both are on the brink. Yet Citigroup is likely to be rescued within days. General Motors may not be rescued at all.

    Why the difference? Viewed from Wall Street, Citi is too big and important to be allowed to fail while GM is simply a big, clunky old manufacturing company that can go into chapter 11 and reorganize itself. The newly conventional wisdom on the Street is that the failure of the Treasury and the Fed to save Lehman Brothers was a grave mistake because Lehman’s demise caused creditors and investors to panic, which turned the sub-prime loan mess into a financial catastrophe — a mistake that must not occur again. But GM? GM is only jobs and communities. Citi is money.

  10. Prairiedog says:

    Robert Reich is a pinhead.

  11. taco says:

    GM is only jobs and communities. Citi is money.

    GM is only jobs and communities. Citi is money. And Robert Reich is a horse’s ass.

  12. Rachel says:

    I’ve said it before and I will say it again, the remedy for the Big Three Automakers is simple. Fire the entire executive board of all three automakers and let the unions run the companies. The unions have long advocated the production of smaller, more fuel efficient cars but the executives said no.

  13. Slackdog says:

    Rachel’s idea is brilliant! Why not let the Unions take over the management of the automakers? Who knows the industry better than the men and women who are on the lines and carry out the actual work?

  14. Brigadoon says:

    Maybe Detroit should change their business model to the military, industrial complex? Seriously, the only two things the U.S. does nowadays is make the toys that help nations wage war and movies. War, is a growth industry. Just ask GE and Northrop.

  15. RAWDAWG says:

    equity injection will never work

  16. R.J. says:

    Henry Paulson is the worst Treasury Secretary ever. Even the rabid right wing talk show hosts hate him.

    I don’t understand why Citigroup should be saved. They made their own bed. Let them lie in it.

  17. JollyRoger says:

    Got to kill the UAW. Didn’t you know? Until we all make subsistence wages, our economy just won’t work.

  18. TOM339 says:

    $700 billion for Wall Street.
    $306 billion for CitiGroup.
    $25 billion for the Big Three Automakers.

    Now, which of these is the more modest proposal?

    Everytime I hear a conservative on TV complaining about helping Ford and GM, they never miss the chance to blame the unions. Never. As if the unions got the industry into the current mess they’re facing.

  19. Big Hank says:

    It’s good to know Harry Reid is standing strong against the nearly dead America auto industry.

    Too bad he couldn’t find his gonads when it came to standing up to George Bush and the Iraq war.

  20. JollyRoger says:

    “Stepnfetchit” Reid never met a Chimpy proposal he didn’t embrace.

    He needs to go. Now.

  21. As someone who lives in Michigan, this state along with Ohio and any factory town across this country would be killed by letting the big three go. We can’t afford it and yes what a shock, the wealthy CEOs went on private jets but so what?

    Are you going to fire 3,000,000 people, make them all dependent on government health care and pay the pensions of their empolyees all because…rich people spend money.

    It’s time congress act sensible. If they can afford $20 billion for Citi and insuring $300 billion in assets it can afford a $25 billion LOAN to help out actually Americans.

  22. Fran says:

    To be fair, the Big 3 already got $25 billion not too long ago, they are asking for ANOTHER $25 billion. Experts say the $25 billion will only tide them over till Spring, when they would be facing the inevitable bankruptcy anyway. The neglected economy is coming full circle….

    Detroit could make the best, most efficient care ever & if people don’t have jobs, homes, or the ability to get a loan, they are not going to buy cars.

    I just watched the film *Who killed the electric car?* It’s a 92 minute film about GM- who had an electric car on the market until 2003, but then crushed the vehicles.

    So when they say they have to reinvent the wheel to retool, and invent a more efficient car, they only need to retrace their steps several years to the days when a market test with functioning electric cars was sabotaged.

    They used inferior batteries, and refused to let the people buy their lease (only) cars.

    GM obviously had an incentive to make the electric vehicle unsuccessful.

    If the government insists they bring it back to get
    bailout money, good.

    That may be the silver lining to all this mess… it will force the changes that are long overdue.

    Historically, the auto industry did not make changes until changes were legislated…. adding seatbelts, what mileage efficiencies they did do– all forced by legislative action.

    I opted to keep my US made vehicle that is 14 years old, because I am holding out for a viable electric car.

    If the government has to hold the automakers hostage with a hot poker & bailout money to get up to speed, fine! Viva la revolution!

  23. Joe in Colorado says:

    Well, I feel much better knowing the government is about to use my tax dollars not on repairing bridges or increasing veterans healthcare or increasing NIH funding but instead, on bailing out a Wall Street credit card company. Maybe the cold attitude the Feds (and a few posting here) have toward the U.S. manufacturing base would be better if the men and women building American cars and trucks wore shirts and ties and loafers?

  24. Fran says:

    Click here to watch the movie…
    Who kiled the electric car? 92 minutes.


    no extra charge for french subtitles!

  25. Ypsilanti says:

    Like Christopher (R), I too, live in Michigan.

    I find it astonishing that people say the auto industry received $25 billion at an earlier time which somehow makes them ineligible for help today.

    Business is cyclical and what happened a year ago, or two years ago, or three years ago, isn’t germane to economic conditions today.

    The current $25 billion dollar request isn’t a bailout per se but, a low-interest loan that is supported by none other than Barack Obama, who said the loans to be expedited to help the industry retool plants and develop more fuel-efficient vehicles.

    The money-honeys on CNBC, CNN, and in Forbes and Bloomberg say the request should be conditional on a new business model. Didn’t anyone actually listen to the testimony last Wednesday? All three companies told Congresss they have detailed plans for new, fuel efficient cars. The CEO provided clear answers. Wagoner, Nardelli and Mulally were professionals. What more do people want? An on-air triple suicide?

    If the Big Three are allowed to go bankrupt and possibly not exist, the ripple effect will be felt from Maine to California and from Alaska to Florida. We can’t sit by and let this happen while Wall Street keeps getting multiple sittings at the Federal trough.

  26. Mauigirl says:

    It is hard to fathom, isn’t it? I’m hoping the Big Three will also get the help they need.

  27. Randy Arroyo says:

    I saw this segment over the weekend on CNN. The report centered around a single woman in Detroit with 2 schoolage kids. She climbed out of welfare and got a decent paying job with GM. She was able to buy a modest home to raise her children and give them a good life. She was terrified that her GM is about to vanish and she could end up back on welfare unable to provide properly for her children. She is the face of the Big Three Automakers.

  28. feminazi says:

    Randy – I saw that story on CNN too. The woman is African America and had been on welfare since her husband walked out on her, leaving her penniless. The job she got at GM is her lifeline to the middle class. Detroit can’t be allowed to fail.

  29. libhomo says:

    Rachel’s proposal of having unions run the car companies is frakking brilliant. I hope she has a blog so she can share more of her views to a larger audience.

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