Citigroup Reaches Deal to Repay Bailout Billions

The New York Times is reporting this morning that Citigroup has reached a deal with government regulators to repay $20 billion dollars of bailout money.

Citigroup reached a deal early Monday morning to be the last of the big Wall Street banks to exit the government’s bailout program, after persuading regulators that it was sound enough to stand on its own.

Citigroup executives announced a broad program that will replace the $45 billion of federal aid with funds from private investors and allow it to wean itself off other forms of government assistance.

With its regulators’ permission, Citigroup plans to redeem $20 billion of preferred stock that the government received as part of the bank’s first two rescues late last year. It will also end a loss-sharing agreement with the government on about $250 billion of troubled real estate and credit card assets.To help replenish its coffers, Citigroup expects to raise about $17 billion by selling stock as early as this week and issue another $4.2 billion in so-called tangible equity units and subordinated notes. All three moves aim assuage regulators’ concerns about the bank’s ability to weather another severe economic downturn without returning to the government for more money.

The Treasury Department, meanwhile, plans to wind down its 34 percent ownership stake in Citigroup, which it acquired by converting $25 billion of preferred shares into common stock in a third rescue this year. It expected to sell its nearly 7.7 billion shares through a series of large stock sales to institutional investors over the next six to twelve months. The first sale, for up to $5 billion of Citigroup shares, is expected to occur alongside the this week’s $17 billion stock offering.
- New York Times

This sounds like a good thing, funny how the banks know they can't be free if they are in debt and are eagerly wanting to get debt-free as quickly as they can. Yet, when it comes to the consumers they want us to stay in debt to them. Of course, when we do follow their plan and are always in debt to them, they are making money off us.

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