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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Bailout Costs $200 Billion Less (Supposedly)

According to the Associated Press,

The Obama administration will lose $200 billion less than expected from the federal bailout program and is looking at using part of the savings to fund new job creation efforts.
- WJZ (Baltimore)

Oh $200 billion dollars less. That's nice, seeing as we still spent $141 billion dollars that we didn't have. If you are or I spent money we didn't have we would go to to jail for check kitting, but the Government does it all the time.

The official, who spoke on condition of anonymity because the administration's new projection has not been released, said the lower estimate reflected faster repayments by big banks and less spending on some of the rescue programs as the financial sector recovered from its free fall more quickly than the administration originally expected.

The administration had made the $341 billion estimate as part of its midsession budget review released in August.

The official said the new estimate will become part of the administration's new budget - meaning it at least some of the savings will be used to reduce the government's projected deficit - which President Barack Obama will present to Congress in February.
- WJZ (Baltimore)

Oh so we did spend the original $341 billion initially reported, but borrowers repaid it faster then expected. I see, that still doesn't excuse the hot checks our Government is writing. Nor the bad example they are setting to all American's, who need to learn to live within their means rather then overspending, because they want something now, rather then waiting till they have the cash for it.

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Stocks brace for sell off

Early reports this morning are that there will be a sell off of some stocks today, according to CNN.

NEW YORK (CNNMoney.com) -- U.S. stocks headed for a lower start Tuesday as a shake-up in world markets made its way across the Atlantic, adding to investor uneasiness about the economy.

Dow Jones industrial average, Nasdaq-100 and S&P-500 futures were lower, with most of the downturn occurring after 6 a.m. ET.

Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins.

Stocks ended mixed in a choppy session Monday as investors weighed a stronger dollar, falling oil and gold prices, and comments from Fed Chairman Ben Bernanke that cooled worries about higher interest rates.
- CNN

I hope to God, that they are wrong, but it is the nature of the beast. Up one day, down the next. So we will have to wait and see. Apparently, though, these predictions and fears are based on what happened in Europe yesterday and last night while we slept.

David Jones, chief market strategist at IG Markets in London, said that Wall Street is following declining stock indexes in London, Paris and Frankfurt, which stem from a disappointing report on German industrial output.

"It's definitely driven by this German data," said Jones, noting that sluggishness in pre-Christmas trading has arrived early this year, which creating more volatility. "We're already seeing volume starting to drop off, so we're seeing more exaggerated moves."

Peter Cardillo, chief market economist for Avalon Partners, said U.S. futures also appears to be reacting to "continued pressure in the Dubai Market."
- CNN

As you can see the fear is based on these other markets, but I have to wonder if press reports like these from CNN, would be more to blame. We all know, that past results don't mean a thing for the future. Yet, the mainstream press write stories like this causing fear in American markets. Which in turn results in sell offs that may have never occurred otherwise, despite what happened in Europe otherwise.
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G.E. Agrees to Sell NBC to Comcast

After nearly eight months of negotiations, Comcast, the
nation's largest cable operator, reached an agreement on
Thursday to acquire the television network, NBC Universal,
from General Electric in deal worth $30 billion.

That according to the New York Times, this morning. The deal will include spinning off NBC into a separate company from GE.



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Around The World

I thought this morning, we would take a quick look at financial news around the world. The fist bit of news isn't really financial, but is an interesting tid bit.

Meredith Baxter Makes it Public on the Today Show

Meredith Baxter, the actress who played Alex Keaton's (Michal J. Fox) on the popular 80's sitcom, Family Ties, announced to the world on this mornings edition of the Today Show, that she was gay. In a interview with Matt Lauer, described the years of hiding it from the public,even though her family knew it.

Square As a Personal Finance Tool
The Baltimore Sun is reporting this morning that Twitter co-founder Jack Dorsey's new start-up, opened to the world yesterday and gave us more insight into what's ahead in the world of mobile payments.

The new site known as Square, allow

users can attach a small card-swiping device to their gadgets (i.e. an iPhone) and accept credit card payments wherever they happen to be. It could come in very handy for small and medium-sized businesses, especially if it's robust enough for the enterprise. Users would get an electronic receipt.

Square is expected to make spending easier, while decreasing our dependence on cash. As a consumer advocate, I don't see that as a good thing, because as Dave Ramsey is so fond of saying, "Debt is DUMB, cash is king."



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Blogs Future

Since starting this blog, it has been my desire to provide the best information I can as I learn (or hear about it), while at the same time being open and honest about my own debts. That means that I want to be a serious member of the new media and things were going pretty well the first couple of years. I was in the top 100 most read personal finance blogs. The biggest problem was and still is that this blog is run as a hobby, since I do not earn enough income to make a living with it.

That means that I have to work a full time job. Which in turn makes it hard to make my daily posts to the blog. I still have a book laying here behind me that I am suppose to be reviewing on the blog, but haven't had the time to even read the book so I can review it. How can I be taken seriously, if I can't keep up? On the other hand, how can I focus on the blog and give it the attention that it needs, if I can't make a living at it?

Don't take this as a sign that I am shuttering the blog. I have no intention of doing that. I will continue to post, hopefully more often. However, I have to find that balance between maintaining the blog regularly and keeping the focus I need on my family and full-time job. In time perhaps, the blog can return to the greatness that it once was. I would love to get more interviews, like I did earlier this year, when I interviewed Cody Willard, Rebecca Diamond, and Eric Boiling. Which by the way was the highlight of my three years of doing this blog. My biggest dream interview would be Warren Buffett. Of course, that's not my biggest dream for the blog. That would be when I can finally report that my fiance and I are both 100% debt-free.
Through it all, I hope that you keep reading and especially commenting. I love reading your comments, even those that takes me to tasks. Comments the I agree and disagree with are appreciated.
Thanks


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Thanksgiving - What Are You Thankful For

Today, in the good ole USA, is Thanksgiving Day. The one day of the year we officially stop and give thanks for everything that we have. Of course, we should do that every day, but the day was set aside former President Abraham Lincoln, as the official annual day of thanks.

I will be having my fiance, her daughter Jessica (and her boyfriend Tony), my parents and my brother Andrew, over for Thanksgiving Dinner. We will be having turkey, corn bread stuffing, mashed potatoes, gravy, green beans, corn, yams, candied apples, cranberry sauce Kings Hawaiian rolls, and of course pie (pumpkin and sweet potato).

I will be thankful that I have a job. Thankful also and most importantly for my fiance. Not to mention the roof that is over my head and of course each and everyone of you that reads this blog.

So on this day of thanks, what are you thankful for. Would love to hear your thoughts. In the mean time, I would like to wish each and every one of you a very Happy Thanksgiving.



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