Business | Banking
US saves Citigroup with $326b bailout
Bush hints at similar measures to rescue ailing institutions as Obama assembles economic team.
- AP & Reuters
- Published: 09:22 November 24, 2008
- Image Credit: Reuters
- Traders at the Citigroup trading post on the floor of the New York Stock Exchange.
New York: Wall Street showed clear relief on Monday over the government's plan to bail out Citigroup, with major indexes jumping more than 3.5 per cent to extend Friday's rally.
The stock surge came hours after the US government vowed it was working to shore up the ailing economy and stepped in to guarantee potential losses at Citigroup up to $306 billion and pump $20 billion more into one of the world's largest banks.
"With these transactions, the US government is taking the actions necessary to strengthen the financial system and protect US taxpayers and the US economy," US agencies said in the joint statement.
US President George W. Bush said his administration would take future measures to shore up the economy as necessary, after discussing the Citigroup rescue with Treasury Secretary Henry Paulson. "This is a tough situation for America. We'll recover from it. The first step to recovery is to safeguard our financial system," Bush told reporters yesterday. "If need be, we're going to make these kind of decisions to safeguard our financial system in future."
Citi operates in more than 100 countries and, with more than $2 trillion in assets, is viewed as too big to be allowed to fail. The deal will give US taxpayers an eight per cent stake in the group. Citi chief executive officer Vikram Pandit said the bank appreciated "the tremendous effort" by the US government to assure market stability.
In Washington, President-elect Barack Obama named a heavyweight economic team and vowed to put a decisive stamp on efforts to rescue the economy. "We'll need to bring together the best minds in America to guide us," Obama said at a press conference.
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