"The unemployment assumptions used in both scenarios have in fact already been exceeded." -Oversight Panel
The $301 billion federal guarantee on Citigroup's (C
) crappy loan book is expected to cost taxpayers $43.9 billion in losses... IF the unemployment rate peeks at 9.5%. Doh. We're at 10.2% now and 13% is now being thrown around as a possible high
Citigroup Asset Guarantees May Cost U.S. Taxpayers, Panel Says: " U.S. taxpayers may have to share in the losses on $301 billion of Citigroup Inc. loans and securities covered by federal guarantees after unemployment reached a 26-year high, according to the Congressional panel overseeing bank-bailout programs.
The Federal Reserve Bank of New York projected a year ago that the Treasury Department might have to pay $3.96 billion on the guarantees if unemployment hit 9.5 percent, the panel said in a Nov. 6 report. The jobless rate rose to 10.2 percent in October, the Labor Department said last week.
The government hashed out the guarantees over a weekend in November 2008 to help shore up confidence in New York-based Citigroup and head off a run on the bank's deposits. The New York Fed analysis, which wasn't previously disclosed, raises questions about whether the Treasury Department and regulators were tough enough in the negotiations, said Joshua Rosner, an analyst at investment research firm Graham Fisher & Co.
"It looks like Citigroup got the better end of that deal," Rosner said.FN:
Citigroup one, taxpayers minus one.
The New York Fed estimated that losses on the assets would reach $34.6 billion under a "moderately adverse" economic scenario with unemployment at 8.2 percent in the fourth quarter of 2009, the oversight panel said in its report.
Under the "severely adverse scenario" of 9.5 percent, the losses would rise to $43.9 billion as more people became unable to pay the mortgages, auto loans and other obligations included in the guaranteed pool, the reserve bank projected. At that point, Citi would have exhausted its deductible, forcing taxpayers to begin paying out.FN:
Those fake stress tests coming back to haunt the administration. But now for the really fun part...
"The bank's employees are benefiting from the rescue. Citigroup plans to give 19 top executives annual salaries of about $500,000 along with more than $100 million in stock awards, according to an Oct. 22 report by the Treasury Department's special paymaster, Kenneth Feinberg."FN:
So with an unemployment rate greater than 10% these asshats get to take your hard earned tax dollars and award themselves great bonuses for their complete lack of ability.