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Citigroup bailout being hatched?

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By Michelle Malkin  •  November 22, 2008 12:26 PM

Click here for update: Citibail!

Where are our fiscal conservative watchdogs in Washington? Bloomberg reports that analysts are confident a rumored Citigroup bailout is being hatched. You’ll remember that the AIG bailout negotiations took place out of sight, in the dark of night, on past weekends. Looks like we may have another one cooking.

This is our money — despite what bailout stooge GOP Rep. Joe Knollenberg and his grubby-handed colleagues on both sides of the aisle may think — and we deserve input. GOP leaders, where are you? Wake up and smell the money grab. Get to work. Chop-chop:

Citigroup Inc. will probably get rescued by the U.S. government after a crisis in confidence erased half its stock-market value in three days, investors and analysts said.

Citigroup has more than $2 trillion of assets, dwarfing companies such as American International Group Inc. that got U.S. support this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke may favor a rescue to avoid the chaotic aftermath of Lehman Brothers Holdings Inc.’s bankruptcy in September.

“There is no question that Citi is in the category of ‘too big to fail,’” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion. “There is a commitment from this administration and the next to do what it takes to save Citi.”

…Including a $25 billion capital injection from the U.S. Treasury under the $700 billion Troubled Asset Relief Program, the company has at least $50 billion of capital above the amount required by regulators to qualify as “well capitalized.” Capital is the cushion banks must keep to absorb losses and protect depositors.

Deutsche Bank AG analyst Mike Mayo wrote in a report today that the bank’s $25 billion of reserves, when combined with other resources, “should be enough to cover estimated cumulative losses of $50 billion on loans.’” Mayo rates the stock “hold” and has a $9 price target.

“With Citi being as big as they are, the government will make a special case and step in and find another reason to dispose of more TARP funds,” said Matt McCormick, a portfolio manager and banking analyst at Bahl & Gaynor Investment Counsel in Cincinnati, which manages about $2.9 billion and doesn’t own Citigroup stock or debt.

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