US govt to inject $300 bn into Citigroup

The US government and Citigroup are working feverishly to hammer out a rescue plan for the beleaguered bank. If all goes according to plan, an announcement of some type of plan is likely in a couple of hours. The exact nature of plan remains unclear, but the US government is leaning towards some sort of cash infusion into Citigroup.

The plan will probably be a multi-layered one, which means the government could backstop losses on Citigroup's troubled assets as well. In exchange, Citi may issue preferred stock to the US government. While the amount to be covered under the plan is under discussion, the talks are focused on about USD 100�200 billion worth assets.

Citigroup lost 60% of its market value last week as investor confidence in the New York-based company's prospects faltered after four consecutive quarterly losses.

Bill Smith, President and Senior Portfolio Manager at Sam Advisors, said, �We would prefer a takeover. We would prefer someone like a Goldman Sachs or anyone of the other major banks that have a great management team in place, and we would like something like that happen. That way you can stabilise the situation at Citigroup. It would give them time to get through the credit crisis and then maybe six months�a year down the road they can start divesting the operation.
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