Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government's portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.

In exchange for the guarantees, the government will get $7 billion in preferred shares of Citigroup. In addition, Citi said it will issue warrants to the U.S. Treasury and the FDIC for about 254 million shares of the company's common stock at a strike price of $10.61.

As a condition of the rescue, Citigroup is barred from paying quarterly dividends to shareholders of more than 1 cent a share for three years unless the company obtains consent from the three federal agencies. The bank is currently paying a dividend of 16 cents, halved from a 32-cent payout in the previous quarter. The agreement also places restrictions on executive compensation, including bonuses.

Importantly, the agreement calls on Citigroup to take steps to help distressed homeowners.

Specifically, Citigroup will modify mortgages to help people avoid foreclosure along the lines of an FDIC plan that was put into effect at IndyMac Bank, a major failed savings and loan based in Pasadena, Calif.

Cashing in on double standards

The feds pump another $20 billion into teetering Citigroup Inc. and insure $306 billion in bad assets just days after Congress slaps Detroit's automakers for failing to table "a plan" to justify $25 billion in loans and folks 'round here cry, "Double standard! Double standard!"

In the inimitable words of teenagers everywhere: "Duh." Of course there's a double standard.

They're everywhere -- in families, on sports teams, in workplaces and certainly throughout the halls of Congress, where favor (or at least the benefit of the doubt) tends to smile on those who grease the skids of power with campaign contributions to the right people in the right places.

In this humiliating exercise called "Detroit's Big Three goes to Washington," their tormentors-in-chief are emerging: Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee; Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee; Sen. Majority Leader Harry Reid, D-Nev.; and House Speaker Nancy "until-they-show-us-a-plan-we-can't-show-them-the-money" Pelosi, D-Calif.

Double standard? You bet, but it's more than a geographic cabal of coastal Democrats and anti-union, pro-foreign auto Republicans from the South that clearly has it in for Detroit. It's money and political alliances, folks, neither of which the boys at General Motors Corp., Ford Motor Co. and Chrysler LLC have in abundant supply.

How come Citigroup gets a pass and a big fat check? First, failure of its sprawling operations truly would pose a mortal threat to the global financial system. Second, the banking giant is exceedingly well connected to the campaign wallets of the very same folks -- and their allies -- who are poised to foist draconian terms on Detroit to keep it afloat.

Among Citigroup's illustrious board of directors is Bob Rubin, the former Clinton Treasury secretary who serves as "senior counselor" to Citi's management, has been a consigliere of sorts to President-elect Barack Obama and is a mentor to his would-be treasury secretary, Tim Geithner.

It gets better. This being Thanksgiving Day, launch Google and type in "Chris Dodd campaign contributions." Up will pop a link to an interesting site called opensecrets.org, a product of the independent Center for Responsive Politics. Who was the top contributor to Dodd between 2003 and 2008?

Citigroup -- or, more precisely, its political action committee, whose contributions totaled $316,494. In the 2008 election cycle alone, Dodd received $157,194 from Citigroup's PAC. From AIG, he garnered $223,478 between '03 and '08, taking in $98,100 this year from the beleaguered insurer propped up by $150 billion of taxpayer money.

Move on to Barney Frank, whose initial bill outlining a loan program for the automakers would have given the government an equity stake equal to whatever an automaker borrowed from the Treasury.

This year, he received $213,750 in contributions from securities and investment firm PACs; $180,048 from insurance companies; and $111,700 from commercial banks. Citigroup, however, is not among those listed.

Pelosi? She received fairly modest contributions, namely $15,600 or less, from J.P. MorganChase, Citigroup, Goldman Sachs, Fannie Mae, Morgan Stanley and the Mortgage Bankers Association -- all of which have a clearly vested interest in the continuing federal bailout of the credit markets and nearly failing firms like Citigroup and AIG.

None of them, according to opensecrets, received meaningful contributions from Detroit's automakers, whose astute reading of the political winds persuaded them to favor Republicans in their PAC contributions. Yet powerful Democrats now are poised to have as much -- if not more -- influence on the future direction of the American-owned industry as their managements and directors, combined.

http://www.detnews.com/apps/pbcs.dll...ON03/811270392

Double standard? Certainly. Citigroup, for as much as it has undermined its business and screwed up the American financial system, has the right friends in the right places. Detroit mostly doesn't.

http://www.detnews.com/apps/pbcs.dll...ON03/811270392