Leave your feedback Share Copy URL https://www.pbs.org/newshour/show/citigroup-averts-collapse-with-government-rescue-plan Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Transcript In an effort to stabilize the teetering American financial giant, the U.S. government stepped up to help Citigroup by injecting $20 billion in capital and agreeing to shoulder most potential losses for the bank's high-risk assets. A New York Times reporter and economic analysts discuss the implications of the rescue. Read the Full Transcript Notice: Transcripts are machine and human generated and lightly edited for accuracy. They may contain errors. JUDY WOODRUFF: Well, just before President-elect Obama focused on his future economic plans, President Bush announced the latest package to deal with the threatened meltdown of Citigroup.Under the plan, the federal government will invest another $20 billion in the bank and provide a safety net by absorbing losses from a pool of troubled mortgage-backed assets. Those securities are said to total more than $300 billion.Eric Dash has been covering the story for the New York Times, and he joins me now.Eric Dash, thank you for being with us. In the story you wrote today, you call this a "radical plan." Why so? ERIC DASH, New York Times: Well, it's really an unprecedented step that the government is taking here. You know, Citigroup, there was a really major crisis of confidence in the company. While its executives maintained that it had a strong financial position, investors were saying otherwise and voting with their shares. They sent the stock down 83 percent last week. JUDY WOODRUFF: Well, when the government said today that they're going to guarantee over $300 billion in these troubled assets in exchange for an ownership stake, help us understand how that works. ERIC DASH: Well, what the government is basically doing is providing an insurance policy for Citigroup, and Citigroup is paying for it by having the government invest in it.And so what's happening is the government is saying we're going to absorb all losses over a certain level, so Citigroup has said we're going to absorb up to $29 billion in losses, and then anything in addition to that, the government's going to absorb the losses on. And in return… JUDY WOODRUFF: Help us — go ahead. ERIC DASH: … they're going to invest the $20 billion in the company. JUDY WOODRUFF: Help us understand why this was necessary. You wrote over the weekend, Eric Dash, about the recent history of Citigroup, the risky investments that were underway, the lack of oversight. Give us a thumbnail on that. ERIC DASH: Well, Citigroup was really an amalgamation of a bunch of companies that had been bought up over the years and never really put together well. And the company really didn't have a lot of good risk management practices or controls.And so at the very time that the housing market was exploding and — booming, excuse me — Citigroup's management team decided to plunge into it, headfirst. And when the housing market went belly-up, it started suffering massive losses.Over the last year, it suffered some $65 billion worth of losses. And investors are now worried, what else is on its balance sheet?So this action was to give the investors some certainty of sort of how much losses or how many additional losses investors could suffer in the future.