Will Citigroup File Bankruptcy-Despite Receiving Bail Out Money From Taxpayers?
Posted Under: Bankruptcy, Credit Cards, Debt Relief
Taxpayers will lose hundreds of thousands of dollars in bail out money if Citigroup is unable to avoid bankruptcy. Citigroup received bailout funds to help them stay in business through Congress and to help the company avoid filing for bankruptcy.
Citigroup is a very large multiple complex company with over 200 million financial accounts from customers in more than 100 countries worldwide and filing bankruptcy would be a setback to the Citigroup’s account holders worldwide.
The America government has agreed to back approximately $3 billion in troubled obligations the bank has through the FDIC. The FDIC insures customer’s deposits up to approximately $100,000 for each account.
One Citigroup senior executives feels the bank isn’t in financial trouble although they has formed a plan to have the bank’s assets split into two different units to assist in improving its operation and avoiding possible bankruptcy.
The first unit consists of businesses the senior Citigroup executives intend to find a way to get rid of. The main most important unit or section is the retail banking worldwide, investment banking and transaction services for institutional clients. This section the senior executives feel is vital to the bank’s future existence.
Due to the large bailout funds received from congress, many of the banking analysts are said to be very optimistic about the bank’s chances of recovery and not having to seek bankruptcy. To also avoid the bankruptcy Citigroup is said to be selling many of the companies in its portfolio although this will lessen its financial superpower prominence.
The main reason for Citigroup’s financial issues is said to be the bank simply placing too much and too big a bet on consumer loans and mortgages that were risky due to many factors such as the loan to value ratings. Many of the riskier losses had to be eaten by Citigroup and this weakened the company’s ability to fight off bankruptcy. Will Citigroup rise again from its recent near-death experience?
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