The US government is to inject some 16 billion euros into Citigroup Inc and back up to 243 billion euros of the bank’s assets in an attempt to stabilise the company and restore confidence in the wider financial system.
In exchange for the support, Citigroup will issue preferred shares to the federal government, stick to executive pay limits and carry out a government programme to help make home loans more affordable for borrowers in difficulty.
Meanwhile, president elect Barack Obama is due to announce his economic team that will try to steer the US and the world out of the worst recession since the Great Depression.
Head of the New York Federal Reserve Bank Timothy Geithner, who is set to become Obama’s Treasury Secretary, worked with officials on the rescue plan.
Lawrence Summers, a former Treasury Secretary under Bill Clinton, will be director of the National Economic Council.
By unveiling his financial team early, Obama signalled the priority he places on addressing the current economic turmoil.