Fed Members Gave Their Own Banks $4 Trillion In Secret Bailouts

[Thriftville]

Link

During the 2008 crisis, the US gov partially nationalized Citi. Greatly diluting the share value by 95%, causing great damage to common stock holders. At the same time, the gov secretly buy up toxic assets of Citi.

Any idea why the gov need to dilute Citi to such great extent? Aren't those major shareholders politically linked?

[sgd]

The US government probably made money buying those toxic assets. I read the value of toxic assets could become 20cts to the dollar. And since they were going to print money anyway they first shored it up by the boatload, nationalised companies by force then start running the printing presses, once money flood the system and companies could borrow quite cheaply and become solvent again the value of toxic assets started to rise. Was this a robbery at global scale? There are lots of conspiracy theories but who knows?

[Thriftville]

yeah i read bout that open auction of toxic assets, but if Citi were to sell at 20c to a dollar, it will be forced to declare huge losses...

The point about Fed's secret bailout is to pay full value for those illiquid assets, so as to boost the balance sheet of the banks. please correct me if i'm wrong

[corydorus]

I wouldn't say great damage to shareholder.
The shareholders paid the CEO high salary to screw up the company to bust. They are lucky to even get 5%.