Another great chart from Doug Short confirming my belief that markets declines might have gone a little too far in a very solidly visual way...
Citi Bailout terms are out and in my opinion they are not as bad as some might have expected. The worst case outcome has been prevented in my opinion.
"Size: Up to $306 bn in assets to be guaranteed (based on valuation agreed upon between institution and USG).
Term of Guarantee: FDIC standard loss-sharing protocol: Guarantee is in place for 10 years for residential assets, 5 years for non-residential assets.
Deductible: Institution absorbs all losses in portfolio up to $29 bn (in addition to existing reserves)
Any losses in portfolio in excess of that amount are shared USG (90%) and institution (10%).
USG share will be allocated as follows: UST (via TARP) second loss up to $5 bn; FDIC takes the third loss up to $10 bn;
Preferred Stock: Institution will issue $7 bn of preferred stock with an 8% dividend rate (under terms described below). $4 bn of preferred will be issued to UST. $3 bn will be issued to the FDIC"
