Citigroup Bail A joke, But not a surprise !

The Citigroup bail-out announced is not a surprise, but it raises more questions and clarifies one. We now know why TARP was changed to focus on ABS as FDCI just gave a guarantee for 300bn of asset for a bank that early last week said they were in better shape than their competitors. With TARP only 700bn it would not be able to do what FDIC are doing with just one bank. Some of the questions to ask are:

1. Do FDIC have capital to make that guarantee?


2. What do the other banks need in US and rest of the world need?


3. What levels of deferred-tax assets do other banks have?


4. Why is Pandit not out?

So I doubt the Geithner, Summers and a fiscal package of US 500-700bn inspired rally from late Friday has any major legs today.