Cash infusion: The $20 billion cash injection by the Treasury Department will come from the $700 billion package. The capital infusion follows an earlier $25 billion infusion into in which the government also received an ownership stake. That earlier $25 billion was part of a capital injection program for major banks.
Guarantee against losses: As part of the plan, Treasury and the Federal Deposit Insurance Corp. (FDIC) will guarantee against the "possibility of unusually large losses" by Citigroup on risky loans and securities backed by commercial and residential mortgages. Under the plan, Citigroup will assume the first $29 billion in losses. Beyond that amount, the government would absorb 90 percent of the remaining losses. Money from the $700 billion bailout and funds from the FDIC would cover the government's portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.
Government stake: In exchange for the guarantees, the government will get $7 billion in preferred shares of Citigroup.
Dividends: As a condition of the rescue, Citigroup cannot pay quarterly dividends to shareholders of more than 1 cent a share for three years unless it obtains consent from the three federal agencies. The bank is now paying a dividend of 16 cents, halved from a 32-cent payout in the previous quarter.
Executive pay: The agreement also restricts executive pay, including bonuses. But it doesn't get rid of Citi's top management as the government did with AIG.
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