Government Injects $20 Billion Into Citigroup

The government announced Sunday night that it is stepping in to rescue Citigroup, which federal regulators say is too big to fail. Shares of the bank lost more than half its value last week and finished at less than $4 a share. Investors questioned the soundness of the bank, and by Friday night, Citigroup executives had turned to the government.

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STEVE INSKEEP, host:

NPR's business news starts with the Citigroup bailout. Apparently, investors did not believe Citigroup's reassurances that its finances were sound. And by Friday night, Citigroup executives turned to the government. Now, after another weekend of activity, federal regulators apparently have concluded Citigroup is too big to fail. And last night the government announced it was stepping in. It's the latest of several bank rescues in recent months. Under the Citigroup plan, the government has agreed to absorb potentially hundreds of billions of dollars in Citigroup's losses, and it will also immediately pour another $20 billion into the bank. That's on top of $25 billion previously committed. The terms also include limits on executive compensation. Officials hope this move restores confidence in the bank and in the larger financial system.

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