Just when Citigroup was in full swing to hold a press conference in an attempt to set the record straight. Pen "Fun" Pavilion www.biquge.info

Located in the Federal Reserve headquarters building in Washington, D.C., a number of top federal economic giants, including Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Paulson, gathered together. to discuss federal funding to intervene in an emergency.

It's just that the original target of the aid was changed from Bear Stearns to Citigroup, the largest private bank in the United States. The latter is in the midst of a storm, and its stock price has fallen from a peak of $36 to the current $25.57 in a day, a drop of more than $10, which is also the first time for a super financial giant with a market value of more than $200 billion.

Although before the subprime mortgage crisis in 2007, Bear Stearns' stock price was as high as $157 per share, and it is still as high as $75, but everyone knows that the crisis at Bear Stone has not gone away.

They only temporarily survived for a while because of the Citigroup scandal and the revelations of Lehman Brothers, and when the Citigroup crisis was resolved, Bear Stearns could not avoid bankruptcy and liquidation.

As the chairman of the Federal Reserve, Bernanke broke the silence by speaking first, "Gentlemen, I believe you already know the topic of this meeting. Before the meeting officially begins, I would like to make one thing clear that according to our Fed predictions, the scope and depth of this subprime mortgage crisis will not enter a serious period until next year, that is, at the end of January and early February 2008. But due to the selfish and stupid actions of some people, the situation has suddenly intensified, forcing us to take immediate action to avoid being dragged down by some people and causing the stock market to collapse as a whole. ”

U.S. Treasury Secretary Paulson nodded and said, "Yes! According to the consensus of my White House economic advisers, there is still some time before the subprime mortgage crisis erupts, and we planned to take advantage of this time to adjust the strategy of the whole country and complete the firewall arrangement in the financial industry, but because of the stupidity of Lehman Brothers, the entire financial industry is about to collapse." We are convening you here today to negotiate a mutually acceptable condition, and then the Federal Council will invest various amounts of bailout funds into the stock market and major financial groups according to the outcome of this meeting to help you get out of the financial crisis. ”

The leaders of the major consortia sitting below looked at each other a few times, but did not speak, because the total amount of funds that the federal government can use to bail out the financial industry is not too large, including the emergency funds approved by the Ministry of Finance and the Parliament, financial institutions led by the Federal Reserve have also taken out up to $800 billion to bail out up to 6,400 financial institutions across the country. (Non-gratuitous assistance)

These people here are all leaders of large consortia, and everyone wants to get the most part for their financial companies and investment banks, but they are afraid of being besieged by others, so they are all silent, wanting to see how big each other's hole cards and appetite are.

"Since we don't talk about it, let Mr. Tarulo talk about our Fed's rescue plan. Bernanke knew this, but he didn't care, because everyone would choose to protect themselves in such a crisis.

One of the five special directors of the Federal Reserve, who is responsible for communicating and coordinating the financial industry, he heard Bernanke's instructions and stood up and said, "Dear gentlemen and women, I will introduce you to the first part of the Fed's rescue plan in this crisis, please look at the big screen." ”

Tarulo has been with the Federal Reserve for eight years, and over the years, he has built good relationships with many of the biggest names in the financial industry, so he is in charge of the rescue and distribution of funds, taking care of every aspect.

In fact, Tarulo confidently put the tables he made on the big screen, and every number of them was honed by himself and decided by the Fed's top management.

"Due to the difficulties in the financial industry caused by the subprime mortgage crisis, the Fed's estimate is that it has not yet entered the peak of the crisis, so after consulting with the Ministry of Finance, we decided to put the limited funds into the bailout in batches to ensure that there will be no problems in the repayment ability and risk resistance of each company. Of course, in the end, everyone still needs to work hard to save themselves, and external rescue funds are not the key to the financial industry's resurrection. ”

"Now I will introduce to you the first part of the allocation plan of the rescue funds, a total of 230 billion US dollars, we will select the most serious 25 financial institutions and their own business problems, but inevitably affected by the financial crisis 300 enterprises, together to share this part of the rescue funds. The only way to obtain funds is to provide the corresponding margin and equivalent collateral, and the interest rate is calculated at 120% of the interbank interest rate for the same period. And we will enjoy all the benefits of this part of the equivalent during the mortgage period free of charge, and will not bear any losses. Tarulo knew that the plan itself was a major reshuffle of the Federal Reserve's efforts to reshuffle the entire federal financial industry.

They have prepared a huge amount of nearly $800 billion in three stages, which will be invested in the financial market at the lowest point, and the resulting profits such as a steady rise in stock prices and a recovery in the book value of equivalents are estimated to exceed $500 billion, most of which will be obtained by the 12 Federal Reserve Banks controlled by the consortium, but the Federal Reserve and the Treasury Department will also reap hundreds of billions of dollars in profits.

So the plan was passed in full by Congress without reservation, and those lawmakers were even eager to pay their own money to participate in the plan.

Because everyone knows that the financial tsunami caused by the subprime mortgage crisis will eventually pass, and these rescued financial institutions will stabilize sooner or later, and their stock prices will rise steadily, and the benefits brought by this alone will be enough to offset all the risks.

"Can you talk about the specific ability to resist risks? For example, the division of expected returns and losses. John Jr., the leader of the Morgan consortium, who holds the three Federal Reserve Banks in his hands, pointed to the crux of the matter, knowing that in this invisible battlefield, any small move can bring two completely different results.

With hundreds of billions of dollars invested at every turn, even the deep-pocketed Morgan consortium has to be cautious and walk on thin ice.

With Bernanke's permission, Tarulo continued, "Okay, I'm here to help. According to our preliminary estimates, the danger of this rescue fund is very large, and our internal assessment is most optimistic that we will bear 20-35% of the loss, because it is inevitable that a large part of the enterprises will go bankrupt and liquidate, but the remaining enterprises must provide compensation for this. So we made a decision, that is, any company that receives the rescue must make a commitment within a unified framework. That is, the first 10% of the total scale of rescue funds must be borne by the rescued enterprise itself, and once the loss exceeds 15%, the Federal Reserve and the Ministry of Finance must immediately seal the collateral provided by the enterprise. As soon as the loss exceeds 50%, the ownership of the collateral is automatically transferred to the Federal Reserve, which will have all legal rights to dispose of the collateral. ”

"Okay, I'm okay with that. Little John thought about it and felt that it was very cost-effective and very safe, and he had no reason to refuse such a business that was completely profitable.

After thinking about it for a while, Hinrich, chairman of the Financial Guarantee Insurance Corporation of the United States, who participated in the meeting, said, "According to the documents sent to us by the Federal Reserve, our insurance industry needs to raise $50 billion in this three-phase rescue plan." But at the same time, we are liable for claims against all the financial industry, is that unfair to us?"

For others, this business is a sure bet, but for the Federal Financial Guarantee Insurance Corporation, this business is dispensable, because all the financial institutions expect to put a lot of insurance in the insurance company, and they make money, and the insurance company doesn't get any more points, but if they go bankrupt in large numbers, the insurance company is doomed.

Due to the overall environment, the Federal Financial Insurance Corporation has spent more than $13 billion in payment policies over the past five months, and according to their forecasts, this figure will continue to rise until the end of 2008, when their cumulative policy payments may exceed $30 billion, which is equivalent to the company's total revenue over the past seven years.

"Mr. Hinrich, I have to remind you that the role of federal insurance in this rescue package is irreplaceable, and it is precisely because of the special nature of your industry that we have included the insurance company in the rescue fund list in order to avoid your company being also involved in the cloud of bankruptcy. But your company does not have to provide the corresponding funds, but takes out the same collateral, guaranteed by the Federal Reserve, and sets aside the corresponding funds from the twelve Federal Reserve Banks to invest in the rescue plan, and the final profit is divided into 20 shares, of which the Federal Insurance will get 2 shares, and the remaining 12 Reserve Banks will each get 1.5 shares, you should have no opinion, right?" Bernanke said according to the plan that had been agreed on a long time ago.

Hinrich shook his head, "It's not fair. We have paid out more than $13 billion in policy benefits during the financial crisis, and if the ultimate relief benefits do not meet the expected goals, federal insurance will deny payments to other financial institutions, especially those who are being rescued. ”

The problem with federal insurance is that the company's cash reserves, despite tens of billions of dollars, are less than half of what they expected to pay, and if they get involved in a seemingly profitable rescue plan, they risk dying on the eve of success.

This is obvious, and now the Federal Insurance itself has to rely on the Federal Reserve's Reserve Bank to provide financial bailouts, let alone $50 billion to bail out other companies.

But the same difficulty is here, the insurance company that has been losing money cannot file for bankruptcy, it is coerced by the federal government and the Federal Reserve and the big conglomerates, forcing the latter to fulfill the unfinished contract, otherwise the federal insurance will seize the net assets of the federal insurance, and the federal government will take over to pay the amount of financial guarantee insurance; in this way, the federal insurance on the one hand bears huge losses, on the other hand, it cannot come up with funds to invest in the rescue plan, and the estimated losses will be as high as more than 55 billion US dollars, such an astronomical figure, no one can accept。

Walker, who was sitting on the side and wanted to watch the excitement for a while, couldn't help it, knowing that the situation of Citigroup has reached the point where it must be rescued with capital injection within a few days, and it must be immediately guaranteed by federal credit, otherwise Citigroup's stock price will completely collapse, and no one can take this responsibility.

Walker couldn't sit still any longer at the thought of millions of dollars lost every minute, and he stood up sharply and interrupted the conversation between the two, "Please wait a moment, sir! I have to remind everyone here that the Citigroup matter has reached the point where it must be resolved, and if the situation is allowed to continue for a few days, then we don't need to discuss how to rescue the financial institutions, just cancel this industry." ”

In normal times, although the Rockefeller consortium also occupies three seats in the Federal Reserve, there will never be a result that as soon as he speaks, others will be silent.

But with the entire financial industry almost being kidnapped by Citigroup, no one dares to veto the necessity and urgency of a Citigroup rescue. Everyone knows that if it drags on any longer, it may not take two or three days for the entire financial industry to evaporate more than $1 trillion in paper value. And as time goes on, more than $30 billion will be lost every day after that.

No one dared to bear the consequences, and in the silence, Federal Treasury Secretary Paulson frowned and said, "Although the rescue of Citi is in our plan, it is clear that Mr. Walker, you yourself have violated certain principles that cannot be violated, and let people seize the handle, which is the key to the problem." ”

"I don't understand what you're talking about. All I know is that if Citigroup collapses at the beginning, then the entire American financial industry will be plunged into the most bone-chilling winter. Walker sneered, he had never been fond of such groundless accusations.

Little John, who was sitting across from him, couldn't hold back for a moment and laughed out loud, "Walker, you're still so humorous. Who doesn't know that Rockefeller's financial institutions have more than $20 billion in cash flow at any time, and if you were given a day to collect it, maybe $100 billion would not be a problem. But now a full three hours have passed, and Rockefeller has not invested more than $200 million in the stock market. Do you want the Fed to come to Citi's rescue with us?"

Of course, Walker wants to say yes, the reason why he waited not to rescue is because Rockefeller has a bigger abacus, and since there is free money, why not use some more?