The federal government has agreed to a massive bailout of the banking giant Citigroup that could cost taxpayers almost $300 billion. The bailout is seen as the most sweeping rescue ever of a US bank. As part of the plan, the government will inject $20 billion of new capital into Citigroup, on top of $25 billion it already gave the bank. In addition, the government has agreed to back some $300 billion of Citigroup’s risky loans and securities. Before the bailout was announced, Senator Chuck Schumer of New York appeared on ABC’s This Week and said the government must take action to help Citigroup.
Senator Chuck Schumer: “I think what we learned with Lehman Brothers is you can say that the company made mistakes — and, boy, did they — but the ramifications of letting them go under affect millions of innocent people. And I think most economists who looked at letting Lehman go down now regard that as a mistake.”
Last week, shares in Citigroup plunged by more than 60 percent. The bailout of Citigroup was coordinated by the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation.
President-elect Barack Obama has revealed plans to pursue a massive economic stimulus program by creating 2.5 million jobs and spending as much as $700 billion to improve the nation’s infrastructure. Obama unveiled the plan on Saturday during the weekly Democratic radio address.
President-elect Barack Obama: “I have already directed my economic team to come up with an economic recovery plan that will mean 2.5 million more jobs by January of 2011, a plan big enough to meet the challenges we face that I intend to sign soon after taking office. We’ll be working out the details in the weeks ahead, but it will be a two-year nationwide effort to jump-start job creation in America and lay the foundation for a strong and growing economy. We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead. These aren’t just steps to pull ourselves out of this immediate crisis. These are the long-term investments in our economic future that have been ignored for far too long.”
Aides to Obama have said he is also reconsidering his campaign pledge to repeal the Bush tax cuts for the wealthiest Americans. Instead of repealing the tax cuts, Obama is now considering letting those tax cuts expire as scheduled in 2011.
At a press conference today, Obama is expected to introduce Timothy Geithner as his nominee to be Treasury Secretary. Geithner is currently the president of the New York Federal Reserve Bank. Geithner played a key role in the government bailouts of Bear Stearns Cos. and American International Group. He is seen by many as a protege of former Clinton administration Treasury chief Robert Rubin. During the late 1980s, Geithner worked at Henry Kissinger’s firm, Kissinger Associates. President-elect Obama is also expected to name Lawrence Summers to be the director of the National Economic Council in the White House. Summers served as Treasury Secretary under President Clinton and is former president of Harvard University.
Advisers to Obama say he has decided on several other key cabinet posts. The President-elect is on track to name Senator Hillary Rodham Clinton as Secretary of State and New Mexico Governor Bill Richardson as Commerce Secretary. Richardson served as UN ambassador under President Bill Clinton and later as Energy Secretary. Eric Holder is expected to be named Attorney General. Holder held the number two slot in the Justice Department under Bill Clinton. Other expected cabinet nominees include former Senate Majority Leader Tom Daschle of South Dakota as Secretary of Health and Human Services and Arizona Governor Janet Napolitano as Homeland Security Secretary.
The Pentagon is considering a plan to send more than 20,000 troops to Afghanistan over the next twelve to eighteen months as part of a so-called surge. Defense Secretary Robert Gates said he and top commanders had discussed sending five brigades to Afghanistan, including four brigades of combat ground forces as well as an aviation brigade. Gates said, “I think it’s important that we have a surge of forces before the election.”
The United Nations Relief and Works Agency is warning Gaza faces a humanitarian “catastrophe” if Israel continues to prevent aid reaching the territory. Karen AbuZayd, commissioner general of UNRWA, said the human toll of this month’s sealing off of Gaza was the gravest since the early days of the Palestinian intifada eight years ago.
In Iraq, at least eighteen people have died in a pair of rush-hour bomb attacks in Baghdad. A roadside bomb blew up a minibus killing thirteen female employees of Iraq’s trade ministry. A female suicide bomber blew herself up outside the Green Zone, killing five people.
On Friday, thousands of supporters of Shiite cleric Muqtada al-Sadr marched to protest a security deal that would allow US troops to stay in Iraq until 2011. Protesters toppled an effigy of President George Bush. The demonstration took place in Baghdad’s Firdos Square, where US forces pulled down a statue of Saddam Hussein in 2003.
In Venezuela, allies of President Hugo Chavez won regional elections in seventeen of Venezuela’s twenty-two states. The opposition won two of Venezuela’s largest and wealthiest states, Zulia and Miranda. The opposition has also taken control of city hall in the capital of Caracas.
And in Georgia, thousands gathered this weekend outside the gates of Fort Benning to demand the closing of the Western Hemisphere Institute for Security Cooperation, formerly known as the School of the Americas. Six people were arrested and charged with criminal trespass. Frequently dubbed the “School of the Assassins,” critics say the school’s graduates are responsible for some of the worst human rights abuses in Latin America.