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Thursday, January 29, 2009

Late Night: Credit Union Bailout, Ford Job Cuts, Citi Oversight

by Calculated Risk on 1/29/2009 12:39:00 AM

Just a few more stories to discuss ...

From the WaPo: U.S. Aid Goes to Credit Unions

The federal government yesterday expanded its bailout to another vulnerable sector, saying it will inject $1 billion into a nonprofit company that provides banking services to the credit union industry.

The government also will guarantee tens of billions of dollars in previously uninsured deposits in a move that aims to forestall a crisis of confidence in a system once considered unshakable because of its conservative business practices.

The National Credit Union Administration ... said it was acting to protect the nearly 90 million Americans who use a retail credit union.
The story is interesting. Many Credit Unions send funds to U.S. Central Corporate Federal Credit Union to invest, and Central invested in ... what else ... mortgage-related securities!

From Bloomberg: Ford Credit Will Cut 1,200 Workers as U.S. Auto Sales Slide
Ford Motor Co.’s finance unit will eliminate 20 percent of its workforce, or about 1,200 workers, as part of a cost-cutting move as U.S. auto sales rate falls to the lowest since 1982.
Expect a huge loss tomorrow too!

From the WSJ: Agreement Boosts Citi Oversight
Citigroup Inc. has recently started operating under a regulatory agreement that could subject the company to greater restrictions on its operations.
...
In a contract spelling out terms of the government bailout package, Treasury required Citigroup to disclose whether it or any of its subsidiaries are subject to any cease-and-desist orders, memorandums of understanding, consent orders, or other enforcement actions or regulatory agreements.

In a document attached to the contract, Citigroup didn't check a box indicating that it isn't operating under any such directives. Instead, the document states: "Certain items previously disclosed to the company's appropriate federal banking agency."
That is a little vague ... but clearly there is a cease-desist-order, MOU, or some other directive.