The Wall Street Journal reports that U.S. Agrees to Citigroup Bailout:

(emphasis mine)

Treasury has agreed to inject an additional $20 billion in capital into Citigroup under terms of the deal hashed out between the bank, the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corp. Treasury officials will charge a higher interest rate for the capital injection -- 8% for the first few years -- than it has charged to dozens of other banks now borrowing money under the government's the $700 billion rescue package approved by Congress last month.

In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed.

My reaction: As I said last week, I expect one last rally before stocks begin their next leg down. This bailout could be the catalyst which pushes the DOW back over 9000. In any case, I would not want to be short Citigroup going into tomorrow's open.

On an another note, while I believe the Citigroup rescue is wrong, I am not angry about it. After the 700 billion bailout passed congress, I stopped getting mad about injustices/dangers of government intervention, because it takes too much energy to get irritated over eash new bailout. Instead, I have accepted the simple truth: the government is going keep throwing ever bigger piles of money at the problem until faith in US treasuries and the dollar collapses.