A Tale of Two Citis: One bank explores stock sale, the other uses bail-out bonds


Citigroup (C) continues to send mixed signals about its long-term health. In one story, you find out that Citi needed to use the FDIC's emergency facility to raise $5 billion through government-guaranteed bonds. In another story, you read that Citi is in talks with the government about getting the government off its back through a sale of some of the stock the government holds.

Citi's use of the FDIC guaranteed bond facility could complicate any talks it's having with the government about reducing the government's 34 percent stake in the bank. The last banks to tap the FDIC facility were GMAC in June and U.S. Bancorp in May. In fact, the facility is due to expire on Oct. 31, but may be extended on a case by case basis for six months. So it's a lifeline Citi may or may not be able to tap again. These bonds are cheaper for Citi than normal debt because investors will accept a lower interest rate in exchange for the government guarantee.