The LFB

Citi's Underwhelming Bailout

Mr. Salmon, aside from the issues you bring up what's your overall opinion for the way this work-out is structured?

We think it's interesting that the troubled assets are "ring-fenced" into a kind of accounting limbo, because it accomplishes the original intent of the TARP (taking toxic assets off balance sheet) without having required the USG to buy them.

Aside from providing a shield, the USG can now force Citi to modify the underlying mortgages as per Ms. Blair's new formula, which many believe has great potential.

This looks to us as a "test," meaning that the Citi deal will be the template for future work-outs of this sort.