Citigroup will take over seven subprime-plagued investment funds, with $49 billion in assets, and provide emergency support if necessary, to keep them solvent, the Wall Street Journal reports. The decision yesterday to bail out its affiliated SIVs—structured-investment vehicles—is a reversal of Citi's earlier decision to keep them off its balance sheet, and it led Moody’s to downgrade Citi’s credit rating.
The move, which came just two days after new CEO Vikram Pandit took over, likely spells the end of an industry effort, backed by the Treasury Department, to create an SIV rescue fund. Citigroup and several other banks decided they couldn’t wait for the slow-moving plan to develop. (More Citigroup stories.)