CITIGROUP. Today’s Wall Street Journal reports in its lead story that “the federal government agreed Sunday night to rescue Citigroup Inc. by helping to absorb potentially hundreds of billions of dollars in losses on toxic assets on its balance sheet and injecting fresh capital into the troubled financial giant.” The paper sees it as marking a “new phase in government efforts to stabilize U.S. banks and securities firms” because “after injecting nearly $300 billion of capital into financial institutions, federal officials now appear to be willing to help shoulder bad assets, on a targeted basis, from specific institutions.”

Under the details of the plan, Citigroup and the government have identified a pool of about $306 billion in troubled assets – Citigroup will absorb the first $29 billion in losses in that portfolio, while “three government agencies – the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. – will take on any additional losses, though Citigroup could have to share a small portion of additional losses.” Treasury will also inject $20 billion of fresh capital into Citigroup. The paper notes that this “comes on top of the $25 billion infusion that Citigroup recently received as part of the the broader U.S. banking-industry bailout.” The government will receive $7 billion in preferred shares – on top of the $20 billion of preferred stock it will get for its additional cash infusion.

·         The New York Times calls the plan “radical” and “complex” and describes it as the “government’s third effort in three months to contain the deepening economic crisis.” The Los Angeles Times says that this is "the largest single rescue effort thus far in the current financial crisis."

·         The Washington Post notes that “Citigroup is the largest U.S. bank by assets, with $2 trillion on its books. By contrast, Wachovia, which became the biggest bank to be done in by the financial crisis after being forced to sell itself to Wells Fargo this fall, has just over one-third as many assets.”

STIMULUS PACKAGE. In its lead story today, The Washington Post reports that Democrats “are rapidly ratcheting up plans for a massive fiscal stimulus program that could total as much as $700 billion over the next two years.” Rivaling the total of the economic rescue plan passed by Congress in October, the Democrats’ stimulus “would also be one of the biggest public spending programs aimed at jolting the economy since President Franklin D. Roosevelt's New Deal.” One adviser to the President-elect acknowledged that the new administration’s plan to create or preserve 2.5 million jobs “will cost substantially more than the $175 billion stimulus program he proposed during the campaign.”

·         Bloomberg notes that leading Democrats said that their goal is to push the bill through Congress at the start of the 111^th Congress, in order to get it to the President-elect’s desk on Inauguration Day.

·         The New York Times adds that members of the President-elect’s transition team have begun to acknowledge that “because of the gravity of the situation, Mr. Obama was leaning toward letting a Bush tax cut for the wealthy expire on schedule in 2011 rather than repealing it sooner.”

AUTOMAKERS. The Hill reports that “House Speaker Nancy Pelosi (D-Calif.) said Sunday America’s automobile manufacturers have to open up their books in order to secure a rescue effort from Washington.” The Speaker is quoted as saying on CBS’ Face the Nation: “What we are saying to Detroit should be very good news to them. And that is, we want to be their partners to go forward. We have to subject everything to scrutiny. Because why should the taxpayer dollar be put up to bail out poor performance, which is rewarded in the tens of millions of dollars?” The paper notes that “lawmakers plan to return in December after the Thanksgiving recess to work specifically on relief for the carmakers. House Majority Leader Steny Hoyer (D-Md.) said he was optimistic that such a package would pass once members had a better understanding of how Detroit would use the funds.”

NEW ECONOMIC TEAM. Today at noon EST, the President-elect will hold a news conference to introduce the leaders of his economic team, including Timothy Geithner, the current head of the Federal Reserve Bank of New York, who will be nominated to serve as Secretary of the Treasury, and former Treasury Secretary Lawrence Summers, who will lead the National Economic Council.

The Politico calls the Geithner pick an appointment that “that gets rave reviews on Wall Street and will likely get an easy ride through the Senate,” noting that “Geithner has served as president of the New York Federal Reserve Bank since 2003 but has spent almost his entire career in government service.” Nevertheless, “Geithner’s views on a variety of fronts remain a mystery. A career civil servant, he’s had a front seat to the current financial rescue efforts but not the tight control he’ll wield as treasury secretary. While he’s written and spoken widely about the key issue of financial regulatory reform, his views on fiscal policy, home foreclosures, and trade, among myriad other economic issues, are not well known.”

BUILDERS. Today’s Wall Street Journal reports that “the home builders’ lobby is ramping up its sales pitch for a $250 billion stimulus package called ‘Fix Housing First,’ arguing that financial markets won't recover until home prices stop falling. They are calling for a generous tax credit for home purchases and a federal subsidy that would lower a homeowner's mortgage rate.” The builders are pushing for the plan through full-page newspaper advertisements, “but face an uphill battle, with critics suggesting the proposal is too expensive and that it too heavily promotes home purchases rather than addressing loan modifications for delinquent homeowners.”

AFGHANISTAN. Today’s Los Angeles Times reports that the Marines are working on a plan to deploy as many as 15,000 more troops in Afghanistan to take on the Taliban. At present, the paper notes, there are more than 30,000 American troops, mostly from the Army, in Afghanistan, in addition to 30,000 troops from other NATO countries and allies. The paper notes that “finding troops will not be easy unless there is a significant drawdown in Iraq, where Marines have been deployed to Anbar province, west of Baghdad, since 2004. The Marines have about 22,000 troops in the sprawling province, assigned mostly to back up Iraqi security forces if the Sunni Arab insurgency attempts to rebound.”

COMMERCE. The Politico reports that New Mexico Gov. Bill Richardson "is slated to be named Secretary of Commerce by President-elect Obama, adding to the new administration's heavy roster of Clinton administration veterans." Though he wanted to be appointed Secretary of State, “the Commerce job is something of a consolation prize for Richardson, who ran for president during the Democratic primaries and comes equipped with one of the best résumés in Democratic politics, albeit one weighed down by a reputation for being a headline-seeker and independent operator.”

MN SENATE. The Minneapolis Star Tribune reports that “with Republican U.S. Sen. Norm Coleman clinging to a reed-thin lead over DFL challenger Al Franken – 180 votes as of Saturday night,” attorneys for both candidates “have already armored up for the next pitched battle: over whether to reexamine thousands of rejected absentee ballots." The "difference could come down to clerical errors on absentee ballots or even a challenge of Minnesota's law governing such ballots." On Wednesday, "both sides will face off at a state Canvassing Board hearing that could prove momentous, with discussion and perhaps a ruling on whether rejected absentee ballots are in or out."