Special Access:With the Fed Chairman

Throughout the financial crisis,Ben Bernanke,Chairman of the Federal Reserve,has exhibited quiet leadership.Mr.Bernanke recently shared his reflections on the course of the crisis and what might be done about it.Our nation is being tested by economic challenges,the central banker said,but there are more tools the Federal Reserve could use.The Fed could purchase long term Treasury bonds or agency debt.It could backstop liquidity in financial markets beyond banks.Further rate cuts are certainly feasible,but obviously the scope is limited:the Fed funds rate has already been cut to 0.5%.The rate cuts were rapid and proactive.Nonetheless,the Fed's liquidity programs have failed to return private credit markets to normal,although they have been helpful in lowering some spreads.The market itself must ultimately address financial problems.

Shop Talk

Hello to the Czech Republic,where I advertised this week.You are an ally and have a picturesque capital,Prague.It's good to have you reading today.It's been noted that the price of gas is so low,the economy should be bouncing back already.If your income is in jeopardy,though,and the value of your home keeps declining,the price of gas doesn't matter enough to make you spend more.It helps to have cheap gas,but it just does not save the recessionary day,as much as we might wish for such a simple solution.There is nothing simple about the financial crisis.Hence the public's angry mood.Yet it is the weekend.It's time to think about old cities like Prague or Kiev,perhaps the home of your ancestors.Think about those European days so many of you came from-or at least admire.

Ford In Best Shape

Of the three U.S. automakers,Ford Motor Company is in the best financial shape.According to CEO Alan Mulally,Ford has enough money to make it through next year without government assistance,and may never need it at all.Nonetheless,the old line firm would like some aid to fully ensure it survives,and is appealing to Congress along with General Motors and Chrysler today.Ford introduced six new models at the recent Los Angeles auto show,including a hybrid version of the Fusion.Ford is staking its future on small,fuel-efficient models,rather than the trucks of its past.

A Big Investor's View

Prince Alwaleed bin Talal of Saudi Arabia,a Citigroup investor since 1991,described Citi as a core investment for him.The fact that CEO Vikram Pandit was left in office proves that the government doesn't want to run the company.I expect to see Citi's dividend raised in three years,the prince said.Until then,we are prepared to accept the dividend cut.We need to give Mr.Pandit some time.He's a man of a mission,of strong vision.Citi is still far from being a nationalized entity,Prince Alwaleed insisted.The deal allows a bounce-back if the markets improve.Frankly,the recent share price destruction is the fault of Citi's previous management,His Royal Highness observed.

Customers Protect Citi

Citigroup's deposit base and loan book are growing,Gary Crittenden pointed out.There will be continuous re-engineering of the company,and that's healthy for it.The deal could be a template for other banks.We brought our assets down by 300 billion dollars.Our legacy assets are exposed to the consumer,but our ex-U.S. customers are mostly in the Citigold category,which should mute the impact of the financial crisis,Gary Crittenden maintained.

CFO on the Rescue

Citigroup's Chief Financial Officer,Gary Crittenden,says the rescue package is not a nationalization.Citi's Tier One ratio is among the highest in the industry.The rescue package does not require Citi to increase lending or change strategy.We haven't won or lost,Mr.Crittenden said,just increased confidence that Citi can do what it has to do in this environment.The talks with the government were highly collaborative.We got to a place that was good for the government,the taxpayer and Citigroup.Today we have the strongest capital ratio of any large bank in the financial services industry.We worked hard to get a package that should have some success,the CFO noted.

Focus on Citigroup:Inside the Rescue Package

Citigroup is a firm that is so large and complex,it's difficult to ascertain just how large it is.There are various rankings of it,depending on what factors are considered.Some say it is the largest bank;some say it is second-largest;it has even been described as fifth largest.In any event,it has around two trillion dollars in assets.It's off-balance sheet entities amount to about 1.23 billion dollars.Those are the troubled ones.Citi's Smith Barney brokerage alone has over 15,000 advisors.When Citi's announced job cuts are completed,it will have about 300,000 employees in 106 countries.The U.S. government has fully committed itself to Citi's survival,believing its loss would be devastating to the world economy.The U.S. is injecting a further 20 billion in cash into Citi;is acquiring 27 billion of Citi preferred stock with an interest rate of 8%;and is guaranteeing 306 billion of Citi securities,loans and commitments.No management changes are required of Citi;executive compensation must be submitted to the government for approval;the quarterly dividend must be reduced to one cent a share for the next three years;and job cuts will be global,across Citi's multiple businesses.The government will acquire a 7.8% stake in Citigroup.