Federal agencies bailing out Citi

U.S. gets $20 billion stake, backs as much as $306 billion in loans

President-elect Barack Obama was also working over the weekend to shore up confidence in the rapidly faltering economy. Obama signaled that he will pursue a far more ambitious plan of spending and tax cuts than what he had outlined during his campaign. Some Democrats in Congress, meanwhile, were calling for the government to spend as much as $700 billion to stimulate the economy over the next two years.

Obama's expected choice for Treasury secretary, Timothy Geithner, the president of the Federal Reserve Bank of New York, played a crucial role in the negotiations with Citigroup, whose shares have plunged 87 percent this year. While the initial focus of government officials was to help the embattled company, they may also seek to draw up an industrywide plan that could help other banks.

The plan could herald another shift in the government's financial rescue. The Treasury Department first proposed buying troubled assets from banks but then reversed course and began injecting capital directly into financial institutions. Neither plan, however, restored investors' confidence for long.

The plan could herald another shift in the government's ever-changing financial rescue plans. The Treasury Department initially proposed buying troubled assets from banks but then reversed course and began injecting capital directly into financial institutions.

Once the nation's largest and mightiest financial company, Citigroup lost half its value in the stock market last week as the bank confronted a crisis of confidence. Although Citigroup executives maintain the bank is sound, investors worry that its finances are deteriorating. Citigroup has suffered staggering losses for a year, and few analysts think the pain is over. Many investors worry that the bank needs additional capital.

With more than $2 trillion in assets and operations in more than 100 countries, Citigroup is so large and interconnected that its troubles could spill over into other institutions. Indeed, Citigroup is widely viewed, both in Washington and on Wall Street, as too big to be allowed to fail.