Citigroup's Nov. 24 bailout includes $22.5 billion from the U.S. Treasury to Citi in preferred stock and common-stock warrants; $7 billion more from Citi to FDIC and Treasury "as payment for a government guarantee" on a troubled $306 billion Citi loan portfolio, on which Citi would pay the first $29 billion in losses and government most of the rest; and a three-year Citi dividend reduction, to a token 1 cent a share.

Citi's Sept. 29 plan to buy Wachovia Corp. included $10 billion from private investors for Citi preferred stock and common-stock warrants; $12 billion from Citi to FDIC and Treasury for a government guarantee on a troubled $312 billion Wachovia loan portfolio, on which Citi would pay the first $30 billion in losses, and government most of the rest; and a three-year partial dividend reduction, to 16 cents a share.

That's kinda similar, no? We suspected at the time that the Wachovia bid would have rescued Citi, almost as much as it rescued Wachovia. Wells Fargo & Co.'s sweeter offer, which derailed Citi's attempt, was painted by canny Wells spokespeople as a better deal for everyone except Citi. But if it ended up forcing the subsequent Citi bailout, Wells-Wachovia will have cost taxpayers even more than the billions in federal tax breaks (estimated at $25 billion by Griffin Financial Group, King of Prussia) that PhillyDeals previously reported.

Standard & Poor's cut counterparty and senior-secured bank loan ratings on J.G. Wentworth Inc., the Bryn Mawr "structured settlement" firm that buys insurance payouts, to 'CCC+' from 'B-', and warned it could cut again. "Wentworth's financial position could deteriorate further unless it receives additional capital to meet margin calls, fund structured settlement/annuity purchases, and pay fixed obligations," due to "severe dislocation of the credit markets" that have "rendered unprofitable" some financing transactions, said S&P analyst Rian M. Pressman in a statement.

"Wentworth received an additional margin call of $16.9 million on Oct. 22, 2008, the payment of which was waived until Nov. 21, 2008. The payment has not yet been made," S&P added. Wentworth makes most of its money by selling asset-backed securities. Because such asset-backed transactions are tough to make in the current market, Wentworth has been reporting losses, S&P said. Wentworth is owned by New York investment firm JLL Partners.

"The U.S. Treasury market, the foundation of government bond and corporate bond markets worldwide, is suffering a crisis of confidence at the worst possible moment," writes Institutional Investors's Euromoney. "Investors in Treasuries are the lenders enabling the US government bail-out of the country’s broken financial institutions. That leaves them financing purchases of equity of volatile and highly questionable worth and backing a ragbag of distressed assets.

"For now, Treasury yields are at record lows across the term structure as investors with cash to invest conclude that they can trust no one else with their money. But investors must wonder at what point the expanded supply of government debt and its use will make the borrower inherently less creditworthy.

"There is an even more pressing concern...: the settlement system has broken down. Following the collapse of Lehman Brothers in September, fails to deliver among the 17 primary dealers in the US treasury market have rocketed to more than $2 trillion over a period of weeks and still lie above $1.3 trillion. Broker/dealers have stopped delivering bonds. Holders of US treasuries are now scared to lend into the repo market in case their bonds are not returned, and potential buyers sit on the sidelines fearful of handing over their money to a counterparty that at best might not deliver a bond on time, and at worst might go under."

 The Pennsylvania Public School Employees' Retirement System investment portfolio fell to $54.7 billion on Sept. 30, from $62.7 billion just three months earlier, as the stock and bond markets fell and real estate and private equity investments failed to make up the difference. Year-to-date, investment returns are down 17 percent, said PSERS. Additional losses are likely later this year. 

  Retired school administrators' and teachers' pensions are safe, but, as pension assets drop, state taxpayers and property owners in school districts across the state will be expected to pay larger subsidies in future years.  Trying to put her fund's decline in context, chairman Melva Vogler, a math teacher at Waullenpaupack High School in the Poconos and a local leader of the politically powerful Pennsylvania State Education Association, a government employees' labor union, said PSERS lost $10 billion in the 2000-02 bear market, but made over $40 billion in the 2003-07 bull market.

 The Pennsylvania State Employees' Retirement System investment portfolio fell to $29.3 billion on Sept. 30, from $33.6 billion just three months earlier, as the fund's unusually large investments in hedge funds, private equity and real estate failed to protect from falling share prices combined with the usual pension payouts. Year-to-date, investment returns are down 14 percent, about the same as other big pension funds, said SERS in this statement. 

 The results don't yet include private equity and real estate losses from after June 30; SERS doesn't plan to report those losses until next year. Additional losses are expected during the current quarter, SERS added. Retiree pensions are safe, but, as pension assets drop, taxpayers will be expected to pay larger subsidies in future years.  

 Seeking to put the losses in context, SERS chairman Nicholas V. Maiale, a Center City lawyer, lobbyist, South Philadelphia ward leader and former state representative, said in the release that "in the 2000-2002 bear market, SERS incurred investment losses of $6 billion, but earned $23 billion in the five-year bull market that followed."