http://www.nytimes.c...bank.html?_r=1&hp
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Federal regulators were nearing approval on Sunday of a radical plan to stabilize Citigroup in which the government would soak up tens of billions of dollars in losses at the struggling bank, according to people briefed on the discussions.
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Paulson has yet a new plan. In this one the government just takes a pile of losses for Citigroup in exchange for a pile of stock.

In one sense it is amusing, because it wasn't long ago that the FDIC was looking at Citigroup to buy up other banks that where in trouble. But sudden revelations about Citigroup's actual financial situation has driven their value through the floor.

http://www.cnbc.com/id/27873985
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Sources with knowledge of the deal say government officials are now getting cold feet over the plan to buy the troubled assets from Citigroup.

Situation is still fluid and people close to the company say some sort of a deal will likely be worked out tonight. one other option being considered now is for the government to put money into citigroup.
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The whole thing is still up in the air though. The government doesn't want Citigroup to fail, as that could throw the entire finance system back into lockup. But they don't want to just give Citigroup a big pile of money either.

The article doesn't say anything, but I suspect somebody at the Treasury realized that it was politically unfeasible to give Citigroup a big pile of money right after rejecting a much smaller loan to the car makers.

Jay