As the subprime mortgage crisis began to unfold, heavy exposure to toxic mortgages in the forms of collateralized debt obligations (CDOs), compounded by poor risk management, led the company into serious trouble. In early 2007, Citigroup began eliminating about 5 percent of its workforce in a broad restructuring designed to cut costs and bolster its long underperforming stock. By November 2008, the ongoing crisis hit Citigroup hard and despite federal TARP money, the company announced further staff cuts that eventually totaled over 100,000 employees. Its stock market value dropped to $20.5 billion, down from $244 billion two years earlier. Shares of Citigroup common stock traded well below $1.00 on the New York Stock Exchange. As a result, Citigroup and federal regulators negotiated a plan to stabilize the company. On November 24, 2008, the U.S. government announced a massive stimulus package for Citigroup, designed to rescue the company from bankruptcy while giving the government a major say in its operations. The Treasury would provide another $20 billion in Troubled Asset Relief Program (TARP) funds in addition to $25 billion given in October. The Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) would cover 90% of the losses on its $335 billion portfolio after Citigroup absorbed the first $29 billion in losses. In return the bank would give Washington $27 billion of preferred shares and warrants to acquire stock. The government would obtain wide powers over banking operations. Citigroup agreed to try to modify mortgages, using standards set up by the FDIC after the collapse of IndyMac Bank, with the goal of keeping as many homeowners as possible in their houses. Executive salaries would be capped. As a condition of the federal assistance, Citigroup's dividend payment was reduced to one cent per share. In September 2011, a book titled Confidence Men|Confidence Men: Wall Street, Washington and the Education of a President, written by former Wall Street reporter Ron Suskind, states that Treasury Secretary Timothy Geithner ignored a 2009 order from President Barack Obama to break up Citigroup in an enormous restructuring and liquidation. According to the book, Obama wanted to consider restructuring the bank into several leaner and smaller companies while Geithner was executing stress tests of American financial institutions. Another book, A Presidency in Peril by Robert Kuttner, says that in spring 2009 Geithner and chief economic adviser Larry Summers believed that they could not seize, liquidate, and break up Citigroup because they lacked the legal authority or the tools to do so. The Treasury Department denied the account in an e-mail to the media stating "This account is simply untrue. The directive given by the president in March 2009 was to develop a contingency plan for tough restructurings if the government ended up owning large shares of institutions at the conclusion of the stress tests that Secretary Geithner worked aggressively to put in place as part of the Administration's Financial Stability Plan. While Treasury began work on those contingency plans, there was fortunately never a need to put them in place."
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