Under the plan to rescue Citigroup, the US Treasury will buy $20bn in preferred shares in Citi, which will pay the government annual dividends of 8%. The new shares are in addition to the $25bn in preferred shares already owned by the government. The deal also includes guarantees for $306bn in domestic assets, including residential and commercial mortgages, leveraged loans and auction-rate securities, but does not cover Citi’s credit card business. Citi, which has dedicated about $8bn in reserves to cover assets in the portfolio, agreed to shoulder an additional $29bn in losses on its own. The government will take 90% of any losses on the remaining $269bn in assets, with Citi absorbing 10%. Regulators considered more aggressive action, even discussing plans to buy common shares of Citi in the open market to “squeeze” short sellers, who bet on the company’s decline. But the proposal – which recalls past strategies employed by central bankers – was rejected. See separate analysis here, and for a comprehensive take, FT.com’s in-depth special on Citi here.