Salesmen for U.S. bailout face grilling

In a break with the administration stance, Sheila Bair, chairman of the Federal Deposit Insurance Corp., who also will testify Tuesday, recently proposed using $24 billion of the bailout money to help some American households avoid foreclosure.

So far, the Treasury Department has pledged $250 billion for banks and has agreed to devote $40 billion to troubled insurer American International Group - its first slice of funds going to a company other than a bank. That leaves just $60 billion available from Congress' first bailout installment of $350 billion.

Congressional officials said Paulson indicated he is unlikely to tap the remaining $350 billion before the administration leaves office on Jan. 20. That would mean the incoming Obama administration would decide whether and how the money should be spent. The congressional officials spoke on condition of anonymity, saying they were not authorized to disclose the developments.

On Monday, Citigroup, widely seen as the sickest Wall Street bank after posting four consecutive quarterly losses, announced it will make some of the most severe cuts in the history of U.S. business - 53,000 jobs - as it tries to slash costs and get back to basics before it's too late.

The cuts, which will leave Citi about 20 percent smaller, are the latest step in a stunning remaking of the American banking landscape since the financial meltdown, an upheaval that has included the demise of storied investment houses and the conversion of others into commercial banks.

Citigroup CEO Vikram Pandit met with employees Monday and laid out the bank's strategy in stark terms: "We are a bank. What does a bank do? A bank takes deposits and puts them to work by investing and making loans."

Challenger, Gray & Christmas Inc., which has tracked downsizing since 1993, said Citi's cuts are the second-most on record. IBM announced in July it was cutting 60,000.

At its peak in 2007, Citi had 375,000 employees.

About half the cuts are expected to come from selling off parts of the business. The bank has already said it would sell Citi Global Services and its German retail banking businesses, and it plans to unload more, a spokesman said. The rest of the cuts are expected to come from layoffs and attrition.

The government invested $25 billion in Citigroup as part of the financial rescue package.

As investors digested that news, financial stocks had a bad day. Citigroup stock fell 63 cents, or more than 6 percent, to $8.89. The Dow Jones industrials, nearing their lowest close since the financial meltdown began in September, lost nearly 224 points to close at 8,273.58.

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