Taxpayers may have to share in the losses on $301 billion of Citigroup Inc. loans and securities covered by federal guarantees after unemployment reached a 26-year high, according to the congressional panel overseeing bank-bailout programs.

The Federal Reserve Bank of New York projected a year ago that the Treasury Department might have to pay $3.96 billion on the guarantees if unemployment hit 9.5%, the panel said in a report Friday. The jobless rate rose to 10.2% in October, the Labor Department said last week.

The government hashed out the guarantees over a weekend in November 2008 to help shore up confidence in Citi and head off a run on the bank's deposits. The New York Fed analysis, which was not previously disclosed, raises questions about whether the Treasury and regulators were tough enough in the negotiations, said Joshua Rosner, an analyst at the investment research firm Graham Fisher & Co.

The panel overseeing the government's Troubled Asset Relief Program included the analysis in the report Friday and criticized the Treasury for being too secretive about the loss projections.

Under the terms of Citi's asset guarantees, the Treasury and the Federal Deposit Insurance Corp. must absorb a combined 90% of any losses beyond Citi's $39.5 billion deductible, up to $16.7 billion. The Federal Reserve would absorb 90% of any further losses.

The New York Fed estimated that losses on the assets would reach $34.6 billion under a "moderately adverse" economic scenario with unemployment at 8.2% in the fourth quarter of 2009, the oversight panel said in its report.

Under the "severely adverse scenario" of 9.5%, the losses would rise to $43.9 billion as more people became unable to pay the mortgages, auto loans and other obligations included in the guaranteed pool, the reserve bank projected. At that point, Citi would have exhausted its deductible, forcing taxpayers to begin paying out.

"The unemployment assumptions used in both scenarios have in fact already been exceeded," the oversight panel said.

Citi said in a filing last week that the guaranteed assets lost $2.8 billion in the third quarter, bringing the total losses in the pool to $8.1 billion at Sept. 30. The value of the covered assets has shrunk to $250.4 billion.

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