As JPMorgan Chase & Co and Wells Fargo

As a result
of the prolonged Great Recession, the American GDP fell drastically since 2008
alongside with rising unemployment rate in the country. For the year 2008,
Citigroup experienced a huge loss amounted at $27,684 million. This was mainly
due to the financial market shocks as well as the collapse of housing and
mortgage bubbles. According to Appendix A (Excel), revenue reported for year
2008 was $51,599 million, 33% lower than that in 2007. Furthermore, the
operating expenses and provision for claims of the group was approaching $104
billion in 2008, which substantially increased the amount of net loss incurred.
In 2009, Citigroup’s revenue rose up to $80,285 million, credit to the Federal
Reserve’s efforts in boosting confidence level in the economy. On November 23,
2008, the US Treasury decided to inject $20 billion investment into Citigroup
in exchange for immediate equity stocks and securities. Despite the fact that
this was only a part of the whole bailout, it effectively boosted the
confidence level amongst investors. In the next trading day, both the
Citigroup’s share price and Dow Jones Industrial Average rose significantly (Ellis,
2008). The major competitors of Citigroup were all benefited from this
government decision to recover expectation in the financial system, with Bank
of America Corp rose 27.2%, JPMorgan Chase & Co and Wells Fargo & Co
all advanced more than 20% in share price performance on NYSE (Wilchins &
Stempel, 2008).

 

Numbers of
researches shown that the U.S. asset prices in the stock exchange market react
robustly to unanticipated monetary policies on the federal funds rate target
decisions. Andersen, Bollerslev, Diebold and Vega (2003) and Faust, Rogers,
Wang and Wright (2007) studied the impacts of real-time monetary policies and
macroeconomic news on the U.S. exchange rate changes, and found that the
dynamics between the two are substantial.

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