Citigroup bailout a necessary safeguard: Bush

U.S. President George Bush said Monday that the $20-billion US bailout of financial giant Citigroup was necessary help to get the economy back on its feet.

"We have made these kinds of decisions in the past," Bush said in Washington in a brief statement with Treasury Secretary Henry Paulson. "We made one last night. And if need be we will make these kinds of decisions to safeguard our financial system in the future.

"This is a tough situation, but we will recover from it," Bush said.

The U.S. government said late Sunday it will pump the money into the financial company.

The U.S. Treasury Department and the Federal Deposit Insurance Corp. will also offer guarantees against the "possibility of unusually large losses" on up to $306 billion in shaky, Citi-held mortgage-backed loans and securities

The U.S. government will get $27 billion in Citigroup preferred shares in exchange for the loss guarantee. Citigroup will also issue the government warrants to buy 250 million of its shares.

Citigroup will be prevented from paying any quarterly dividends to stockholders in excess of one cent per share for a period of three years. Citigroup's current dividend is 16 cents a share.

The bailout also includes conditions on executive pay and bonuses.

So far, the U.S. government has committed more than $1.6 trillion to bail out investment firms and dodgy debt amid the ongoing global financial crisis. Citigroup previously received a $25-billion cash infusion from Washington.