The government announced tonight the possible expenditure of up to $326 billion in taxpayer funds to bailout Citigroup. The plan spends "only" $20 billion immediately, but puts the government on the hook for up to $306 billion in "risky" loans and securities. In a worst-case scenario, the government just committed the bulk of the second half of the $700 billion bailout.

http://www.msnbc.msn.com/id/27877195/

The $20 billion cash injection by the Treasury Department will come from the $700 billion financial bailout package. The capital infusion follows an earlier one -- of $25 billion -- in Citigroup in which the government received an ownership stake.

In addition, Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.

Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government's portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.

To-date, as far as I know, $290 billions of the $700 billion package had been spent or committed. This Citigroup bailout, in theory, adds $326 billion to that total and leaves only $84 billion available. However, I'd be willing to bet that the government doesn't count the $306 billion loan guarantee commitment against the $700 billion available since not all of the $306 billion is going to be spent immediately (or, hopefully, ever). But that also means the government is extending loan guarantees related to the bailout such that the government could end up facing costs that exceed the $700 billion that was authorized by Congress.

The government's annual spending budget is currently about $3 trillion. The government just committed 10% of its annual budget to prop up Citigroup.