NEW YORK — Shares of Citigroup and other financial stocks soared Monday on a bet that a long line of government-funded financial bailouts could be nearing a close. But if the past few months have taught investors anything, it’s that new problems always seem to crop up.
New York-based Citigroup was widely known to have worse problems than many of its peers in the financial industry even as the government began doling out the first payments to it and seven other banks from the $700 billion relief program last month.
How much worse, though, is a question dogging investors.
And until it’s answered, it’s not likely anyone will know if another major bank will need to be bailed out, or even what the government’s willingness for more large rescue plans might be.
Paul Miller, a Friedman Billings Ramsey banking analyst, predicted other banks will need government help, and “some of them are going to be very large,” he said. He figures the financial industry needs as much as $1.2 trillion in new capital.
Morgan Stanley is still down 64 percent since the government decided to give funding to eight major banks in October, even after Monday’s rally, while Bank of America remains down 57 percent, and Goldman Sachs is down 56 percent.
Spokespeople at several big banks declined to comment on whether the companies would want the government to backstop losses.
