CitiBank is being saved by a $300+ billion infusion of cash, and this bolstered investor confidence Monday, causing shares to move higher across financials and other industry sectors. More than $300 billion of CitiBank’s toxic debt will be backstopped by government guarantees against loss. Another $20 billion will also be given to the struggling bank, adding to the $25 billion they’ve already received. Will this translate to more available credit to homeowners? After last week’s Senate hearings during which Henry Paulson and Ben Bernanke were grilled over use of bailout funds thus far, we hope that CitiBank will break the pattern and use the money appropriately to help homeowners stay in their homes and avoid foreclosure.

Fannie Mae and Freddie Mac announced a freeze on foreclosures through January 9th, 2009. While we applaud this move, it simply pushed off the inevitable for too many families. But since Obama has indicated that he may place a freeze on foreclosures once he takes office, it may be only a matter of weeks in January before Fannie and Freddie’s freeze is extended, possibly into the spring. This makes sense if lenders will also be pressured to modify mortgages, waive pre-payment penalties, and restructure missed payments to keep people in their homes affordably once the freeze has ended.

Existing home sales in California last month moved higher from September sales numbers. Although San Francisco and western Bay Area counties continued to fare better than areas inland and other parts of the US, prices are still in decline. This is understandable and will continue until mortgage lending is freed up once again and foreclosures reduced. But the 4.9% increase from September ‘08, and 63.7% increase in California sales volume from October 2007, are good signs signalling strong foreclosure property sales. This is an important trend to watch. Once inventory numbers shrink to lower levels prices will likely stabilize and then (finally!) rise again.

What’s in store for you? Obama is speaking as I write this, announcing his selections for Treasury Secretary and other important members of his economic team. Obama doesn’t minimize the seriousness of our economic issues… but his selections for these positions clearly emphasizes his intent to place middle class concerns front and center in his policies. Given his plans to convert our economy to one that is growing and healthy again the future may be brighter than it looks right now… something we can all be thankful for.