You’ve heard all about bailouts. But here’s one that keeps getting even worse.

Back in January, Citigroup (C) wrote down $18.1 billion in bad loans. And, thanks to Middle Eastern wealth funds, Citigroup got their butts saved. Well, at least for a quarter.

A new report by Merrill Lynch reports that they expect Citigroup to write down yet another $18 billion in bad loans!

The new credit crunch is here. It just arrived. And unfortunately, this time it’s even worse than what we saw in mid-August of 2007.

It’s not been a great week for banks, but neither has it been as bad as some might have feared. Royal Bank of Scotland had a similar set of results to other banks this week – bad, but not that bad.

There were plenty of write-downs, but trading overall was better than expected, and chief executive Sir Fred Goodwin was in a cautious, but broadly bullish mood, defending the bank’s recent acquisition of ABN Amro as being a good deal.