Sunday, March 15, 2009

Saving Citi

"Citigroup Inc. and the federal government agreed to a third rescue that will give U.S. taxpayers as much as 36% of the bank but expose their ownership stake to greater risk from the recession and housing crisis. ... But the deal will punish existing shareholders of Citigroup, who will see their stake diluted by 74%, and likely do little to change the awkward relationship between federal officials and managment of the New York company. ... According to Citigroup executives, the Treasury Department and other banking regulators didn't try to squeeze new concessions from the New York bank. ... This rescue also was more palatable because the government isn't pumping in additional taxpayer dollars. Instead, as much as $25 billion in preferred shares held by the U.S. government will be converted into common shares as Citigroup struggles to stabilize itself", my emphasis, David Enrich and Deborah Solomon at the WSJ, 28 February 2009.

"In a better world, Citi would have long ago been put into bankruptcy", Editorial at the WSJ, 28 February 2009.

How punish? This is a bailout. What did the US get for the preferred to common conversion? Nothing as far as I can see.

Kill this monster. Now!


Junior said...
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Junior said...

Doesn't matter. As Bernanke said, it was never taxpayer money. It's Fed funny money.

Citigroup is not the monster. The idiots pumping in Monopoly money are.

However, point taken. Citi needs to be put out of its misery.