Citigroup in Talks That May Raise Government's Stake

Citigroup in Talks That May Raise Government's Stake

bloomberg.com

Citigroup Inc., the recipient of $45 billion in U.S. government aid, is in talks with federal officials that may increase state ownership of the bank, the Wall Street Journal said.

The government may end up holding as much as 40 percent of Citigroup’s common stock, the newspaper said, citing people familiar with the situation it didn’t identify.

(visit the link for the full news article)

More taxpayers money going down the drain... 40% is almost nationalisation... it's just a game of words at this point...

This will probably give a rally in the short term, following by a decline towards bankruptcy or total nationalisation because in the end, Citigroup is still unsolvent.

IMO they should nationalise it right now.

bloomberg.com
(visit the link for the full news article)

reply to post by Vitchilo


How is 40% almost nationalization, why not 51% or 60%?

Did you bother to read the short article?

proposed to its regulators that the government convert a large portion of its preferred shares into common stock in a transaction that wouldn’t cost taxpayer more money

This will dilute the common stock and further erode its value for shareholders. This will increase the government's voting stake in C. Typically, preferred stock does not have voting rights; so this conversion would actually give the government a true stake in the company.

But you are right about the sucker's rally that will ensue once something is confirmed. Great time to buy puts...

reply to post by titian


It is underhanded nationalization. Call a spade a spade man. This isn't straight talk this is politic-speak for nationalization. Just as "quantitative easing" is a superlative to inflation.

I am just amazed that this is a declaration of things getting worse and that the government diluting common shares is not out of the question and futures are up big. What a big suckers rally coming tomorrow. I'll ride up anything in the financials, sell that day and let the steam die off and short them.

reply to post by RetinoidReceptor


The single most important problem Citi has is their ridiculous over-leveraging. The government is trying to take trillions more off their sheets further compounding the US debt problem. The fact that Obama has said he's magically going to halve the deficit in 3 years or so when we're taking trillions in private debt moving it to public hands is nothing short of a lie. This is wrong, and the sooner the American people realize that this is just the Bush Administration suffering from Roid Rage the better off we will be.

[edit on 22-2-2009 by projectvxn]

Citibank: Government Stake To Increase?

You have to wonder....

Feb. 23 (Bloomberg) -- Citigroup Inc., the recipient of $45 billion in U.S. government aid, is in talks with federal officials that may increase state ownership of the bank, the Wall Street Journal said.

The government may end up holding as much as 40 percent of Citigroup’s common stock, the newspaper said, citing people familiar with the situation it didn’t identify.

.... what is going through Geithner's mind - and Pandit's.

I wonder if there's a vacuum in there. It sure looks like it.

I have a really radical proposal! Let's force these "captains of industry" to disclose what they're holding, both on balance sheet and off, along with the 'models' they claim are giving them valuation information. Break it down to the CUSIP level (or equivalent if there isn't one) and let's look under the kimono!

All this nonsense about "TCE", or equity valuation as a percentage of assets, is just that - nonsense. Focusing there focuses attention on what amount to bear raids fomented by people playing in the CDS market and we must stop that crap for enterprises that are being guaranteed by the United States Government.

This sort of speculative line of attack is literally an attempt to force the government to abandon the company after pouring (in Citibank's case) over $300 billion in asset guarantees into it! This is outrageous on so many levels its not funny - first, that we'd stick that level of guarantee in there in the first place, then that we would allow speculative attack on it.

Bluntly put, Geithner and the SEC need to get off the dime right now and declare their intentions. The CDS market must be closed for speculative positions against these institutions, and I would argue that absent exchange-traded (and fully-collateralized and margined) positions this part of the casino should be closed and locked permanently for all firms.

But heh, this feeds right into the idea that the government should tamper in the equity markets with rumor and innuendo. After all, if the conversion price of that preferred ends up tied to the common's price, I can easily see where Geithner could simply utter the word "nationalization" on national TV, crash the equity price, then force conversion and wind up owning the whole bank.

The government would never do something that unethical (or worse), would it? Naw, there's no history of government doing things like announcing discount rate cuts 30 minutes before the market opens on Options Expiration (August 2007) or not disclosing to a company that the discount window will be opened to firms like itself six hours after it agrees to a $2 take-under, right?

The manipulation, game-playing and outrageous activity bordering on an a flat-out scam perpetrated by our government continues. This one seems to have popped the futures overnight, presumably due to market participants coming to believe that they won't be totally wiped out (as was assumed up until late Friday) - we'll see what the adults think of it in the morning.

That about sums it up right there.

[edit on 23-2-2009 by projectvxn]