U.S. government seeking up to 40 pct stake in Citigroup: report

[Joanne98]

Source: Reuters


HONG KONG (Reuters) - The U.S. government may end up holding as much as 40 percent of Citigroup's common stock, the Wall Street Journal reported on its website, citing sources familiar with the plans.

But Citigroup executives hope the talks with U.S. federal officials will result in a stake closer to 25 percent, the Journal reported.

The lender is discussing with U.S. officials a scenario in which a substantial portion of the $45 billion in preferred shares held by the U.S. government, amounting to a 7.8 percent stake in Citigroup, would convert into common stock, the newspaper said.

U.S. stock futures turned positive and Treasuries fell after the report.



Read more: http://www.reuters.com/article/topNews/idUSTRE51M0J120090223

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Why are they trying to save the investors. Just take it!

[Zynx]

1. This dilutes the investors heavily, but I think the shareholders will accept it.

It's certainly better than the alternative. I am in favor of the government taking up to 50% shares in all banks with more than $50 billion in assets. That gives us a direct way of making money if these companies turn around and does re-capitalize them.

[MercutioATC]

2. ...and of losing EVERYTHING if they fail.

Preferred stock would be worth something if a bank failed. Common stock would be worthless. All this would do is insure that the government would keep pouring good money after bad so we wouldn't lose everything.

If we're going to take an equity stake in a company, it MUST be preferred stock.

[Zynx]

4. However, we have no voting interest and currently the common stock is so cheap that

it doesn't set us back much. This is actually more of a political move in the sense that it reassures people that the taxpayers have a stake.

Frankly, when a financial institution fails there is nothing for anyone. Creditors are not made whole, much less any level of shareholder. We may as well have a voting position just for the symbolism. Also, the odds are that Citigroup will exist in some form when all is said and done. The government could stand to profit immensely 5 years from now.

[Endangered Specie]

3. Watch Citigroup stock drop like a shit from heaven tomorrow morning...

[Zynx]

5. From its glorious $1.95 a share? It's already priced in significant dilution or insolvency.

[amandabeech]

6. Just go ahead and nationalize it.

It's a dead bank walking.

By dilly-dallying around, Obama and his team are just making it worse.

[earthside]

7. Anti-Progressive

Citi has a derivatives exposure of at least $38 trillion.

Nationalization means the government gets the liabilities along with any (virtually non-existent) assets.

In this case, nationalization is a ploy by the Wall Street insiders to get a taxpayer-funded pay-off.

Nationalizing these insolvent banks has got to be one of the most anti-progressive ideas ... ever.

[RUMMYisFROSTED]

8. That would be over half of the total global money supply. (Appx. $62T-M3)

Not saying it's not true but that is a huge number.