U.S. to control up to 36% of Citi (announced this morning)

[brooklynite]

Source: CNN

NEW YORK (CNNMoney.com) -- Citigroup and the Treasury Department announced a deal early Friday that will give the federal government control over up to 36% of the bank's common stock.

Citigroup shares tumbled 46% in premarket trading.

The deal will convert preferred shares that Treasury already holds in the bank for common shares, a shift that is designed to better protect shareholders against future losses and improve the embattled bank's capital base, which in turn will hopefully allow it to increase its lending.

...snip...

The U.S. government has already given Citigroup $45 billion, for which it received preferred shares and warrants in the company. The new deal Friday did not give the bank any additional tax dollars.

Read more: http://money.cnn.com/2009/02/27/news/companies/citigroup/?postversion=2009022707

[PassingFair]

1. For Pete's sake! Screw the stockholders.

Why can't they just let everyone take
their FDIC insured marbles and go home?

[sarcasmo]

8. Exactly, investments are a risk, why are people not admitting that anymore?

[RantinRavin]

10. How many of those stockholders are retirees

That either own the stock or their mutual funds own the stock ?

[vaberella]

12. Exactly. People have no inkling at the Big picture rather than the little speck they

see as the "teh evil". The bank is shit and it's shady but there are a lot of clients and customers who were taught to put their investments there. The banks are like the ultimate ponzi scheme.

[earthside]

2. Common stock.

This is a rip-off of the American taxpayer.

Plain and simple -- we are being robbed.

Geithner and the whole upper management of Citi that conspired to work this theft should be FIRED and investigated for fraud.

Citigroup is insolvent, it should be liquidated. Why is this so hard for Washington and Wall Street insiders to understand (unless they do and are just trying to steal every last dime they can from us)?

[ixion]

3. yes... we are being robbed... again

and again, and again. It's always a daylight robbery. They walk in, take our money, and walk out. Simple as that. And we stand there like lemmings and watch them.

We truly deserve the hell we're about to walk through.

[lldu]

4. All Citi has to do is declare bankruptcy.....

and our "Common" shares are absolutely worthless. Who gets paid first in a bankruptcy? Preferred shares. Common shares are usually just worthless.

[mwooldri]

6. I don't think given present circumstances Citi will be allowed to go BK.

As I understand it the Preferred Stock would require Citi pay the government money... converting to ordinary stock means Citi doesn't have to make interest payments. But it means the government has more of a say in running the bank.

Personally I'd say the government should own 50.01% of the bank, take over control, rename it Citi Federal Bank and run it in our interests.

Mark.

[earthside]

9. Citi is STILL in Charge!

"... it means the government has more of a say in running the bank."

The hell you say!

Unfortunately, that does not appear to be the case.

Citigroup CEO says in charge of day-to-day operations - Reuters

Citigroup Inc executives spoke on a conference call on Friday and said "we completely remain in charge of the day-to-day operations of the company."

Highlights:

* Pandit, talking about nationalization worries, says "this announcement should put those concerns to rest"

* Pandit says regulatory oversight of Citigroup is not changing

Figuratively, I am for breaking out the pitchforks and torches and laying siege to Citi and Geithner's offices.

[mwooldri]

11. Correct: cos government doesn't have a controlling stake.

They may well be majority shareholder but it's control that counts. Control more than 50% of the company, dependent on how the company is set up, those shareholders can then fire the board and install a new one.

36% of the company will mean that Mr. Pandit will have to take notice of what the government says, but he remains in charge. 50.1% of the company means the government could choose to force an extraordinary general meeting, vote Mr. Pandit out and someone else in.

Mark.

[TheWatcher]

13. They do Understand.

Once again, The American People mistake all of this for Bad Management, and Irresponsible Incompetence.

Let's try one more time.

IT. IS. BY. DESIGN.

There is massive looting and voracious theft going on, and the American People continue to sleep and misconstrue it as something else.

When history books reflect on this decades from now, if there is ANY history still left to be written, this will be looked back on bleakly and darkly as The Greatest Transfer Of Wealth from one incredibly large group of people to one incredible small group of people.

And how most of America looked on and exclaimed "THANK GOD IT PASSED!!!!!1111"

[fasttense]

5. The Republicon plan has come to full implementation - Mission Accomplished.

Tear down regulations for huge financial corporation. Destroy accountability. Steal and con while the getting is good. Then turnaround and dump the costs and failures onto the Middle Class American Tax payer.

The Republicons plan has been completed.

[Spouting Horn]

15. The Corporate Bailouts of 2008

were approved by both the Democrats and Republicans, and they're continuing in 2009 under Democratic control of the entire Government.

The US Taxpayer gets the shaft while Corporate bigwigs continue their multi-million dollar lifestyles unabated.

PS: If the Government owns even a single share of stock in any company you own stock in, your stock will soon be worthless.

[AyanEva]

7. :( ???

Is there some source that can explain what all this means? I can't make heads or tails of common/preferred shares or anything that's going on with this. I managed to get the gist of what was happening in the original bailout after a bit of work but I'm floudering here and I want to understand what's happening.

[Vinca]

14. So let's take a vote. As 36% owners, I say we immediately

cut credit card rates and stop charging fees for everything even remotely connected to our accounts.