US Government in talks to own 40% of Citigroup Bank

[TeamJordan23]

FEBRUARY 23, 2009

U.S. Eyes Large Stake in Citi
Taxpayers Could Own Up to 40% of Bank's Common Stock, Diluting Value of Shares

By DAVID ENRICH and MONICA LANGLEY

Citigroup Inc. is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people familiar with the situation.

While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup's common stock. Bank executives hope the stake will be closer to 25%, these people said.

Any such move would give federal officials far greater influence over one of the world's largest financial institutions. Citigroup has proposed the plan to its regulators. The Obama administration hasn't indicated if it supports the plan, according to people with knowledge of the talks.

When federal officials began pumping capital into U.S. banks last October, few experts would have predicted that the government would soon be wrestling with the possibility of taking voting control of large financial institutions.

The talks reflect a growing fear that Citigroup and other big U.S. banks could be overwhelmed by losses amid the recession and housing crisis. Last week, Citigroup's share price fell below $2 to an 18-year low. Bank executives increasingly believe that the government needs to take a larger ownership stake in the institution to stop the slide.

Under the scenario being considered, a substantial chunk of the $45 billion in preferred shares held by the government would convert into common stock, people familiar with the matter said. The government obtained those shares, equivalent to a 7.8% stake, in return for pumping capital into Citigroup.

The move wouldn't cost taxpayers additional money, but other Citigroup shareholders would see their shares diluted. A larger ownership stake by the federal government could fuel speculation that other troubled banks will line up for similar agreements.

Bank of America Corp. said Sunday that it isn't discussing a larger ownership stake for the government. "There are no talks right now over that issue," said Bank of America spokesman Robert Stickler. "We see no reason to do that. We believe the goal of public policy should be to attract private capital into the bank, not to discourage it."

Full Article: http://online.wsj.com/article/SB123535148618845005.html#articleTabs%3Darticle

[Rosa Luxemburg]

1. I've always wanted to own a bank and here we are

40% to the citizens of America! Yeah!

[alcibiades_mystery]

2. They should nationalize Citigroup immediately

It doesn't have that much farther to fall in share value, so it wouldn't be a big drop.

Citigroup is a failed business. The problem is that it holds millions of accounts. It should be nationalized, cleaned up, and sold off. Current shareholders down to ZERO.

Period, end of story.

[Fire1]

6. That makes too much sense.

[AllentownJake]

3. The House of Saud cannot be happy

They are one of CitiGroups biggest shareholders.

[cloudbase]

4. I would just love to be the guy

who gets to vote the shares at the annual meeting.

[ddeclue]

5. 51% - we the people ought to be setting the rules...

if we don't hold 51% the crooks will still be running it but using our tax money to do it.

[MercutioATC]

7. No, no, no!

If Citi goes under, that 7.8% stake in preferred shares will be worth something. 40% (or 51%) in common stock...hell, 100% in common stock...will be worthless.

All this does is insure that Citi will be sucking the teat for eternity. HORRIBLE for us.

[Runcible Spoon]

8. I've had a citigroup credit card since 1998...today they raised my interest rate from 7 to 26%

I called them today demanding why; they offered to let me retain my current rate but then the account would automatically close in 4 months, or I could accept this new rate. Obviously I told them what they could do with their new rate.

The best part is, I opted for electronic statements and they acknowledged that is why I never received a letter. What, like an EMAIL would be difficult for them?! That's where the fucking statements get sent, although now that I think about it I haven't seen an e-statement in a few months..I'm gonna go check but I usually just remember to log in and pay it.

Fucking scum!