Citigroup Does the Impossible: It Screws Us Taxpayers Again

[Frank Booth]

Citigroup Does the Impossible: It Screws Us Taxpayers Again
Posted Dec 17, 2009 10:13am EST by Henry Blodget
From The Business Insider, Dec. 17, 2009:


In case you missed it, here's the latest outrage:

As of yesterday afternoon, the United States taxpayer owned 34% of Citigroup's common stock, in addition to a massive amount of TARP preferred stock. The US taxpayer did not own 34% of Citigroup's common stock by choice. We owned it because our government decided to bail Citigroup out not once, not twice, but three times.

In the last of these bailouts, the Treasury Secretary Tim Geithner gave Citigroup the latest in a long series of gifts, by converting some of our preferred stock to Citigroup common stock at $3.25 a share. This conversion price was too high and resulted in an invisible bailout/gift that most people missed. It also left taxpayers with the dubious privilege of holding Citigroup common stock.

Common stock is lower in the capital structure than preferred stock, meaning that it will be the first thing to be wiped out if Citigroup starts losing boatloads of money again. As Citigroup investors know all too well, common stock also carries with it a high possibility of loss: If the stock price falls, we're toast (whereas with preferred stock, we get our money back when the company redeems it).

- - -

Then Citigroup decided that it simply had to pay the TARP money back (understandable). Of course, Citigroup didn't have the money to do this. So it had to raise the money by selling $17 billion of new common stock at a huge discount to the trading price ($3.15) and diluting the heck out of the US taxpayer again. We now own only 26% of Citigroup, down from 34%. This value destruction is permanent.

There's more here about Geithner's gifts to Citibank on behalf of US taxpayers: http://finance.yahoo.com/tech-ticker/citigroup-does-the-impossible-it-screws-us-taxpayers-again-393993.html

[Romulox]

1. Don't forget the $38 BILLION new tax break. It's been a good week to be a Bankster Crony!

Merry Christmas, Assholes!

[Laelth]

2. k&r for visibility. This is important.

Whoever agreed to allow our preferred stock to be converted to common stock should be prosecuted and imprisoned for dereliction of their fiduciary duty to the people of the United States.

:dem:

-Laelth

[Raineyb]

3. Grr! More financial fuckery!

The taxpayers aren't even guaranteed a dividend check with the common stock. And who votes the taxpayer's shares? Or did they decide that the taxpayer's common stock doesn't get to be voted?

Figures!

[jgraz]

4. And the hits just keep on coming.

How can this administration possibly expect progressives to support them?

[walldude]

5. They have an ad on the radio praising themselves

for holding off all foreclosures till Jan 17th. Their idea of a gift.