Citi Gets Nationalized; Don’t Call It Nationalization
Friday, February 27, 2009 8:28
Bailout #3 for Citigroup
The Government has reached a deal to buy 36% of Citigroup’s common stock. The United States will now be the largest shareholder of the troubled bank (But don’t call it nationalization). Citigroup announced another huge quarterly loss. The firm lost $10 billion in the 4th quarter of 2008 and has suspended dividend payments on its common and preferred shares. Yes, it even suspended the 1 cent dividend it paid to common shareholders.
The United States had owned a large stake in Citi’s preferred shares and was to receive quarterly dividend payments. The latest move lets Citigroup off the hook from paying the public back those payments. Citigroup immediately announced the suspension of all dividend payments on both common and preferred shares after striking the latest deal with the government.
The Treasury said it will convert the $25 billion of preferred stock issued under the Capital Purchase Program into common stock. Citigroup has a market capitalization of $13 billion. The public will have paid twice the companies market cap (what it would cost to buy the entire company) for a 36% stake. Hmmm, sounds like a fair deal wouldn’t you say?
Shares of Citigroup are set to tumble at the open. Futures indicate a drop of 40% at the open to another all time low. The common and preferred shares have essentially been wiped out. (Hate to say I told you so)
See last weeks post as we called for Citi and B of A to be taken over by the US gov within 60 days. One down.
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Tom Edgar says:
February 27th, 2009 at 8:46 pm
If a car yard owed you money and the dealer offered you the choice of taking a car from the lot would you take one that was wrecked or one that is working?
Let the broken private banks go to the wall. The efficient profitable ones will gobble them up. That is what Free Enterprise is all about.
Don’t NATIONALIZE any, not even the working banks, except for the Federal Reserve Bank. Then set up a National Federal Government Banking network in competition with the “Private” sector. The customer will still have a choice, but the Government will control the money.
Adolf Hitler said it. In 1938. “A country that does not control its own finances cannot govern its own country.” Right now the American Government is controlled financially by people who have interests other than the welfare of the American people.
Moe Badderman says:
February 27th, 2009 at 10:06 pm
Tom Edgar says:
# “That is what Free Enterprise is all about.”
Your so-called “free” enterprise is a myth, and a fraud. It’s a corporate enterprise in which Wal*Mart is “free” to import cheap Chinese goods to sell, but you’re not “free” to buy cheap Canadian pharmaceuticals. Now get to work, slave!