Monday, February 23, 2009

Citibank moves closer to nationalization

The US government is getting ready to convert their preferred shares of Citibank into common shares. This will give them a 40% ownership if Citibank. President Obama has tried to halt talk of a government takeover of Citibank and Bank of America. Moves like this make Obama's press statements seem very disingenuous.
Citi Moves One Step Closer To Toast (US May Take 40%+ Stake) (C)
Henry Blodget|Feb. 22, 2009, 9:29 PM

The government is in talks to convert most of its $45 billion of preferred stock in Citi (C) to common stock, the WSJ says. Other preferred shareholders might follow suit.

This plan would raise the government's ownership of Citi to 40%+ from just under 8%. Common shareholders would be severely diluted, especially if other preferred holders convert.(excerpt) read more at

1 comment:

Anonymous said...

As much as I hate the idea of nationalization in a general sense, when it comes to banks, I'm having a hard time seeing what difference it would make. They are already acting as the government printing press under fractional reserve lending, their shares are near 0, the government already loans them money at a rate lower than inflation, and due to FDIC guarantees, if the banks default, we pay for it anyway. I'm starting to think that nationalization only really affects the CEO. The banking system has already done more to suppress free market than the government.