Hot in the CITI Tonight….

The government isn’t done with CITI yet….our previous posts on Geithner and the troubled CITI bailout he put together last Fall here and here and here and here and even here ….

CNBC: Citigroup is in talks with U.S. officials about the federal government taking a larger stake in the troubled institution, according to people familiar with the situation.

The aid would involve a new capital injection that would increase the government’s stake in the troubled bank, but would not constitute nationalization, which has been a major concern for investors.


Sources say bank executives are hoping the govenment stake will top out at about 25 percent, athough it is possible it could be as high as 40 percent. In either case, if the govenment converts its current preferred-stock status to common shares, Citi shareholders would see their stakes diluted and the government would potentially have a much larger influence over Citi.

And yes it would be nationalization, despite the semantics of Team Obama, you just cannot be slightly pregnant:

Any additional money that Citi receives from the government automatically means a further stock dilution. While Obama Administration officials say this isn’t nationalization, markets may interpret the situation differently and see it as de facto nationalization.

The move likely would make the U.S. government the biggest shareholder of Citigroup, owning a majority of its stock. This is de facto government ownership, or nationalization. What this ownership means at this point, nobody knows

What can CITI do? Nothing they are frakked, with the governments giant feet coming down everyplace NO ONE wants to get in front of them, and no private equity will come in as a result….

Citi could also try to raise fresh equity with a public share offering, the Financial Times reported. The aim would be to keep the government stake to no more than 40 percent or at least below 50 percent, it said, citing people familiar with the plan.

Message to Pandit, you don’t sit down to dinner with the Devil and leave the table unscathed my friend…..

February 23, 2009. Tags: , , , , , , . Cabinet, CITI, citigroup, Economy, FDIC, Finance, Music, Obama Administration, Politics, Popular Culture, TARP, Uncategorized, Wall St. 3 comments.

Treasury announces new program: for “financial institution rescues similar to Citi Case”

Hank ‘Virgil Starkwell’ Paulson and the Gang who couldn’t shoot straight are trying another ‘program’, and it STILL isn’t directly addressing housing, yep.

From Forbes:

…In determining whether an institution is eligible for participation in the program, Treasury will consider the following:

-Whether destablization of the institution could directly or indirectly threaten the viability of creditors and counterparties.

– Whether the institution is at risk of a loss of confidence and how much stress is caused by unstable or illiquid assets.

– The number and size of other institutions in similar situations or the number of those that would be destabilized by the institution being considered for the program.

– The extent to which the institution’s financial position could potentially cause disruptions in credit markets, destabilize asset prices, increase uncertainty or weaken the overall economy.

– The extent to which the institution can access capital elsewhere.

As with other investments through EESA, Treasury may invest in any instrument it deems a troubled asset and will require institutions to provide Treasury with warrants or other considerations to protect taxpayer interests. Participating institutions will also be required to cap executive compensation and possibly limit expenditures….

Breaking from CNBC’s Steve Liesman (who also has a good discussion from SF here on topics at the Econ Assoc meeting):

Steve: Treasury had a comment period on this, right now because of some TARP accounting details, it pays for the Treasury to handle these ‘certain’ financial institution rescues a la Citi, BUT they see it as very very limited option…

for certain “Systemically Significant Institutions”….


January 2, 2009. Tags: , , , , , , , , , , , , , , , , . Economy, FDIC, Foreclosures, Housing, Politics, Unemployment Statistics, Wall St. 4 comments.

TARP 2.0: Is CITI bailout the Geithner/Obama template?

Bill Gross thinks so.

CNBC Street Signs video now up here

Parsing Obama’s picks for the economic team and discussing the future of Citigroup, with Bill Gross, PIMCO Founder & CIO; Al Dellibovi, Federal Home Loan Bank of NY president & CEO; and CNBC’s Erin Burnett.

He tells Erin Burnett he thinks Geithner has hit upon the formula to stabilize asset values:

“up until this point the TARP money has not been used wisely …in terms of not having restrictions on its use …going forward I have new confidence today that we have a new model…this CITI model..and the money market SPIV model that originated today, have the same 10-1 levered type of concept..if remaining 300 billion in TARP are used in this model you can lever up and use this money to the tune of …3 trillion dollars”


November 24, 2008. Tags: , , , , , , , . Cabinet, CITI, Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Wall St. 4 comments.

The New Stimulus: Inauguration Day…Economic Team:Melody Barnes to lead on policy…


UPDATE: 12:15PM EST: The President-Elect has named Melody Barnes, of the Center for American Progress, the head of his policy council (happy dance). Ms. Barnes did a column in WaPo 2 years ago reflecting upon what a truly progressive POTUS might say at a SOTU address, it is well worth a look for some insight into the future direction of our policy:


November 24, 2008. Tags: , , , , , , , . Cabinet, Center for American Progress, citigroup, Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Wall St. 1 comment.

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