The Wall Street Journal is reporting on its website that Citibank and the United States Government are negotiating a deal which would make the Government a substantial owner of Citibank common shares.
The ownership would come about as a substantial portion of the preferred stake which the government currently owns is converted to common shares. The article suggests that the bank and government are negotiating the percent of Citi that the taxpayers would own, and says that it would be between 25 percent and 40 percent.
This would be the most explicit admission yet that Citibank is insolvent in its current form, and after some initial jubilation and euphoria financial markets should respond with fear, as investors recognize that Citibank is not alone in its plight.
Update: The Financial Times has a story on the same topic.
Taxpayer Takeover of Citi Should Bring More Fear
Feb 23 2009, 04:51
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