IrvingFisher

Citi Update: Government Closes in on Beefed Up Deal

One of the most telling quotes in this article is "My concern on a go-forward basis is that the government will force Citi to make decisions that are more to serve political agendas than the health of the business."

This is obviously the market's concern to; if you look at premarket trading today, more government intervention isn't attracting private capital, at least not yet. Will it ever?

As this author so cogently points out, the idea of the government wholly dictating lending terms for political purposes is a nightmare. Are we to expect that Citi's consumer finance divisions will now be expected to lend at cut rates--even to the riskiest of market segment customers?

What will the new Citi look like, and are there any buyers for Citifinancial and Citimorgage to emerge?

Most of all, businesses don't have to be in business. Much is made of the government "making" Citi do this and that, like a ringmaster and his now-tame lions. What people forget is that private investment ultimately decides whether a company will be around.

When the government tells Citifinancial to lend hundreds of millions of dollars unprofitably, will it be around for long?

Banking Crisis: Causes and Possible Solutions

The question for Citigroup is whether they will hold on to their toxic consumer finance divisions, Citifinancial, Citimortgage, and Citiauto. Who would possibly want to buy this toxic trio?

Even more pressing, how can the Citicorp "good" assets rid themselves of the Citiholdings "bad" assets if no buyer emerges?

No analyst has yet addressed these specifics; until someone does, there's no bottom to banking stocks, imo.

U.S. Banking Crisis: Is Nationalization the Answer?

In the case of a "bad bank" structure for BofA and Citi, what happens to Citi's toxic consumer finance divisions in particular? Do they just shut down for lack of profitability, or does the Obama administration politicize them so that the government can show that Citi is "still lending?"

Most of all, does it make sense to "still be lending" largely unsecured funds to the riskiest consumers?

I have read and heard a lot of analysts talk about the bad bank model, but no one seems to know exactly what that would look like for Citi with regard to its divisions Citifinance, Citimortgage, and the by- now completely unwarranted Citiauto. Can anyone help paint this picture?