NEW YORK (CNNMoney.com) - The U.S. government waded deeper into the bailout of one of the nation's largest banks Friday when it announced a deal that will give it control over as much as 36% of Citigroup's common stock.
Citigroup shares tumbled 46% in premarket trading.
The deal will convert preferred shares that Treasury already holds in Citigroup for common shares, a shift that is designed to improve the embattled bank's capital base, which in turn will hopefully allow it to increase its lending.
The U.S. government has already given Citigroup $45 billion, for which it received preferred shares and warrants in the company.
The new deal Friday did not give the bank any additional taxpayer dollars. But the government is taking on a greater risk by assuming more volatile common shares. The market price is well below the $3.25 per-share conversion price the government is paying.
Taxpayers will also lose roughly $2 billion in dividends, because the preferred shares they are giving up paid 8% dividends. Citi suspended its common share dividend as part of the agreement.
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While Americans are drunk from the coolaid, Premier Obama is taking over the banking system one share at a time. Look south folks, Chavez is smiling. WOLVERINES!!
This is bad, very bad. This is the start of national banking, which will ultimately lead to a type of socialism.
The liar-in-chief..Transparency-lie...No lobbyist.bigger lie..No pork.Huge lie..I am for smaller government.The biggest lie..Hell0 socialism onward to communism.
@ Seattle Sue
Indeed. And if you read the budget, you'll notice statistics like the top 1
percent taking home more than 22 percent of total national income,
up from 10 percent in 1980. Now, I wonder whose economic theories we've been applying since 1980........
Facts like that are indisputable PROOF that trickle-down economics does not work and is simply A FAIRY TALE TOLD TO THE AMERICAN PEOPLE TO CONVINCE THEM TO REDISTRIBUTE THEIR WEALTH TO THE WEALTHY.
Follow the yellow brick road, socialism, nationalization of companies, share the wealth, communism, dictatorship.
no more help for financial institutions, let them go down in flames
Seattle Sue, 26 years ago Reagan inherited a recession from Carter, just as today Obama inherited a recession from Bush.
The key is that we don't need to cut taxes or do more deficit spending – - If we all work hard, save more, spend less, borrow less. We'll get out of the recession slower but without borrowing against our childrens future.
I hope that we resist the temptation to socialize banks. This Citibank situation is worrisome to me. We need to stabilize not socialize.
obama takes over a bank and the tax payers lost 2 billion but the liberal bed wetters do not say anything. Let Romneys house get broken into the the wealth envy crowd are crowing. I wonder if the liberal bed wetters know how pathetic they are, probably to busy waiting for their next hand out.
i so happy BofA got subpoena because they refuse to disclose how they use TARP on bonuses.
btw, Eric Cantor, the ever so righteous rep voted for the 1st portion of TARP money, as it appeared, the bank his wife works for is one of the banks who received those TARP money. how conservative! how righteous! how trustworthy! how?!?!?!?!?!?!
Funny how this article labels everyone who owns Citi stock as a 'taxpayer'.......I would believe some of the rich people who are owners of this stock have probably not paid much tax over the last eight years......thank goodness that is ABOUT TO CHANGE.
I agree with 'Sue' that the Republicans CONVENIENTLY forget who was in charge when all went to blazes, both now and in the past. And the Reagan years were GOLDEN Republican years?????? Keep saying it and you might believe it.........
What the Soviet Union, Cuba, Venezuela, Al Qaeda, Bin Laden, and other could NOT do – Obama is doing in 60 days:
Destroying America
I find it ironic that all the banks we taxpayers are bailing out are spending our money to advertise on the media reporting on the bailouts and wrong doing thereabout. Is that hypocrisy or what??? I can't see how any advertising is warranted as EVERYONE KNOWS WHO THE BANKS ARE!!! The banks rate up there with Clean Coal, and the oil companies as flim-flam groups telling us how great they are while taking us to the cleaners. So much for the credibility factor in our economy making people want to spend money!!! Besides, are the banks advertising they do not make loans???
Yeah great comment Sue. Therefore Reagan was a bad president. Logic for morons
as a taxpayer, i guess i own part of Citibank now? can i get them to lower my credit card interest rate that they jacked up for no good reason?
Sucks to be Citibank; I would lose whatever account I had with them right now if I had one.
obviously this helped Citi's shares
Reagan was a bad president! Can't you remember...Iran Contra, invasions, Beruit, etc......Stock market crash 1987. Star Wars. Overspending and national debt.
Need I say more.
Government ran banking.....what a sad day in the US!!
in case you geniuses haven't noticed,
NOTHING the obama administration has done thus far has worked to even promote confidence or some semblance of stability in the market.
OBAMA IS A JOKE.
NEXT!
It all part of the new world order...everybody is afraid to say it. Obama is a pawn of a higher power preparing for the things to come. Government will own everything, all your personal information will be on a chip. Don't get the chip, don't get no money, no health care, no food..Government can't enforce all this unless they own everything..this is just a step on the road to one world government..Obama will go down in history as the one who kicked it off...giving up our freedoms and security and individulism. Say good-by to America and hello to Big Brother. Thanks Mr. President.
@ matt
The top 1percent takes home more than 22 percent of total national income, up from 10 percent in 1980. THERE'S YOUR REDISTRIBUTION OF WEALTH. Now, I wonder whose economic theories we've been applying since 1980...
AndyL, you propose to let the market act without government interferene? The bankruptice of CitiGroup? The government could never have run CitiGroup more poorly than the captains of industry who ran the company. When the most powerful capitalists in our country are incompetent, and they are, capitalism does not work.
Why didn't they just nationalize this bank. It couldn't be worse than it is right now. If a couple of top banks get nationalized, I wonder how long it would take other banks to reorganize themselves and become more efficient to avoid the same fate. It's worth a try. Economists are saying it's the way to go that would be the least painful for taxpayers.
As for the "bailout"... most people believe it's money GIVEN the financial institutions. That is a completely false statement; these are LOANS that the taxpayer will make billions off of in interest. The government also force JP Morgan and Wells Fargo to take the money even when they did not need/want it.
Cambel Brown run her mouth recently about Wells say "if you are doing so well, why not pay back the taxpayers money?" Well that would be great if they could. Government restrictions prevent that for 3 years. Another example of misleading reporting that's very damaging. Shame on her.
We have to help these miserable crumbling banks. After all, they are probably cold, hungry and sleeping under a bridge.