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.
Unlike the insane anarchists on here, I think this is a good move.
Its time for all of us to switch to our local Credit Unions. They are owned by us, not stock holders. The Govt cant touch it. Its time to think small, not big. I don't like Bush or Obama. The American people are done with the Govt. We are better off dealing with our local everything, chamber of commerce, mayors, state sen. Washington needs to protect us and deliver our mail. That's it..
Its about time the rich took a bath.
Lots of Change February 27th, 2009 10:16 am ET
Welcome to the USSA! I had an account with Citibank. This morning, I'm switching it to someone else.
I too had an account with them. They are the worst. An account I had with someone elso got snapped up by them. I wanted to close it, they quietly made a savings account without my knowledge or consent. When I finally raised a lot of hell with them, I finally got the close out check, and even then they would not cash their own check. My late stepfather was with me when this happened. He was horrified by their action. Finally opened an account with a good bank..No problems
Citibank is the one I wouldn't mind see going down in flames. They are the most arrogant bank anywhere!!! If anyone has an account with them...GET OUT
Goot Job, Comrade Obama!!
Hey Seattle Sue – Reagan not been in office very long at that point, coming in off the failed policies of Jimmy Carter. Obviously things got better under Reagan's administration, which lasted throughout the rest of that decade. DUH!
I am not one of those accusing of "socialism" – right wing hype.
BUT I would like to know what the connection is between HUGE money donations from Citigroup ($653,468 – federal records) and the take over by the Obama administration.
He lied about taking lobby-like money – he just called it something else. PAC's, bundles, whatever – it is the same color green.
Question Authority – we didn't do this enough with Bush.
NO! Hispanic in TX...
Gov't can RUN when RUN by intelligent people who are not greedy and who are NOT trying to steal money.
REPUBS are scared because now, with the new ethics and accountability team watching our tax $$s like hawks, no one can "lose" billions of dollars. Has it ever occured to anyone that spending will boost the economy when done correctly and when the money actually makes it to the programs and projects they were intended to fund...GET A BRAIN rethugs and stop listening to the FAT BOY!!
They've gotten rich off of us for long enough. We want to know where all our tax $$s have gon and now we will finally find out–they're scared as they should be...
What phrase will replace, "don't bank on it"? Don't 'food stamp' on it just doesn't have the same ring.
I am so sick of these socialism comments. It's just scare tactics that politicians are using to scare the braindead into following them.
If we are going into a socialist government, you should thank Bush and the Repubs for putting us there. The Repubs controlled Congress for 16 years and 8 of those years they controlled the White House. They spent money and didn't think, or care, about how it would effect the American people. Now, Obama and the Dem Congress have to clean up the mess, just like Clinton had to clean up after Reagan and Bush.
If socialism is the way to get us out of the mess we're in, then so be it. Deal with it and move on.
I don't understand why we are worried about the government not being able to manage banks when it appears the bankers don't know how either. And a $750,000,000,000 bailout was enacted two months before President Obama took office. So much for the 30 days as opposed to 8 year argument.
You know, blaming either conservatives or liberals for the nations problem is fantastic. It keeps the sheeple occupied and divided while the real culprit, the Federal Reserve and the international bankers that control it, continue to reap profits no matter if its boom or bust(which they create btw). And once the American economy collapses, the world economy will soon follow, and you will hear calls for a new World Bank to implement a new system so that the turmoil that is coming will "never happen again".
Seriously people , take a closer look at our economic system and you will start to realize that something is very very wrong...our founding fathers wrote into the constitution that the issuance of money should be controlled by the people, not private banks. And now we are paying the price...
where are all of you stupid libs!!!!
Hey Sue, Ronald Reagan had just come into office following that stellar democrat jimmy carter.
Bye-Bye Citi it was nice knowing you.
In the event you did not know it or are in denial like the rest of the socialist type government loving Democrats When Ronald reagan took over the Presidency from the peanut farmer from Georgia (that would be Jeeeeemeee Carter) the economy was in the tank, interest rates on home mortages was 21% and tax rates70%. So, screw you!!!
It's credibly stupid for Americans to be mouthing off about socialism when they don't even know its definition. If conservative think that it is socialism to share, then, why Jesus was a socialist? Should conservative follow Jesus?
A first step to "Nationalization" of our banking industry? Which industry is next, the automobile?
Well since Citi is clueless on how to run a company.. why the hell NOT! I don't like the fact of my tax dollars going to these cooperations and we the people are not getting anything in return.
@ Truth... obviously you don't know the truth. This President is trying to correct the mess your President left behind. Your truth went right out the door.
To Sue – That was an economy inherited from the Carter Administration,. Double digit unemployment to go along with double digit inflation due to government spending trying to fix the problem. Which by the way was fixed by the Reagan Administration which led to the Clinton administration's "surplus". By the way there was no real surplus because the Clinton Administration registered the first trillion dollor debt. It was just money left over from overtaxing people for four years.
Great, Obama's doom and gloom talk has worked so well, he's got people so convinced that the Gov't needs to take part in everything, even our banks. Good bye capitalism, Hello Socialism. This is a huge joke on all of us
What would you prefer? That the US govt. give even more of our taxpayer money to Citibank. This deal was left over from Bush. It was made by Henry Paulson. If you read the article, it says, "No new taxpayer money was given"
You republicans just want to give ALL the money to the rich guys. No strings attached. Because they are so smart. They are the best and the brightest. Then when it Trickles down you can beg them for jobs or a loan.
You talk so independent. But you are really saps for authority. You just want to be told how patriotic you are. How great are country is. What good Christians you are. Grow Up! You have been had!
THE PEOPLE ARE TAKING THEIR GOVERNMENT BACK FROM THE ELITES!!!! THAT IS WHY WE VOTED FOR OBAMA!
WHO cares if a ceo has to sell one of his yachts?
Hey 'TRUTH' (aka FALSE) :
What was UK, Germany, France, Japan and many other 'free-market based economy' (aka Capitalists) countries answer to the menace of meltdown on the bank system? Exactly what BHO is doing.
Now you can complain that he is having bad counseling on how to handle the current economic crisis, but then he wouldn't be the only one.
And do not dare to compare him (yet) to the former president.
He's been there for a little more than a month! And he's from what was the opposition in the previous administration (so obviously he won't have the answers to the country's problems than his predecessor)!
If you want to compare, either positively or negatively, the current administration with the previous one, wait a little more!
Mike, if we follow your logic it brings us to the conclusion that BUSH is the cause of our current economic problems.
I agree with you Mike!!!