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.
GOOD, Citicorp bank doesn't need anymore of my money until they've EARNED it!!
All these banks are quick to charge us, the TAXPAYERS for everything under the sun when it comes to OUR money, but NOW that its time to hold these banks accountable, these banks do nothing but give us excuses after excuses on where our MONEY is and what it was spent on!!!
Something needs to be done, and right now President Obama is trying to curb all these foolishness and bring in some accountability. I'm all for it right now because we can NOT continue to trusts these banks and CEOs when they clearly CAN'T be trusted!! No plan is perfect, but this is a start. We can't continue to ignore the problems, we need to act and get everyone on the same page. Bottom line.
Hey Truth-We are dealing with what Bush did now. Nothing that President Obama has done has had time to have any effect. Who do you think ordered those helicopters everyone is screaming about? Who do you think did the budget for 2009? Who do you think presided over the biggest transfer of wealth ever in this country, from 95% of Americans to the top 5%? Who as the "great decider" drove our country over the cliff? Thank God for President Obama a true American, who cares about all Americans, not just the wealthy ones. Thank God for President Obama, who cares about people in other countries as well, and would not lie and manufacture false evidence, to take our country to war, for no reason but a personal vindetta. Thank God for President Obama, who will not allow torture, and who will restore American values and honor. Thank God for President Obama.
@ Seattle Slew (sue)
What is it about you libs that prevent you from seeing things clearly., or understanding history. What a completely boneheaded post. The 26 yr reference goes back to the total enconomic chaos that happened under the last Dimocratic prez that considerd socialist agendas to be good for the country. Jimmy Carter. It took Reagan about 2 years to turn that mess around.
I love the liberals who continually say that this has nothing to do with Obama...it's all Bush's fault...has nothing to do with Democrats in Congress...it's all Bush's fault. Even 9/11 was Bush's fault because, as another dynamic liberal said earlier, "It was on Bush's watch!"(*forget the fact that Clinton did nothing on 4 different occasions to stop Bin Laden). Well, liberal illiterates, this is all happening on Obama's watch...the Great O....our Deliverer. Your turn to take some blame! And by all means, if you disagree, you should not be allowed to comment (**I'm keeping with your own liberal philosophy on that last statement). 4 years of this should be interesting to watch...UNFORTUNATELY.
The stock market has dropped every since Obama became President.
Thanks to Obama, my Citi shares have cost me a fortune. Yet, Obama will not let me claim the losses on my taxes. This is all a planned strategy to dwindle everyone's retirement plans so they have to go to the government for support.
Mike@12;25====Do the math.The unemployment figure was October 1982, Reagan had been President for 1 year and 9 months. The GPD figure was 1993, Reagan had been President for at least 2 years. Gee I just hate to tarnish your God. Also under Reagan and Bush 41 the deficit triple in 12 years. And don't forget Carter followed Gerald Ford.which was not the best administration. So just suck it up.
Get rid of your Citi shares! The government could not run the Mustang Ranch selling sex and alcohol do you think they can run Citi Corp.?
The government should take it over. Period.
To Clarify – Reagan was an awful president. He ran up the deficit, was ignorant and let's not forget Iran Contra (lying under oath about trading weapons to enemies) and his wife and kids were disfunctional clowns.
some people are saying that obama is destroying the country in one month. obama is trying to fix the economy. some ignorant people keep calling him socialist. some socialist countries are better off than America. people in those countries lives better than you. poverty is low in those countries and health care is for everyone. my first question to those ignorant people. what is socialism?. if you cannot answer, just chut up!!!!!!!! or go read some books.
All I hear is critisicim yet, nobody had any alternatives while this mess was created. Blame blame and no action. It's time Wall Street took responsability for the mess. You play you pay!
I have a credit card with Citibank. As long as it continues to be honored at merchants, I will continue to use it. Of course Citi never gets any money from me, though, because I always pay off the entire balance each month. They could do whatever they like with interest rates, it won't affect me. Of course they could decide to shut my account themselves since I'm a "bad" consumer by some sort of odd logic – I pay my debts off on time, so I don't support them by paying fees and interest. Somehow I think this definition of "bad" consumer is maybe what got everyone into this mess in the first place.
@TRUTH February 27th, 2009 10:17 am ET
Obama and his administration have caused more damage to America in 30 days than Bush did in 8 years.
It is better to keep your Mouth Shut and let people think you are IDIOT than to open your mouth and remove all DOUBTS
Grand theft of the taxpayers!!!!!!!!!!!!!!!!!!!!
And next they'll be buying up the domestic auto industry. I never thought I'd ever feel like a refugee in my own country, but I also never thought that America could be so stupid to elect a Socialist regime either.
Great this is just great.
The chairman and the executives think that it is their birthright to take this $$$ as bonuses and we keep writing checks and taking more risks.
Great, Im just thrilled to hear this.
Now we can start the WASHINGTON DC STOCK EXCHANGE,those rascals in the NEW YORK STOCK EXCHANGE act like a bunch of greedy politicians anyway !!! Obama WILL save us with his transparency ,and his truthfulness.We don't have to worry about earmarks anymore,there are none !!!--It's a new day !!!
Ask only what your country can do for you,not what you can do for your country !!!!
You know what the Russian word for "truth" is? "Pravda". Think of that, as you read "TRUTH"'s comment.
So tell me @ Kevin in Ohio? How much would those dividends pay if the bank fails completely?
Goin' overboard with too much govt. control of the malfunctionin' financial institutions will draw fire from the furious factions of Dems and the GOP alike. Watch out BHO! Make sure you unleash these banks as soon as they are weaned.
For those of you who say, "let the banks go under": You DO know that we owe other countries, particularly China, money? What do you think would happen if that stuff has no value? What do you think would happen to the value of the dollar?
I'll finish my Coke while all of you genius free-marketiers marinate on that...
Hey Mike, Barack Obama has just come into office following that stellar republican, George Bush. And yet people are blaming Obama for this economic meltdown. Quiz time: What do the S&L scandal, the dot com bust and our current problems have in common? The period of prosperity that preceded them was based on imaginary wealth like derivitives and futures and such. Nothing of real value was produced. The current situation is just a return to a more realistic notion of what has value. Also let me ask which administration bailed out the banks?
Everytime, Obama comes on TV(which is often), the stock market takes a hit. We have lost 2500 points in last 3 0days. Where is the confidence in the market? Government needs to back off and leave the bank to fail, housing prices to come down. That will inturn create new banks, new home owners and some new industry. Trying to hold failed banks and companies will ultimately destroy the country.
That's what I'm talking about. We went from a precarious scenario to a lose-lose scenario. What a brilliant government we have. Thank God they are taking over the banking industry, which was collapsing far too slowly.