Home » Most Recent Stories

GOVERNMENT TAKING STAKE IN CITIGROUP

23 February 2009 by Cullen Roche 0 Comments

Bloomberg is reporting that the U.S. government is taking up to a 40% stake in Citi.   Futures are trading up over 1% on the news.  The story is still developing, but the market clearly views this as a positive sign that the bank won’t be fully nationalized any time soon.   This looks like another attempt to buy time for Citi while we hope that the market rebounds.  Personally, I don’t see the point.  A 40% stake is effectively a nationalization.  Why not just take the bank over completely and remove the Citibank doubt from the market?  Better yet, why not perform full blown triage on the entire system, eliminate the bad banks and guarantee the good ones.  Eliminate the uncertainty surrounding the banks.   This is a development positive for now, but if the market doesn’t improve or continues to worsen this hesitation to be proactive will only make things worse in the long-run.

Disclosures - Unless otherwise noted, authors have no positions in any securities mentioned and readers should never consider this to be investment advice. Always consult your financial advisor before acting on any ideas. Comments Guideline - Readers who denigrate authors or other readers will be banned without warning. This site does not tolerate any sort of reader abuse. The goal of this site is to create an environment that is conducive to learning and better understanding of the monetary system and the investment world. We expect readers to behave maturely and responsibly. We welcome and encourage intense and intelligent discourse, but the site adheres to a strict 1 strike policy. While it is your right to speak freely, it is not your right to behave childishly. Above all else, please enjoy the site. It is intended to be used as an educational tool and we hope the intelligent and mature debate will further that purpose. We hope readers will make an effort to respect that goal. Comments with excessive linking or foul language will be moderated before posting.