i hope you are wrong. Citi is not a bad bank, probably better than most. if shareholders anticipate every bank to become nationalized while they get $1/shr they will dump everything financial the moment they start thinking that way.
Maybe the market is saying - by taking every "Big Bank" stock to "0" along with $2-3T of our children's $$$ - that they need to fail, drastically amend their business models and consolidate. . .something they and the Treasury either don't want or don't think they need. :eek: pay$ (Meanwhile we have many, many, many proponents to the philosophy that "things would be much worse" if they hadn't intervened. What has that proven: tick-tock, tick-tock...?)
Nationalizing would be doing them a favor. Their officers ought to be court-martialed and then shot in the necks.
im still kind of confused. What exactly are the terms of the bailout again?? Govt is buying $100 billion in bad assets and will buy preferreds?
The relationships are very complex and interdependent . . . take a moment to look up "counter-party" risk, and then take a look at what happened to the financial markets after LEH was allowed to go under. Also, I'll give you one guess who the largest holder of LEH corporate debt was.
Paulson changed his mind and stated that he would no longer be buying the toxic loans off of the balance sheets of financial institutions ( because "things had changed" he said in an interview with Erin Burnett on CNBC week before last ). This had been his original TARP proposal AND as Congress had understood and approved. Now, it looks like he may potentially be changing his mind, once again. "According to people with knowledge of the discussions between Citigroup and the government, the plan for Citi resembles the original TARP proposal, in which the government would buy bad assets for financial firms at some price higher than what's being offered in the market."
Citi has really high reserve holdings and trillions in assets which have been marked down more aggressively than the competition. Citi is a weird situation in that the balance sheet is strong but confidence is shit. Edit: I don't know what the BIG fuss is about Citi. They can't file chapter 11 per an FDIC rule regarding deposit banks. You shouldn't sweat the FDIC funds. Because there is no true limit. FDIC is backed by the treasury. They can and will print more money as needed.
Update 2: Sources with knowledge of the deal say government officials are now getting cold feet over the plan to buy the troubled assets from Citigroup. Situation is still fluid and people close to the company say some sort of a deal will likely be worked out tonight. one other option being considered now is for the government to put money into citigroup. The problem with buying the assets from citi is political: people close to the deal know that other firms will line up and ask the government to purchase their troubled assets as well knowing that all brokerage stocks got crushed when treasury secretary hank paulson reversed his plan on the tarp to direct capital infusions to the banks and away from buying troubled assets. Bottom line: this is very fluid and the situation may change again, but as of now government getting cold feet on plan to buy troubled assets, which leaves direct capital infusion on the table. http://www.cnbc.com//id/27873985
C common is now probably worthless but the resolution tonight will probably save the market from a deep plunge tomorrow. Asian futures are soaring and the Yen is weakling rapidly. It's only delaying the inevitable, I suppose.