Legal Commentary

What Does Santelli Think About Citi's Proposed Taxpayer Ripoff?

By Big Tent Democrat

Via Atrios, here is the latest proposed ripoff of taxpayers for Citibank's benefit:

Citigroup (C) has proposed that the US taxpayer and other preferred shareholders convert up to $75 billion of preferred stock into common stock, thus bolstering the company's tangible equity and putting it in less desperate need of a complete takeover. And what will the US taxpayer get for this preferred stock conversion? 40% of the company for some of its $45 billion of preferred, say reports. The reports add that Citigroup's goal here is to keep the US's ownership under 50%, so this won't be a de facto nationalization.

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Well, that's nice for Citigroup...and another ream-job for taxpayers. Citigroup's common equity is currently worth $10 billion. If the US were to convert all $45 billion of its preferred [shares] at the current [Citi] stock price, it should end up with 80% of the company, not 40%.

(Emphasis supplied.) REAL nationalization is the government taking over, say, Citibank, by converting its preferred at market price. Fake "nationalization" is when Citibank is handed $45 billion in exchange for a fraction of that value in common stock. So my question is, what does Santelli think about THAT?

Speaking for me only

Full post as published by TalkLeft on February 23, 2009 (boomark / email).