Bankruptcy

Bailout Not Working; Case in Point: Citigroup

By J. Michael McBride

Despite all of the money and all of the deals between the big banks and the Federal Reserve and the Treasury Department which have taken place in the last year or so, the market continues to fall and the prices of bank stock as a specific case in point also have continued to fall. One example, the largest of the large, Citigroup. Currently its stock is trading at less than $4.00 per share. [Here is a link to its stock: http://finance.yahoo.com/q?s=C .] As one consequence of that stock price falling below $5.00, many institutional investors are required to sell their shares. Of course if this occurs, then there will be further downward pressure on the stock prices. “Most institutional investors and pension funds are barred from owning stocks below $5. So if Citigroup's stock remains below that level, it could trigger a wave of selling that would send the share price even lower. "That's the danger of crossing that $5 threshold," says Owen Malcolm, senior vice president of Sanders Financial Management in Atlanta. "They're (Citigroup) already in trouble. It could get worse." Money managers don't necessarily have to sell Citi immediately. But they would have to get out before the end of the quarter if the stock doesn't recover and may opt to do so now to mitigate potential losses.”

Here is a link to that story: http://www.cnbc.com/id/27822169 .

Michael

Full post as published by Texas Lawyer Blog on November 21, 2008 (boomark / email).