You Now Own Citi And Your Economy Is Worse Than You Thought

I wonder sometimes if we would be better off without the Internet, CNBC and all the other instant news sources that pound the latest bad news into our conciousness almost as it happens. Maybe all of this was easier to cope with during the Depression when it came at people in less of a rush.

Anyway, that’s not the case, so here’s my contribution to making your morning more stressful.

The long expected conversion of the government’s Citi preferred stock investment to common stock has come to pass. You, the taxpayer, are now the proud owner of 36% of this fine financial institution. From the New York Times, here is a summary:

Under the deal, the Treasury Department agreed to convert up to $25 billion of its preferred stock investment in Citigroup into common stock, giving taxpayers more risk, but more potential for profit if the company recovers.

The Treasury will convert its stake to the extent that Citigroup can persuade private investors, including several foreign government investment funds, to go along. Treasury will match the private investors’ conversions dollar-for-dollar, and do so at the most favorable price and terms offered to any other private investor.

You can follow the link for the whole article and if you need more information, here is a link to the Treasury Department’s press release. 

Seperately, the government reported that the economy shrank at an annual rate of 6.2% in the fourth quarter. That number represents a significant revision from the initial estimate of a 3.8% decline. Estimates now are for a similar decline in the first quarter of this year. The New York Times has all the details. It is worth a read just to get a sense of how awful the numbers actually are.

I’ll leave you with that for now. Remember this is Friday so don’t be surprised if some small banks go down later. Check back late this evening or tomorrow morning for that news.

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