Corrente

If you have "no place to go," come here!

Why did we "loan" Citi $45 billion when we could have bought them for $20 billion?

And when I say "we," I most definitely mean "they." Dean Baker asks that question, and some other good questions:

The government originally lent $25 billion to Citigroup at below market interest rates in the first wave of TARP lending. In December, it lent another $20 billion and guaranteed $300 billion in bad assets. (The guarantee was almost certainly worth more than $30 billion annually, given the quality of the assets.) On that day, $20 billion would have been sufficient to buy Citi in its entirety on the stock market.

So the question is, how can the taxpayers own anything less than 100 percent of Citi, if its preferred shares (the form of the loans) are converted to common shares? Why is this anything other than a huge gift to Citi's shareholders and top executives?

I was just at a White House conference listening to a lot of people talking about cutting Social Security and Medicare benefits for retirees. How can the same government that hands tens of billions of dollars to Citi's shareholders and top executives cut key benefits for the retirees? Why aren't the news reports calling attention to this massive give away to some of the nation's richest people?

Silly! We don't have a famously free press to do that!

NOTE Via Cmike in comments at Avedon.

0
No votes yet

Comments

Submitted by jawbone on

plans.

The stress tests seem to weighted a bit toward finding the banks pretty OK, per Krugman's first post. He does not agree with that.

Then Krugman wonders (in nicer language) WTF the administration is thinking of accomplishing with the latest Citi "plan" being floated.

I’m trying to be sympathetic to the various plans, or rumors of plans, for bank aid; but I keep not being able to understand either what the plans are, or why they’re supposed to work. And I don’t think it’s me.
SNIP
I just don’t get it. And my sinking feeling that the administration plan is to rearrange the deck chairs and hope the iceberg melts just keeps getting stronger.