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.