Friday, February 27, 2009


At first pass, the Citi plan sounds better than expected (not good, but better). The government is going to convert preferred shares into common in a kind of matching program, to the extent that Citi can convince other preferred shareholders to do the same. The US will end up owning about 36% of Citi.

This doesn't, at the moment, add any more government money. It does make the investment more risky, though to the extent that you believe Citi's dead anyway it doesn't make all that much difference.

Basically it's just a continuation of "let's make it up as we go along" which isn't really a good way to handle this stuff. I think I heard a snippet of Pandit claiming that Citi's all better now. I doubt it.

...Their CFO says they don't know if they'll need more capital, and tries to blame regulatory uncertainty.