And today’s big story. Did you wake up feeling like a titan of Wall Street? You are about to become the biggest shareholder in one of the country’s premier financial institutions. The NYT is reporting that the Treasury Department has reached a deal in which the federal government will take a stake of between 30% and 40% in Citibank.:
The Obama administration deliberately stopped short of securing a majority or controlling interest in Citigroup, but will probably come under intense pressure to take a much larger role in shaping the bank’s direction. Taxpayers, after pumping more than $45 billion into the bank, have become Citigroup’s single largest shareholder. The government will not put in any additional money for now, but some analysts believe Citigroup may require more down the road.
The move is one of the most drastic steps federal officials have taken to prevent the collapse of an institution deemed “too big too fail,” as its downfall could send shockwaves through the global markets. The government also took a major ownership stake in the American International Group, and seized control of Fannie Mae and Freddie Mac in September. So far, none of those deals have turned out well.
The Obama administration has tried to keep the banks in private hands and tried to stamp out talk of nationalization. But Citigroup’s plunging share price and its deteriorating financial condition made it almost inevitable the government would have to convert its stake.
So now that we own the bank, what should we do with it? I vote that we start by abolishing those annoying ATM fees.