Arise, ZombiGroup

“We built this Citi on public funds.”

It is surprisingly hard to find the actual numbers for this deal.  The financial media is even more worthless than I thought.

But Citi itself has provided a summary.

OK, government converts $25 billion at $3.25/share (receiving 7.69 billion shares).  Private holders of preferred shares convert $27.5 billion at $3.25/share (receiving 8.46 billion shares).  Since 5.45 billion shares are currently outstanding, the final share count will be 21.60 billion shares.  So the government will own 35.6%, the current shareholders 25.2%, and the existing preferred shareholders 39.2%.

As I write, Citigroup stock is trading at $1.71/share.  So on a mark-to-market basis, taxpayers have lost $12 billion on this deal so far.  Of course, we all knew we were giving money to these banks.  But this is the first instance where we have formally dropped even the pretense that we will ever be repaid.  More will follow.

We could have seized the bank and paid $0/share.  But we only do that to banks that do not have powerful political connections.  It’s the American way.


1.87 billion shares of Citigroup traded hands today.  This might be the largest single day, single stock volume in history (?).

Leave a Reply