Geithner's gift

Treasury announced this morning that it would be bailing out Citibank exercising its option to convert $25 billion of preferred stock in Citigroup to common stock at a value of $3.25 per share.  Since shares closed at $2.42 yesterday, this seemed rather generous.  At the current price of $1.55 per share, it seems positively extravagent.  As Felix Salmon points out, this is a gift worth about $13 billion to Citibank.

Henry Blodget notes Vikram Pandit saying:

In many ways for those people who have a concern about nationalization, this announcement should put those concerns to rest.

Which sounds sort of like "Well, after we got the diagnosis, he stopped being so concerned about dying.  My, doesn't he look natural laid out like that?  And such pretty flowers!"