Citibank Tango Ends

The Treasury has concluded its financial/political dance with Citibank in a deal that will up the government's stake in the bank from 8 percent to 36. Today's deal will convert the government's preferred stock into common stock at a $3.25 per-share conversion price--much higher than the market value of common shares, which dropped 46 percent in pre-market trading and now sits at $1.71. Important to note is that the government is not making a bigger financial investment in the bank, but taxpayers will lose roughly $2 billion in dividends paid by preferred stock, according to CNN Money.
Aside from taxpayers losing money, the political bottom line is that the Obama administration has avoided acquiring a majority or controlling interest in the bank. Which is good for them. A barometer of reaction to the deal: the main headline on the Drudge Report right now makes no mention of "nationalization"--politically significant for a major administration bank deal--but it does say "Citi in the sewer."