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"“You can’t massively overpay because the taxpayer will scream, but you can’t pay market price because that doesn’t give them enough tangible common equity,” Plath said. “The value of the equity is close to zero, but you can’t let it fall to zero because so much of it is owned by private money outside the U.S.”
Let’s see; stock price is $1.50 but the foreign money gets $3.25 a share. One might wonder why the stock price i even $1.50 when the equity (assets) of Citi is ‘close to zero’.
So the Obama Administration is providing foreign money protection based on U.S. taxpayer dollars.
Obviously , such is NOT "change we can believe in".
7 Comments
my bold.
who do geithner and summers think is more important to protect than the taxpayer?
Geithner and Summers are driven by ideology. At a $1.50 a share Citi could be purchased outright for just over $8 billion but because it is insolvent the government could go in, take it over, and wipe out the shareholders, and that would cost nothing. The government could then work out a deal with bondholders as part of a Citi breakup and restructuring.
So why isn’t anyone holding Obama’s ‘feet to the fire’?
you are more generous than i am. at least for summers, i’m having trouble seeing his ideology as anything other than a cover for narrow self and class interest.
LBJ said he wasn’t going to be the first president to lose a war.
Hence, Vietnam.
Obama is not going to be the fist president to “nationalize” banks.
Hence?
My guess: a deeper and longer depression.
Art45, you can bet on it given the EU’s refusal to ‘bailout’ eastern European nations(and it’s mostly Germany saying/pushing the ‘No’).
“Lawmakers balk at proposal to change bankruptcy law to allow judges to adjust mortgage terms – a measure central to Obama’s foreclosure effort.“
Excuse me while I go hurl.