New U.S. stake in Citigroup won't fix problems (losses on credits cards, toxic a$$ets weigh heavily)

Reuters on Yahoo ^ | 2/23/09 | Megan Davies And Jonathan Stempel

[NormsRevenge]

NEW YORK (Reuters) – Even if the government takes a large common equity stake in Citigroup Inc, worries are likely to persist about the bank's ability to absorb soaring losses in a deepening recession.

The third-largest U.S. bank by assets is in talks with federal regulators on plans for the government to increase its stake, a person familiar with the matter said. Converting $45 billion of preferred stock that the government obtained last fall to common stock is one of many options, the source said.

Shares of Citigroup, which fell below $2 on Friday, rose as much as 23.1 percent after the talks surfaced, and after U.S. bank regulators said they stood ready to provide more capital to the sector and "preserve the viability of systemically important financial institutions."

"Even if shareholders get diluted, as long as the bank isn't nationalized there could be tremendous upside," said Ralph Cole, a portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon.

But investors remained worried that losses from credit cards, emerging markets, trading and toxic assets could overwhelm Chief Executive Vikram Pandit's efforts to restore the bank's fiscal footing. Analysts do not expect Citigroup to be profitable in 2009 or 2010.

"It helps their capital ratios but it doesn't help their problem assets," said Walter Todd, portfolio manager at Greenwood Capital Associates LLC in Greenwood, South Carolina. "If Citi were out of the woods, the stock would not be at $2."

[NormsRevenge]

No WH Christmas Kumbaya Kwanzaa cards for Reuters & AP this year..

[NormsRevenge]

when ya bail-out poop, ya got more poop ahead

when the dems jam an economy, they jam an economy

[NormsRevenge]

Just say Sayonara.

A signboard of Citibank is pictured over a traffic sign at its branch in Tokyo, February 23, 2009. Citigroup is in talks that could result in the U.S. government increasing its stake in what was the country's most valuable bank, a source said, and the Wall Street Journal said taxpayers could own as much as 40 percent of the ailing lender's common stock. REUTERS/Kim Kyung-Hoon (JAPAN)

[RummyChick]

I wonder how the Debt Collection companies are fairing.

There are some that are notorious for breaking the law in trying to get you to fork over money to them. They buy the debt for a few cents and then make your life a living hell trying to collect what you owe.

I have heard plenty about banks and credit card companies but not much about the Debt Collectors.

[longtermmemmory]

well there is a subliminal “do not enter” picture

[janetjanet998]

CNBC jut said that government will take 40% stake in Citi

[Red Badger]

OOPS!.......Sorry!....My BAd!.......I was late with my mortgage payment......................

[Oatka]

Converting $45 billion of preferred stock that the government obtained last fall to common stock is one of many options, the source said.

I'll bet they will push that swindle. Right now, as far as I know, the government still has dibs on Citicorp's dividends. Common stock will./would be the first to have its dividends cut and the taxpayer is screwed yet again.

The fourth paragraph on explains the rights of preferred shareholders.

[Unlikely Hero]

Much of the time the debt is not even collectable anymore (due to statute of limitations issues, etc.). They can’t even prove that they own it in many cases.