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So Much For The Taxpayer Profit In Citi: Treasury Shares To Be Offloaded Over 12 Months After Investors Balk At Overpriced Toxic Holdings
It was just a matter of time before the administration's covert plan of rewarding bank execs for massive failure by allowing them to load up their balance sheets with record risk once again, while paying out historic bonuses, blew up in Larry Summers' face. Today's attempt by the government to not only allow the failed Citi management team to pay itself an infinite amount of money more than it deserves for destroying one of America's landmark companies (why the hell is Vikram Pandit still in charge of the Titanic?) but to pretend that it "generated" another taxpayer win by selling off its shares at a profit, was aborted after hours, when Citi could barely find enough interest to sell $17 billion at the embarrassingly low price of $3.15, below that government's cost basis. This will preclude Obama from making a TV appearance tomorrow of how the US taxpayer made even more money by backstopping Moral Hazard. What the US taxpayer however did do, is funnel money straight out of its pocket, into that of Vikram's worthless lackeys. We somehow doubt this will make the teleprompter of whatever it is Obama will be praising in his TeeVeethon tomorrow.
More from the WSJ:
The U.S. government reversed plans to begin reducing its trimming its 34% stake in Citigroup Inc. (C) after investors balked at buying the bank's shares, according to people familiar with the situation.
Citigroup was nearing completion late Wednesday on the sale of about $17 billion of newly issued shares. But the offering encountered such a lukewarm response that Treasury Department officials decided to hold off on selling any of its shares until next year, these people said.
At the expected sale price of $3.15 a share, the U.S. government would have suffered a loss of 10 cents per share on its 7.7 billion-share stake in Citigroup, or about $770 million.
Treasury officials also agreed not to sell the government's shares for at least 90 days. The 90-day lockup is a significant concession because the government previously could sell its Citigroup shares whenever it wanted.
Citigroup said Wednesday evening that it plans to go forward with repaying the financial lifelines it got under the Troubled Asset Relief Program. That includes unwinding a deal in which the government shields Citigroup from most losses on $301 billion of assets held by the company.
As Citigroup gauged interest in its huge offering, announced Monday, some investors said they were willing to buy shares only if the company extracted an agreement from the Treasury Department to hold off on any future stock sales for at least 90 days, according to people familiar with the matter.
The government now plans to unload its Citigroup stock gradually over the next 12 months, people familiar with the situation said. That is a major shift from the Treasury Department's announcement Monday that it planned to dispose of the shares over six to 12 months.
Is this merely one of the ever increasing cracks in the economic team's bailout plan, which as all investors are fully aware are completely unsustainable in the long run, yet sufficiently plausible over the next 90 or so days (until QE presumably ends) that one more day of buying by various algos may be warranted. Perhaps the 90 days will end up being a far too optimistic expectation.
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Can Citi fail?
Will the sun not rise tomorrow?
Here's a 90 day buy and hold signal from Uncle Sugar ......the nervous holder of 7.7 BILLION shares.
Is this a clusterfuk or what ??
hmmm...so, by around March 1 or so we can expect the Fed to have a really strong bid under these bad boys.....
maybe they can reinstall one of those effective short selling bans?
Moron Alert--
DIRE: In his interview Wednesday with ABC News's Charles Gibson, President Obama warned that if Congress doesn't pass health care reform legislation, “the federal government will go bankrupt.”
"If we don't pass it, here's the guarantee….your premiums will go up, your employers are going to load up more costs on you," Obama said. "If we don't do this, nobody argues with the fact that health care costs are going to consume the entire federal budget."
I can't think who is MORE stupid: Obama or his Handlers who think people will swallow this horseshit
I believe now would be a good time for Citi employees to apply for that conceal/carry permit that GS favors
This is just phucking beautiful.
Just beautiful.
What the phuck Obama? Can you please get rid of Summers, Geithner, and Bernanke and get some financial people in there that are NOT sucking up to the banks and are willing to put a plan in motion to fix the banking mess?
The financial system can be saved but not in the fashion that is being conducted by these guys and their masters at the banks and on wall street.
The only way to fix these free market failures is to simply let them fail. From the ashes will come innovation, not from shit-for-brains economists and Wall Street insiders that are pushing Obama (really us) around. They are only interested in self-preservation.
Amen. They need to go the way of the dinosaur. The sooner the better.
Obama is a toad. A tool. He doesnt have the mental capacity to understand what is happening.
BINGO!!!
he has no idea that hope doesn't work with numbers
not to forget that the U.S. gave up billions in tax money in deal for Citigroup's bailout repayment
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/15/AR200912...
Perhaps this has now changed - since the gov is not selling hmmm
It fucking better have changed; it would buy time to stoke more anger and perhaps prevent it entirely since it's apparently going to be sold within 12 months--most likely at a loss.
lmfao
Have Citi folks stocked up on those handguns yet?
>This will preclude Obama from making a TV
>appearance tomorrow of how the US taxpayer
>made even more money by backstopping Moral
>Hazard.
Yee have little faith in Winston Smith's abilities. ;)
The deal is really loose--brokers are trying to jam stock
down my throat even though it's trading up a nickel after
hours.
An actual Dec. 15 headline on CNBC website:
"Buy Bank Stocks Even If You Don't Want To: Strategist"
Don't you love it when a bad plan goes really bad... couldn't of happened to a nicer bunch of guys...
Not sure if the 90-day lock-up is going to be quite long enough... Citigroup has really taken a dive since it had an interim peak at $5/share on 10/14/09... even during after-hours trading tonight it is off ~6.5% down to $3.22...
I just wish the nicer bunch of guys didn't include US.....the lowly taxpayers.
"bad plan goes really bad.."
nice Minnesota....best laugh i have had today!
With all of the financial shenanigans going on (I understand Citigroup was given a pass on paying $38 billion in federal taxes this year), it is beyond me how anyone can invest in any of these welfare companies. It reminds me of Atlas Shrugged, wherein warring government factions use the government's power to influence the private markets to create and destroy fortunes. Does anyone think that it's any different in reality? The Goldman Sachs/Citigroup/GM/JP Morgan cabal has won the first round but who will win the second?
Directive 10-289 is coming. You just watch.
Also - did John Paulson make a bad pick here?
http://www.gurufocus.com/news.php?id=79129
he could have been in <$2.75 and out >$4.50 - the next 13f will tell some of the tale
Treasury is backing off the sale at 3.15 -- via HuffPo
Would it be illegal to take a $10,000 ad out in the WSJ that says in big ass bold letters...
CALL YOUR BROKER AND SHORT CITIBANK TODAY!
CALL YOUR BROKER AND SHORT CITIBANK TODAY!
CALL YOUR BROKER AND SHORT CITIBANK TODAY!
CALL YOUR BROKER AND SHORT CITIBANK TODAY!
CALL YOUR BROKER AND SHORT CITIBANK TODAY!
CALL YOUR BROKER AND SHORT CITIBANK TODAY!
CALL YOUR BROKER AND SHORT CITIBANK TODAY!
CITI is great! They only hire from American Ivy Leagues! The bestest and brightestest of all Americans. Dont you have faith in the great American schoolin? They teach their students political sciences, sociology, and lawyering. Not good enough to compete against those asians?
Americans like "Vikram Pandit", CEO of CITI?
"Treasury officials also agreed not to sell the government's shares for at least 90 days. The 90-day lockup is a significant concession because the government previously could sell its Citigroup shares whenever it wanted."
What. The. Phuck?
Great writing, Tyler. So funny, so true. If any of the "pundits" in the MSM were this clear and honest, I'd have a lot more hope for the USA.
IMHO, this (Citi shares) is the kind of shit that gets shoveled into city pension funds and university endowment funds as part of the payback for being on the government dole. I wouldn't doubt it if union pension funds aren't loading up on these shares as well.
Watch for shares of BAC, C, WFC, GS and the like in your mutual funds. With the holidays upon us, there's seems to be so much giving going on. Taxpayers unfortunately are on the receiving end (something about a shaft I think).
In the meantime, Santa Ben will print more so that CEO stockings get filled with bonuses.
Ruff.
OK. So, it's time for a Goldman conviction buy tomorrow.
Or do we see uncle Warren coming in for rescue?
But of course, this could be a ploy to tank stocks tomorrow to scare politicians into voting for Shalom.
Is is the craziest thing I have ever seen..Other then Jim Cramer telling me to fill my 401K with Citibank
Cramer called it a lottery ticket. I think I rather take my 1 in 10000000000 chance in winning $50M that own this POS
Which is worse?
a)owning C
b)front row seats at a Yanni concert
c)an overnight stay at Abu Ghraib
d)swine flu
e) Tyler Woods before answering a call on his cell.
Did he just call him Tyler Woods?
This deal is toxic. My sales guy couldnt keep a straight face when trying to pitch this BS. So wtf happens in 90 days? Does that give Obama enough time to impose a no shorting rule on banks that the govt owns and is trying to sell?
let this bad boy fail
Obama missing a day giving yet another speech ?. Not bloody likely..
Pathetic deal....pathetic guidance. Away from them taking 72hours to announce/price vs same day for BAC/WFC, they actually allowed accnts to increase allocation after they guided 3.15 (i.e. you can buy more 3.15 and sell in the street if you can/want from 3.40down / albeit can`t do that much size in aftr hourse). Hence the puppy traded down @ 3.18. To add to the botching...DB+5%, CS+4.5% today. BAC that intially traded dwn when those CNBC jackass came out w/ the news (before the Co.) that px was 3.15 and not 3.30-35 managed to close back to unch from cls. Hell Japanese banks traded up o/n.....ESH0 not even moving. No one to blame this time. Surreal
File that one under: 'Oops'.
this is why zerohedge sucks now, everything is spun negatively at all costs
the secondary was 17 times oversubscribed at this price
CIti was shorted starting about 2 weeks ago and who knows how many naked shorts are in this
BS. Back to the Yahoo! message board with you.
dude, i've been reading and posting on zerohedge for 8 months. i just don't post often anymore because this blog continually focuses on the negatives
you all should be CHEERING that Citigroup is paying back all the TARP, which is US taxpayers. the rest of the stakes can be dealt with over time
this is almost as bad as the bashers on yahoo who bash biotech companies who just got FDA approval....its pathetic.
You wear them whacked out pants from Hot Topic?
Ok. Nevermind your mode of attire, if TARP is what the government calls the money it loaned the banks AFTER the taxpayers where notified they where getting brutally assfucked with a pine tree with the cones still on it, what exactly do you/they/we call all the money the government loaned the banks in December 2007 when they all suddenly went billions into the red and the govt had to loan them the capital to stay in business? Remember that?
Second, you insult every single one of us by trying to sell Hope and Change when we all know the only reason citi is paying back the tarp is so they can go all Goldman Sachs on bonuses before they go bankrupt.
This is no Yahoo message board for sub-sentient poo flinging chimps, partner.
-MobBarley
17% over-subscribed at $3.15? Umm, quick I am going to go get me some before it goes to $2.00. They make an elequoently good risk now that they are still stuffed full of ever-rotting toxic assets and have decided to pull the plug on life support so they can have free reign to pay bonuses like they are going out of style. I guess they better get those bonuses quick, cause they likely won't be in business in a year.
So your saying that IPO, bond auctioning, capital raising channels are having a cognitive disconnect where they assume we want to invest in them and not profit with them when we really mean JUST DIE!!!
Is that the miscomunication?
And where is cramer's psychic who was channeling the... All the banks are going to buy 'something' and this 'something' is going to make them alot of money....
Equipment to gold coat tungsten?
I love it. For Pandit so loved his enormous bonus, that he sacrificed his only company.
A line from Red October is appropriate: "You arrogant ass, you've doomed us all!"
Note to Ben, Timmy et al - you need 'real' investors to take down stock. Your HFT and PPT won't be able to do it - oops.. got caught believing your own hype about this bullshit rally.. nice rookie move.
Sell are you crazy. Loan them some more money first, then reverse split it so it doesn't go to zero.
the Duke of Con Dao here:
....
check out this vid mash-up on Citi - a bit dated
but still goes after pandit the bandit
http://www.youtube.com/watch?v=pPfbXFf4g2k