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The Truth Behind The Government's Citigroup Stock Price Manipulation
American Banking News investigates the reason for the recent massive surge in financial stocks, to a big extent predicated by the government's desire to push Citi stock price over the $5 critical threshold "participation" barrier. As ABN notes: "The reason behind wanting the share price to go beyond $5 is in relationship to institutional investors, who in many cases are prohibited from investing in any stock under $5 a share. For example, pension funds and mutual funds are some of those I’m referring to here." Nothing surprising there. However, the scathing critique that follows, based on nothing but the truth and exposing the government's endless stock market manipulation gimmicks, deserves a broader audience.
Now you know why the U.S. government voted all its shares at the annual meeting to encourage there to be a reverse stock split; they would then sell a large stake in the company, which they would then publicize as making even more money on behalf of the “taxpayers.”
It’s incredible to me to see the U.S. government take taxpayer money, use it absolutely to not allow this giant bank to fail, then turn around after bailing it out and putting a huge portion of what Citigroup owes them in common shares of the company, then manipulating their position in the company in an effort to inflate the share price of Citigroup in order to make a huge profit.
If this was being done by a private company I wonder if there would be any screaming and hollering over what was being done? I wonder if there would be any investigations?
This is the new, crazy world of government interference in the markets (at this level) as they can literally manipulate it any way they choose once they gain access to it.
Now you know why they have all those former bankers on their staffs; you can be sure they’re guiding them along the way.It also makes you question the way the focus has come on Goldman Sachs (NYSE:GS) by the government, even as they have numerous former Goldman Sachs executives as part of their decision-making process.
Is it a scripted play being offered to the public with both parties writing the screenplay?
As far as the push behind the $5 a share push, it seems the government is extremely committed to making it happen one way or the other before making significant sales of their shares in Citigroup. It’s just too good of a public relations coup to pass up, and because Citigroup has struggled to obtain the $5 a share mark, it seems the government is working hard to get a reverse stock split as the other option to get it going quickly in order to boast of their great management of the taxpayer funds.
If institutional investors start putting funds into the stock once it achieves the $5 mark, there could be a nice upwards move over the year which would allow the government to boast over and over again how wisely they’re divesting of the shares they own in Citigroup. It seems they’re willing to go to any length to accomplish that task, at least without the general public understanding what’s really happening.
The problem with Citi is that it still has a insolvent balance sheet that consists to a big part of non-performing assets, delinquent loans, properties not being foreclosed on and thus not generating any cash flow, and other stuff that as others have pointe dout, would give "junk a bad name." Yet what the government is implicitly doing is it is forcing mutual and pension fund money (your retirement capital) to invest in a company which no matter how far of a disconnect from reality its stock price is, is still a hodge podge aggregation of worthless assets. Period. Even Goldman, without doubt a party to the government's charades, could find nothing favorable to say about the company yesterday. Still, the run from $3 to $5 in a month has been exclusively driven by forced short covering as we have reported throughout.
There is no efficient market any longer, there is no market period, that does not at its core have pure welath-transfer manipulation as the primary driving purpose. Citi's existence for a few more years (at best) is merely taking shareholder money and using it to pay for salaries and bonuses of the "managers" of these assets. They already failed once. They will fail again. But at least your restirement money will be used to compensate them just a little longer.
Trade this market if you must. Just know full well that it is about as much integrity as the 3 card monte games played at the cafe of the central Moscow Politbureau. And every day that the administration is in charge makes it worse. The Dodd bill will be the nail that will seal the fate of the American decline into irrelevancy, as the cannibalism between the big financials takes on a brand new meaning, funded all the while the indebtedness of future generations of Americans. Assuming such exist in the first place.
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Without more, this thesis makes no sense.
There is no factual cover for the allegation that the gov't is ramping the price. A reverse share-split where the government trades x million shares @ $5 for x/2 million shares @ $10 does not provide the government with any profit to declare. Moreover, the $5 rule for institutional investors itself is arbitrary and capricious because it takes no account of market cap.
The implication is that if the pension funds start buying the price will continue to rise. This was the same logic they used when they put it on the DOW. It is clear the bankers are running the gubbermint because dumping toxic crap on the epnsion funds is their M.O..
I also think the author is talking in terms of Goverment PR purposes, for example:
CNBC Idiot Talking Head:
"The Obama administration, after investing in Citigroup at $3.20 per share, has sold its stake at $25 per share, a whopping $21.80 per share profit for taxpayers!!"
When, as you correctly stated, they are selling far less shares. Think of how it will be framed by the bullshit artists.
<yawn> Just reverse-split the stock.
Pump and Dump? not the Government? Shouldn't the Government just have the Goldman Algo's help it thru the plateaus?
$4.96+0.08 (1.64%) Real-time: They are getting warmer...
trading this market makes me hate humans
+100
What humans? I thought the Janitor pushed the green button after cool down so the computers could go to work. Bankers stay home and watch screens with betting pools of what second a stock will hit a predetermined price. The people at Goldman Sachs are a buch of Japanese Robots thay bought and stuck under R&D. 30,000 Employees? Nah. no way. Prove it. Strip search live at 10:00 am
"Come on down, and see the idiot right here"
"people=shit"
It must be nice to be too big to fail.
Looks good to be a TBTF... your are correct.
Company Name Price Change Chg % Mkt Cap C Citigroup Inc. 4.95 +0.07 1.43%141.37B
BAC Bank of America Corp. 18.56 +0.17 0.92%186.14B
JPM
JPMorgan Chase & Co. 45.84 +0.45 0.99%182.35B
WFC
Wells Fargo & Company 33.59 +0.57 1.73%174.32B
HBC
HSBC Holdings plc (ADR) 53.19 -0.12 -0.23%185.23B
GS
Goldman Sachs Group, Inc. 160.51 -2.81 -1.72% 84.51BAXP
American Express Company 45.96 +0.20 0.44% 54.98BAIG
American Intl. Group, ... 40.95 +1.86 4.76% 27.28BMS
Morgan Stanley 30.19 +0.63 2.13% 42.18BBCS
Barclays PLC (ADR) 22.89 +0.07 0.31% 68.88BMTU
Mitsubishi UFJ Financi... 5.43 +0.02 0.37% 63.13BI think you have "post" issues. "Make room, JW is here! I'm going to take up way more room than I need to, because I have something impotent, er, I mean important to say. Then when people do not like it, I will call them names. Blah, Blah, Blah."-You
LOL
I am sorry that my posting of the bloated numbers offended you, I am sorry that the biggest problem you can address about the bloated numbers being posted is that I took up to much space on the page.
The Hundreds of Billions verse page space? I have to draw the conclusion from the quality of the compaint that you simply do not understand how screwed we all really are.
I will be more mindful of posting facts and the space that posting the facts takes up so as not to draw attention away from the larger problems we all face. i would have to agree your two (2) line complaint of my posting facts did take up far less space... I would also mention that your post offers nothing other than drama and / or mis-direction from the larger issue we all suffer.
"I have to draw the conclusion from the quality of the compaint that you simply do not understand how screwed we all really are."
I am in the Green CHUTES camp. Enough said?
He's molding my mind. Just a few posts and the stupid will be downloaded.
"If this was being done by a private company I wonder if there would be any screaming and hollering over what was being done? I wonder if there would be any investigations?"
no, there are only investigations when stock prices go down.
They've been HFTing it's ass off for months now and they can't get it over $5? I guess they will soon realize that $600 gold is off the table as well. Even cheaters have limitations I guess.
And in other news it pays to be spokesman for the Squid. Could they make it any less obvious?
http://www.americanbankingnews.com/2010/04/20/goldman-sachs-nyse-gs-rais...
Goldman Sachs Group Inc (NYSE: GS) raised its price target on General Electric (NYSE: GE) from $21.00 to $2.00 following better than expected first quarter earnings on Friday. Goldman Sachs also reiterated its “buy” rating on the company.
Goldman analysts update their 2010, 2011 and 2012 EPS estimates for G.E. from $1.03 to $1.08, from $1.35 to $1.35, and 2 from $1.50 to $1.60 respectively.
The firm said that Friday’s 3% sell off of G.E. creates a new buying opportunity as strong margins and lower credit losses at G.E. Capital Services should shift investor focused to the unit’s normalized earnings power of $0.45 to $0.90 in 2012.
So... General Electric who has Bonds backed by the Treasury and a 0% Fed Window to borrow from…
General Electric who now requires equity participation from borrower’s 20%(ish) more than ever before… equity requirements of 40% with 6% - 7% rates… has better returns that assumed? Collateral Arbitrage, straight to the bottom line… which in turn allows for those GREAT Bonuses for management… in the mean time the same risk is present as before. The quality of the loan has not changed… the profit margin has changed.
General Electric http://www.google.com/finance?q=NYSE:GE has a better Public Relations arm than Goldman… the catch phrase of “Brining Good Ideas To Life” is less accurate than “Maintaining Market Share Thru Legislation”.
0% Fed Window… =’s 6% - 7% rates… http://www.gelending.com/servlets/ActionServlet?action=ShowCLGTransLibraryPage
Capital Participation Requirements of 20% now 40% which drops directly to the bottom line as earned income which allows for Managements Bonus Bonanza, meanwhile the quality or the risk of the loans are no different than before with the minimums being maintained to meet the Fed requirement.
As well, doing God’s work requires that any and all Taxes that can be circumvented be gone around… Just because General Electric and the other TBTF’s get Tax Payer Bailouts… that does NOT specifically mean that those same TBTF’s should pay their Fair Share of Taxes… Instead investing in tax free vehicles… Municipal Bonds and thusly or course manipulating the Muni-Bond Market…
http://www.bloomberg.com/apps/news?pid=20601015&sid=aoAXtf..biHI
1. Introduction
Tax arbitrage plays a central role in the literatures on capital structure, tax capitalization, and implicit taxes. Though it is common to assume that market participants will take advantage of any discrepancies in returns across assets caused by tax differences, this is based more on theory than on empirical evidence. Indeed, most tax arbitrageurs do their best to keep their means of operation secret.1 Actual empirical evidence of the extent to which firms engage in arbitrage is scarce and important.2
http://faculty.chicagobooth.edu/austan.goolsbee/research/munis.pdf
Moral hazard is such a forgiving a Term to use when looking at the big picture… Moral Herding of the idiot American Tax Payers is far more accurate.
They wanted to reward them for all their fine pumpies and loyal service this past week and show them one hand washes the other. I believe when the dust settles a few folks at CNBC will potentially face charges for all their misleading propaganda.
If we were living in a world where they actually prosecuted people I can't think of one person on CNBC who wouldn't become Bubba's bitch.
Though Michelle Cabrera and that hotty Amanda Drury could tag team me. :)
When selecting a firearm, versatility is one of the most important traits to consider. With that in mind, the humble shotgun is perhaps the best overall defensive/offensive weapon one can add to their arsenal.
Mossberg makes a nice line of shotguns with their 500 series. The 500 model is a good tactical weapon for close-in gunfights as well as targets at a short distance. The Remington 870 is comparable to the Mossberg 500, and selection between the two is a toss-up. However, the Mossberg 590 provides superior durability during prolonged exchanges of fire, while the 590A1 is a must-have for the serious shooter.
And despite common misconception, silver bullets are not required to kill bankers, as they are technically not vampires. A lead slug will do just fine.
I am Chumbawamba.
Silver bullets may not matter, but silver coins!
Truth is stranger than fiction, and yes, Vlad the Impaler is still roaming this earth in the form of George Herbert Walker Bush.
Screwed up and went with the Remington 970. Will also acquire Mossberg.
Although, I would emphasize no wish to harm anyone, actually. Quite the opposite. But feel it is reasonable to be prepared for what the other guy has in mind.
Awesome summery! Thank you TD and all!
And to think at one time it was the Vancouver Stock Exchange that gave the financial industry a black eye...
95% of the people on ZH know the system is broken and the U.S. equity market is no longer the bastion of free enterprise it once was. Maybe it never was, but not so long ago it seemed a much more even playing field. The game now is obviously rigged. Fine. Most of us are on the same page on these issues. And we also agree that this blog is where people with insight and intelligence come for honest and truthful financial reporting. My question is this: What can we do to FIX this perpetual baloney that we see everyday in front of our eyes with a never ending march to Dow 100,000?? Certainly ranting and raving here is cathartic. But isn't madness defined as doing the same thing over and over? We need to work on real solutions to heal what is really our defective collective soul. I wish I knew where to begin. Does anyone?
There were crimes against humanity. I know it looks like we're walking around town rehashing what we already know to be true. I know it seems we are raving... it is cathartic.
But the point is to keep it up. To keep talking truth to power. To not let the relentless propaganda machine make you crazy; make you "just give up" - and give in. You, Fyodor, should know!
Someone has to remain aware of all the incredible junk that the markets have become.
It is us. Because we each choose to be here.
And we continue to be incredulous because we still have an idea of how good it could be - and are not willing to settle for less.
Hence, the reference to weapons, a la 4-19: a date that continues to live in infamy, and shake the certainty of those in power.
If you dance with the devil then you haven't got a clue -
'Cause you think you'll change the devil but the devil changes you. - (illyia, off "8-mile", N. Cage)
That's the point.
Burn it all down. The whole goLd forsaken thing.
This market is a symptom of a larger problem. Our monetary system and political system is broken. We the people have no representation only the appearance of it. The politicians sell out to corporations and banks, through lobbyists and contributions. Thus no credible legislation will be passed against their interests. The government agencies (SEC, FDIC, FDA, ect..) are purposely ineffective because many of them were former lobbyists, corporate and bank employees or will be when they leave their gov. jobs. With this conflict of interest nothing of substance ever gets done. The revolving door. The very companies or banks they are supposed to be monitoring were or are going to be their employers. You may know these facts already.
IMO the only thing that threatens the present system is a mass uprising of the people, boycotts, protests. I look to history for the answer. Ghandi, MLK, Ukraine.
One example is when blacks boycotted buses due to discrimination, and chose instead to carpool, walk or ride a bike. This lowered the revenues of the bus co.s so much that they had to give in or inevitably close down. Any legal way you can take revenue from them. As far as politicians they are fearful of mass uprisings. Protests and marches. To motivate the masses is the problem with mainstream media controlled by the elites. IMO
SHOOT ME DEAD! (again)
Uh, no there would not be an investigation.... the incompetent SEC is more interested in tranny porn.
From Dodd's newest version of the bill:
The US Treaury shall be called US TreasuryBridge hedge fund.
Timmy gets 2+20 once the "mark to myth" watermark is exceeded.
How real is the $5 price thing anyway? I know that large mutual funds at Fidelity have no such rule, are there actually pension funds with this stupid rule, one not based on market cap or liquidity but strictly price? Or is this just retail broker bs that has been passed down through the generations?
But why would pension funds and mutual funds buy Citi? The shares are shit and everyone knows it. Perhaps because it's in the index, but that gets you a brief pop and little else. If it's going to show up on the radar of insitutional money, they're going to do the homework on it and see the same things that are rightly pointed to as things that make Citi a POS stock: insolvent balance sheet made up of non-performing assets. Result: many of them won't buy.
The article says, "what the government is implicitly doing is it is forcing mutual and pension fund money (your retirement capital) to invest in a company". Well, how, exactly is it forcing mutual and pension fund money to buy anything?
More facts, please. There are plenty of statements about the government "manipulating their position in Citi in order to make a huge profit on the shares". OK. How are they doing this? Show me. Saying it does not make it so.
I think Leo knows the answer.
But from what I can tell, a good handful public pension funds are (inexcusably) moving to an effective "all-in" strategy on risk assets. Presumably, chasing these returns to the moon will get them to their 8% total return goal on their assets.
Of those run internally, many have the "$5" rule on stock purchses-- and some even extend that rule to their private (hedge fund) contractors.
I'm not saying the strategy makes sense, and I know that most private pension funds are not taking this approach-- but there are sizable public pension funds that are. Adding C to the "Purchase List" will allow the USG one last push before pulling the cord.
Mission accomplished.
Understood, and I can definitely see how some managers would be that foolish. Perhaps I give the others too much credit, but I just don't see the phenomenon being widespread.
My bigger issue (and admittedly I did not communicate this very effectively) is that while every word in the above article might be true, I'm not seeing evidence. There's lots of conjecture and opinion, but at no time does it point to something and say, "this is evidence that X is/might be occurring", or even "this trend Y is unusual and we don't have any obvious explanation". It's simply a well-articulated but unfounded rumor. I don't see a story in that.
"Evidence"? You are applying logic in the current market. Recent history has shown that that is a faulty approach.
Do you suppose that more than a few staffers in the various agencies and Congressional offices might have loaded up on C while it was a penny stock?
Rubin, Rubin, Rubin.
Snake
Enron should still be in business if Citibank can be.
What a total travesty!