Government To Sell Stake In Citigroup. Does That Mean Obama Is No Longer A Socialist?
Citigroup received a huge government bailout, but is now likely to pay what is being described as a “king’s ransom” to pay off the debt.
At today’s prices, the sale would net more than $8 billion, by far the largest profit returned from any firm that accepted bailout funds, and the transaction would be the second-largest stock sale in history.
On paper, the government’s 27 percent stake has grown in value to $33 billion. The size of the deal in the works has Wall Street buzzing. Only the stock offering by Japan’s Nippon Telegraph and Telephone, which raised $36.8 billion in 1987, was larger, according to Thomson Reuters.
The windfall expected from the stock sale would amount to a validation of the rescue plan adopted by government officials during the height of the financial panic, when the banking system neared the brink of collapse….
If the sale proceeds as planned, Citigroup would be able to cut nearly all of its ties to the $700 billion Troubled Assets Relief Program. Meanwhile, the administration could highlight the profit generated from the rescue of big banks.
“It’s unprecedented to do [a stock sale] of this size right after the financial industry has been so battered,” said an industry official who spoke on the condition of anonymity because he was not authorized to comment publicly. “It’s just a very bullish sign.”
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