What Does Santelli Think About Citi's Proposed Taxpayer Ripoff?

Via Atrios, here is the latest proposed ripoff of taxpayers for Citibank's benefit:

Citigroup (C) has proposed that the US taxpayer and other preferred shareholders convert up to $75 billion of preferred stock into common stock, thus bolstering the company's tangible equity and putting it in less desperate need of a complete takeover. And what will the US taxpayer get for this preferred stock conversion? 40% of the company for some of its $45 billion of preferred, say reports. The reports add that Citigroup's goal here is to keep the US's ownership under 50%, so this won't be a de facto nationalization.


Well, that's nice for Citigroup...and another ream-job for taxpayers. Citigroup's common equity is currently worth $10 billion. If the US were to convert all $45 billion of its preferred [shares] at the current [Citi] stock price, it should end up with 80% of the company, not 40%.

(Emphasis supplied.) REAL nationalization is the government taking over, say, Citibank, by converting its preferred at market price. Fake "nationalization" is when Citibank is handed $45 billion in exchange for a fraction of that value in common stock. So my question is, what does Santelli think about THAT?

Speaking for me only

< Krugman And Greenspan: Time To Nationalize Banks | Down the Path To Nationalization? >
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    His math is a little wrong (none / 0) (#1)
    by steviez314 on Mon Feb 23, 2009 at 01:21:08 PM EST
    since if ALL $75B preferred converted, that would give the US $45B out of $85B, or a 53% stake.

    If we went over 50%, the US would have to consolidate all of Citibank's liabilities onto its balance sheet, as the UK did with Lloyds.

    Time for some truth telling (none / 0) (#2)
    by Big Tent Democrat on Mon Feb 23, 2009 at 01:25:27 PM EST
    If he is a man of principle... (none / 0) (#3)
    by kdog on Mon Feb 23, 2009 at 01:29:41 PM EST
    he should be ranting any minute now...Santelli? Santelli?...lol

    Your classic rigged-marketeer posing as a free-marketeer...a lot of those in the halls of finance.

    How about leaving your little echo chamber and (none / 0) (#6)
    by 18anapple2 on Mon Feb 23, 2009 at 01:48:11 PM EST
    doing a little independent fact checking on your own..

    How about you leave my threads (none / 0) (#10)
    by Big Tent Democrat on Mon Feb 23, 2009 at 02:00:50 PM EST
    Echo chamber? You are gone from my threads and do not come back.

    The irony (none / 0) (#11)
    by Steve M on Mon Feb 23, 2009 at 02:07:07 PM EST
    of accusing kdog, of all people, of living in an echo chamber is hopefully not lost.

    LOL... (none / 0) (#12)
    by kdog on Mon Feb 23, 2009 at 02:08:34 PM EST
    A Thoreau-esque echo chamber of one, maybe:)

    WSJ today (none / 0) (#4)
    by Polkan on Mon Feb 23, 2009 at 01:31:37 PM EST
    ... has an interesting article about the same topic.

    "As part of the plan, Citigroup officials hope to persuade private investors that have bought preferred shares -- such as the Government of Singapore Investment Corp., Abu Dhabi Investment Authority and Kuwait Investment Authority -- to follow the government's lead in converting some of those stakes into common stock, according to people familiar with the matter. That would further bolster an obscure but increasingly pivotal measure of banks' capital known as "tangible common equity," or TCE."

    And this:

    The regulators' new focus on TCE represents an important shift. The government's recent injections into hundreds of institutions were predicated on the idea that Tier 1 was key. Because the investments weren't in the form of common stock, they didn't affect the companies' TCE ratios.

    Rick Santelli says we are throwing good money (none / 0) (#5)
    by 18anapple2 on Mon Feb 23, 2009 at 01:43:28 PM EST
     after bad  and as a regular viewer ,i can say he has been  resonably consistent abt letting the big banks fail and NOT bailing them out!



    Not much of a rant (none / 0) (#7)
    by Big Tent Democrat on Mon Feb 23, 2009 at 01:50:22 PM EST
    Where is his rooting section?

    :) hmm nevertheless (none / 0) (#8)
    by 18anapple2 on Mon Feb 23, 2009 at 01:59:19 PM EST
     a reasoned and resonable  argument..less confrontationalist ,so much more constructive and  and so much less easily dismissed as a "rant"..works for me.

    Funny how he does not rant (none / 0) (#9)
    by Big Tent Democrat on Mon Feb 23, 2009 at 02:00:06 PM EST
    when it comes to bailing out banks.

    Wonder why?


    I was a floor trader in NY for 20 years (5.00 / 1) (#13)
    by steviez314 on Mon Feb 23, 2009 at 02:09:26 PM EST
    If we listened to the floor traders, we'd all have babay powder on our shoes, paper mache hatchets sticking on our backs and betting who could swallow a cicada.

    Traders are children with money.


    I never though his initial statement was a rant (none / 0) (#15)
    by 18anapple2 on Mon Feb 23, 2009 at 03:09:26 PM EST
    either and I saw it live.Calling it a "rant" is an easy way of dismissing his argument without addressing the substance of his statement.