Citi approaches feds - seeks bigger government stake; Customers upset

[Richard Tafoya]

Politico:
http://www.politico.com/news/stories/0209/19163.html

The federal government is in talks with Citigroup Inc. to increase its ownership stake in the troubled bank, the Wall Street Journal reported Sunday, citing sources the newspaper did not identify.

The government could take as much as a 40 percent share of Citigroup’s common stock, stoking fresh speculation about the nationalization of several large U.S. banks amid steep losses in the financial sector and potentially triggering a new round of stock selling when the markets open on Monday.

Citigroup proposed the move to regulators, but the Obama administration hasn’t indicated yet whether it supports the plan, the Journal reported.

Administration officials did not respond Sunday night to requests for comment.

White House press secretary Robert Gibbs said last Friday that a “privately held” banking system is the “correct way to go.”

But the weekend talks reflect sentiments among bank executives that the government needs to take a stronger hand in the institution to halt the freefall. Citigroup’s share price dipped below $2 last week, an 18-year low.

[Regis Philbin]

http://biz.yahoo.com/ap/090224/citigroup_customers.html?.v=4

Citi customers angry about reported gov't plans

Tuesday February 24, 7:39 pm ET

By Erin Conroy and Sara Lepro, AP Business Writers

Citigroup customers disgruntled as government considers taking a larger stake in the company


NEW YORK (AP) -- The sight of a Citibank logo makes Rumi Turkel cringe.

She's seen her banking fees climb, and found out Tuesday that interest rates on her savings accounts have fallen again. That's not to mention the substantial amount of money she says her family has lost from owning stock in the bank's parent company, Citigroup Inc.

Like other Citi customers interviewed by The Associated Press on Tuesday, she is infuriated that the company has reportedly approached regulators about expanding government ownership of the bank, which has already received $45 billion in bailout money and guarantees to cover losses on hundreds of billions of dollars in risky investments.

"It's painful, really, to think about," Turkel said as she walked out of a bank branch in her neighborhood on Manhattan's Upper West Side with her young daughter in tow. "We've lost a lot of money, but that was mostly our personal choice, and a very painful one. I don't know if taxpayers should now be forced to give their money to these banks."

Citigroup has approached federal regulators about additional steps the government can take to help the still-struggling bank, including increasing its ownership of the company, according to people familiar with the discussions. They spoke on condition of anonymity because they are not authorized to speak on behalf of the government or the company. A Citigroup spokesman has declined to comment on that issue.

[db44]

If the Feds bump my interest rate down to five-percent on my Citicard, I'll take it. My interest rate has dropped since the feds got involved already, so I wouldn't be one of those upset customers.

[WannaBreatheYou]

I'm a Citi customer (loan and card) and I'm not upset by it, no more than I'm upset about any of the other bailouts.

[DoubleEdgeSword]

Citigroup is a little different than the other large banking groups, such as Bank of America. Citi has always had a very large global presence, loaning huge amounts of money to other countries and putting credit cards into the hands of the citizens of the world. When I worked for them in the 1980s, more than 50% of their earnings came from outside of the U.S. Even more recently, in 2002, Citigroup was the larger lender to Brazil. I'm not sure what that ratio is these days, but if it's anywhere near that amount, I can understand the government taking an interest in the power that the billions of dollars of business can generate and what it would mean should the international markets begin defaulting on those loans.