Should We Bother Being Outraged Anymore?

Citibank and the Treasury  Dept. have reached an "accord" (since when is the language of diplomacy appropriate for a gov't rescue of an insolvent bank?) for Citi's THIRD bailout.

As much as $25 billion in preferred shares held by the U.S. government will be converted into common shares as Citigroup struggles to stabilize itself following more than $37 billion in net losses during the past five quarters.

Depending on how many current holders of Citigroup preferred stock agree to a similar move, the company's tangible common equity could surge to $81.1 billion from $29.7 billion at Dec. 31. That would reverse the recent slide in tangible common equity -- a gauge of what shareholders would have left if the company were liquidated -- that fueled a downward spiral in Citigroup shares.

The conversion leaves taxpayers exposed to the risk of greater losses. The government's preferred holdings had stood ahead of common stock in Citigroup's capital structure, meaning they were less likely to lose value if the company's woes continue to mount. In addition, by converting much of the U.S. stake to common shares, Citigroup won't have to pay the hefty dividend payouts that were attached to the preferred stock.

As George Washington points out, Citi has not just been nationalized. Its ownership is such that it has been internationalized. 

The U.S. now owns about 36% of Citigroup.

The Government of Singapore owns around 11%.

The Kuwaiti government owns about 6%.

And a Saudi prince owns about 5%.royal

That totals some 58% owned by governments and foreign ty.

At the very least, you would think "we" could use "our" ownership of Citi to force some changes at the top, but Sec. Geithner has decided that CEO Pandit is a man "we" can do business with. 

Well, then how about replacing the Board of Directors that governed Citi into its current mess? Apparently, the move to revamp - not replace - the Board "faces hurdles" Doesn't it always.