Saturday, February 28, 2009

Converting Citizen Holdings in CitiSkank to Common: No Preferred Dividends

U.S. taxpayers held $25 billion in CitiBank preferred shares. They paid 5% a year for the first five years and 9% thereafter. Uncle Sam got not one dividend payment before converting their capital to common shares, with no dividend. Over a ten year period Citi would've paid $17.5 billion in dividends.

No new capital doesn't mean it's a good deal for taxpayers. The future stock price will determine its success or failure. Treasury paid $3.25 a share for Citi. It closed at $1.50. Corporafornication remains alive and well.