Citigroup reaches aid deal with government

Sure, Government doesn't want to nationalize the banking system. (That was sarcasm, in case you didn't catch it.)

According to Yahoo news

The U.S. government will exchange up to $25 billion in emergency bailout money it provided Citigroup Inc. for as much as a 36 percent equity stake in the struggling bank, greatly increasing the risks to taxpayers as voter unhappiness about the broader bailout program rises.

Investors appeared disappointed in the deal and expected dilution of their stake, sending shares plummeting 94 cents, or 38.2 percent, to $1.52 in afternoon trading. Stocks tumbled early but pulled off their lows as the Dow Jones industrial average came within 34 points of breaching the 7,000 mark for the first time in more than 11 years.

No big surprise here, the investors don't want anything to do with it.

The conversion will make the government the largest shareholder in Citigroup, but company officials said they still expect to call the shots.

Good luck with that.

Investors have punished the shares of Citigroup and other banks in recent weeks out of concern the government could nationalize troubled banks, which would involve replacing management and wiping out shareholders.

Treasury officials and Federal Reserve Chairman Ben Bernanke have said there are no plans to take such steps.

Of course these things are never "planned". They just happen. And it doesn't surprise me that the investors want to get out of the cave before the Indiana Jones giant marble runs them over.

Dean Baker, co-director for the Center for Economic Policy and Research, a liberal think tank, said the government's efforts to avoid a takeover amount to "a further handout to Citigroup."

"We really should own it outright," he said, given that taxpayers have provided the company $45 billion in assistance, several times its market value.

Sounds like government thinking to me.

I'd definitely say, if you have any investements there, get them out. Because when the government nationalizes it, you probably won't have anything left. I could be wrong, but I doubt it.