The United State government has agreed to increase its stake in embattled Citigroup from 8% to 36%. The NY Times explains, "Under the deal, Citibank said that it would offer to exchange common stock for up to $27.5 billion of its existing preferred securities and trust preferred securities at a conversion price of $3.25 a share, a 32 percent premium over Thursday’s closing price. The government will match this exchange up to a maximum of $25 billion of its preferred stock at the same price. In its statement, the Treasury Department said the dollar-for-dollar match was intended to strengthen Citigroup’s capital base." Still, Citi's shares plunged—Canaccord Adams managing director of U.S. equity trading David Rovelli told Bloomberg TV, "It’s just unbelievable. The government is making up the rules as they go. A continued breakup is probably in the cards." And former SEC chairman Arthur Levitt added, “This is another step toward creeping nationalization." Currently, the Dow is close to 7,000 points.
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