Anyone wanna own a bank?

Looks like pieces of Citibank might be up for purchase. Perhaps now would be a good time for the government to own a bank?

Nationalizing Citibank would be big. Really big. Citi was once the largest U.S. bank, with a market value of $274 billion as at the end of 2006. On Friday, it was down to $20.5 billion.

Now without getting too much into the virtues and sins of mark-to-market, it is still worth pointing out that Citi has $50 billion in capital above and beyond what the regulators require to be ‘well capitalized” and has around $2 trillion in assets. (Mind boggling numbers, eh?) Of course, the U.S. Government is responsible for $25 billion of that capital, a function of the $700 billion Troubled Assets Relief Program that isn’t for troubled assets any more.

Citibank is almost certainly in the TOO BIG TO FAIL category. So, we can expect to see the U.S. Government pony up more bucks, in a move that says the company has adequate capital and liquidity to ride out the crisis and thus calms panicked investors.

But, wait a moment. The company is now valued at $20.5 billion. And we’ve already injected $25 billion. Don’t we already own it?

OK, OK, I know. Market valuation isn’t that simple. Citi was worth way more than what we paid when we paid it. And there’s lots of other schmucks sitting on preferred stocks like us. And selling a company isn’t anywhere near as easy as accepting a no-strings-attached check for $25 billion.

But, still. At what point do we get control of the assets and management and decision-making for all the money we’re putting in? I don’t mean more loans or more debt guarantees. When do we get to own the whole shebang?

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