You know those really, really fat people you hear about now and again? The kind of people who are so huge, they can’t leave the house or even get off their couches, and unless someone does a major medical intervention, their parts cease to function and they die horribly, with their skin grafted into the terrible chintz material, and walls need to be knocked down to move the body out? That’s what Citigroup has been reminding us of lately. The bank is so gigantic, it can’t even see its feet, and even though it has been aware it is dangerously obese, it has never really stopped eating Doritos because that’s what it’s used to because no one ever taught it about nutrition. As for the $350 billion the government gave to it — that was just like a relative of the fat person coming in to rotate its limbs: Yes, it prevented bedsores, but it didn’t really resolve the fact that dude weighs 1,200 pounds. But now, the government, like Richard Simmons, is stepping up, and putting Citi on a serious liquid diet.
This morning, the Treasury Department announced that it would massively increase its stake in the banking giant.
Under the deal, Citigroup said it will offer to convert nearly $27.5 billion in preferred stock sold to private investors and the public and up to $25 billion in preferred stock bought by the government into common stock. The exchange, if fully executed, would leave the U.S. government with 36 percent of the bank’s shares.
The government is also demanding the company overhaul its board of directors, though CEO Vikram Pandit will get to keep his job, and presumably, his awesome $1 a year salary, as long as he wants to. It’s going to be a long, difficult road for everyone involved, but we believe they can do it. As the inspirational theme song to the Biggest Loser says, “It’s never too late to try.”
U.S. to Take Big Citi Stake and Overhaul the Board [WSJ]
U.S. Agrees to Raise Its Stake in Citigroup [NYT]
