Now that the government has given Citigroup (NYSE:C) billions of dollars and has agreed to back-stop hundreds of billion in potential losses on toxic paper, it has decided that the bank may not be able to run itself. At least it may not be able to run itself as well at the government wants it to.
According to The Wall Street Journal, "Citigroup Inc. has recently started operating under a regulatory agreement that could subject the company to greater restrictions on its operations." While the filings are not detailed, it appears that activities at some of Citi's businesses will have to be disclosed to the government.
Citi is already faced with some government control. It is rumored that certain board members are stepping down because their role in the bank's downfall has been questioned. Citi will not be buying a new jet because the Treasury pressured the bank to drop its purchase plan.
The net of all this is that the management that got the huge financial firm into its current mess will not have unfettered ability to decide the future direction of the company. Shareholders can only benefit from having the government look over management's shoulders.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
1-29-2009 @ 3:27PM
alan said...
Gee, the chains must be made from paper machet !!!!
So, Sandy Weill walking off with $1.4 Billion of Citi stock was not enough for that dirt bag. Poor man, he needed the SECRET consulting contract plus perks. Better yet, his wife gets to use the corporate jet (one of them) whenever she desires.
THIS IS WHAT IS WRONG WITH THE CURRENT CULYURE-- SHEER GREED !!!
Does the government have the GUTS to claw back Weill's Theft?