The arguments about the value of shares in Citigroup (NYSE: C) rage back and forth most trading days. The shares can run up or run down 15% during any given market session.
On days when it looks like American banks will be bailed out with common shareholders remaining intact, Citi runs up. On days when nationalization of the banks seems more likely, it heads toward new lows.
An article in The New York Times says that "Some of the nation's large banks, according to economists and other finance experts, are like dead men walking." To come to that conclusion, the bank interviewed almost every expert it could find.
But most of the arguments against bank value turned up by the newspaper are now months old. Bank debt will continue to default at record rates. Consumers will stop paying credit card obligations. The value of housing will hurt mortgage derivatives.
None of those viewpoints matters much. What experts do not want to focus on is that the common equity value of the large U.S. money center banks is in the hands of the federal government, not the financial markets themselves. Even if bank losses double in 2009, Congress and the Administration can elect to buy or guarantee an almost limitless amount of the assets on bank balance sheets.
People with shares in Citigroup and other large banks may as well write their congressman. He has as big a vote in the future of the firms as anyone else.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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