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Why is Citigroup Inc (NYSE: C) under pressure from regulators to sign a secret agreement letting the government take control of 34% of the company? The reason is that Citigroup is losing money.
Regulators from the FDIC are demanding that Citigroup strengthen its board and governance, improve asset quality, better manage expenses and provide more information to regulators about its capital and liquidity. They did do a similar deal with another regulator last year.
We can infer from this that Citigroup is still in deep financial trouble. With other banks reporting profits this week, Citigroup stands out as a source of concern in the banking sector. With all of the press releases saying that the banking sector has turned a corner, this news causes us to doubt that the financial crisis is over.
On Friday, we will know more details when Citigroup releases its quarterly earnings report. The sheer size of Citigroup makes this an important development. Just when we thought the bailouts were over, a new bailout is in the works.
Should you sell Citigroup stock now?
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