Clairvoyant

18 Dec 2009

The Treasury Secretary went up the hill to fetch a pale of integrity for TARP claiming that banks would repay TARP money early and there would be more of it for the taxpayer, money that is.

Citibank dutifully priced and sold shares to return $17 billion to Treasury which, along with $38 billion in tax concessions, removed Citi from the ICU list and permits it to pay executives market rates for losing money at a declining rate.

Unfortunately Citibank sold the shares at 3.18, which Treasury bought at 3.25 and were trading at $4.05 before the Secretary went up the Hill. Treasury says now it will hold the share for twelve months, conveniently past the mid term elections next year.

Citibank has friends in the Gulf. Saudi has come to its rescue early and often. In May of 2007 it was Abhu Dhabi which invested $7.5 billion at $37 a share with the right to buy more at $37.

AD was miffed that Citi sold shares at 3.18 without the courtesy to reduce the strike price on AD’s converts (the right at which AD can buy more Citi shares). Newly litigious AD sued Citibank for “misrepresentation” while it slipped $10 billion to Dubai to keep it out of the Arabian Sea.

The Kuwaiti's, though, got out $1 billion ahead of the game in Citi stock a week before the Secretary went up the Hill.

Clairvoyant.