Citigroup is in frantic discussions with the government about its ongoing collapse, Andrew Ross Sorkin reports. Some customers have apparently begun running for the hills.
As of late Friday evening, no decisions have been made. Options under discussion include:
- Throwing Vikram Pandit over the side. Won't help. It's too late for a management change to save shareholders.
- Selling all or parts of the company. To whom? When? By Monday?
- Arranging a government assisted merger with another company. Which company? When?
- Having the government make an announcement of support. Irrelevant. Everyone knows the goverment won't let Citi go bankrupt. It's just a question of how they bail it out.
- Having the government provide a new financial lifeline. Inevitable. Probably won't save shareholders.
- Publishing full page ads in major newspapers telling public to be calm, all is well. This is preposterous. Can they really be considering this? Yes. In fact they're actually doing it.
- Treasury considering hitting up Congress for the second half of the $700 billion TARP. Given the refusal to send the auto industry one thin dime, this probably won't go over well.
- Bringing back the uptick rule. Fine. Whatever. Won't help. Shortsellers aren't the problem here.
Sorkin:
After a board meeting early Friday morning, Citigroup’s management and some board members held several calls with Henry M. Paulson, the Treasury secretary, and with the head of the Federal Reserve Bank of New York, Timothy F. Geithner, who hours later emerged as President-elect Barack Obama’s choice to be Treasury secretary.
As Citigroup’s stock sank, falling 94 cents to $3.77, the Federal Reserve was carefully monitoring how much money corporations and other customers were withdrawing from the bank, people involved in the discussions said. The Fed was trying to ascertain whether the tumult in the stock market could escalate into something worse.
So far, however, these people said, most customers and clients remained committed to Citigroup.
Translation: Some customers and clients are running for this hills. More will decide to do so over the weekend.
On Sunday, Citigroup plans to run full page advertisements in major metropolitan newspapers that acknowledge “our financial markets have been tested in unprecedented ways,” but arguing that it has the diversity and experience to pull through. In a nod to the company’s slogan, the ad concludes: “That’s why now, more than ever, you can feel confident that Citi never sleeps.”
Absurd. Meanwhille, within Citigroup, some executives are reportedly blaming the government. If only the Feds hadn't allowed Wells Fargo to steal Wachovia out from under them none of this would have happened.
