If the government wiped citi common stock out, nobody and I mean nobody will ever buy a bank stock knowing at any moment the government may come in and wipe them out. Then you would see GS, MS. and all the others go down so fast make your head spin. So forget about being wiped out
Banks up 6% on Monday. Fear was already priced in. No major bad news this weekend. Therefore, bounce to a more reasonable price, which I think is around $8-$9 for C over the next couple of weeks. No doubt, price at $3.5 is well worth the risk.
"While Citigroup executives say the company has adequate capital and liquidity to ride out the crisis, its tumbling share price may shake the confidence of creditors, clients and rating companies. A similar scenario played out at Lehman, when Chief Executive Officer Richard Fuld declared the firm was “on the right track” five days before the firm went bankrupt.
“The market may be implying some sort of regulatory intervention,” Jason Goldberg, a former Lehman analyst who now works at Barclays Capital in New York, wrote in a note to clients yesterday. “In situations where the government has stepped in, the equity holders have not fared well.”
1)break it into 4 pieces and sell to banks that have TARP money in them. like JPM gets deposits, BAC gets International, etc. Value could be $10 total
2)Pull an AIG, which is a messy option. Fed do not have the setup to be a super BOD of public companies. If that happens then Citi to $1.
Pandit invested a huge amount into Citi earlier in the week. He certainly knows that Citi has enough capital so that the goverment will not take it over or he would not have bought so many shares.
Of course it's correct. In addition to NOT wiping out the common, I'd be stunned if they weren't looking for a resolution that sends a serious message to the market (shorts) that this is not OK, and that they don't plan to be doing this sort of thing every weekend.