Now that's embarassing
It seems the Treasury ran into a small problem today regarding Citi.
The U.S. government abruptly shelved plans to start trimming its 34% stake in Citigroup Inc., after investors demanded a price so low that the Treasury Department would have lost hundreds of millions of dollars on the deal.
The embarrassing reversal came two days after the Treasury said it planned to sell as much as $5 billion of stock in the New York company, as part of Citigroup's plan to pay back $20 billion in taxpayer aid the troubled bank received last year.
At the expected sale price of $3.15 a share, the U.S. government would have suffered a loss of 10 cents per share on its 7.7 billion-share stake in Citigroup, or about $770 million.
Could it be that the Treasury lost a whole bunch of money on the bailouts that it refuses to recognize?
The treasury is putting this whole plan on hold for 90 days, and then will unload the Citi positions over the course of a year.
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Do you know much about these $1.25 trillion in MBS by the Fed?
The Federal Reserve has bought $1.25 trillion in mortgage backed securities plus $175 billion in "debt".
That's an astounding number and is this just pure caca CDOs that are worth pretty much nothing?
I'm not hearing anything about this and to me, $1.25 trillion makes the latest Treasury screw up (don't ask them to be a day trader!) peanuts.
I've been following it closely
There are two tricks here:
1) What will happen to interest rates at Fannie and Freddie when the Fed stops buying? The Fed is something like 90% of the market right now.
2) What will happen when the Fed wants to unload these assets? If no one but the Fed is buying them, then who will they sell to? The Fed has tried a couple small "test" repos, but nothing major yet.
when Fed wants to unload
yeah, what I'm thinking. $1.25 trillion, are they worthless? Despite the Fed's printing press I hardly think such a large sum is "made up from thin air".
There will be buyers but issue will be the price.
Pennies on the dollar?
RebelCapitalist.com - Financial Information for the Rest of Us.
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