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.