Once known as the biggest bank by assets, one among the big banking giants on earth – Citigroup is now being defied by Wall Street animals and naked shorts. No one would had ever imagined that Citi will be traded close to $3.07 in 2008 from $54 in mid 2006. However, the US congress wont let Citi to do Lehman thing, they will surely rescue the giant by taking up stake in the Company, one of the serious consequences of this will taken by Common shareholders at Citi, exactly what happened to Bear Stearns and Washington Mutual when it was taken up by JPMorgan Chase. I believe something should happen today or tomorrow, before Monday for sure, government will come up with some rescue plan for Citigroup.
Yesterday, few of us were discussing the consequences if Citi files Chapter 11 – one of the major thing that will follow after the Company files chapter 11 protection will be significant deterioration in prices of other Big banking giants, remember Citi has huge interbank lending and is infamous for CDS positions in various credit markets. Investors always wish to see transparency while they invest in any asset class, however, which is not something Citi has done to help confidence among its investors. President Obama has taken up things at difficult times, everyone is waiting for some good news, actually waiting for something good to happen at Wall Street.
Vivek Misra
