Citigroup will halt dividend payments for the next three years and agree to restrictions on executive compensation under terms of the U.S. government rescue of the struggling bank, it was revealed Monday.Okay, so the federal goverment will give Citigroup $20 billion and may have to eat as much as another $306 billion if Citigroup can't meet its obligations. $326 Billion in exchange for-no dividends to investors for three years and limits on executive pay. Please tell that is not all, because those are the softest loan terms imaginable.
Citigroup had to make the concessions in return for the U.S. government's direct investment of about $20 billion in the bank and an agreement to back about $306 billion in loans and securities.
First, dividends are not required for corporations to pay, never have been, never will be. Thus, Citigroup, who probably weren't going to be paying dividends in teh next three years anyway, will get to be "required" to not pay dividends. Nice huh?
Second, limits on executive pay? Like what, their CEO's and other "Chiefs" don't get a multimillion bonus but still get their seven figure salary? That makes almost no sense.
Not really buying the ease of this deal. Who is negotiating these deals with companies like Citigroup? A five year old with the Democratic talking points?
Dumb to bail them out and dumber still to bail Citigroup out on terms as soft as these. Better to have written a blank check, it would have been more honest.
1 comment:
If you happen to be a Citibank customer, hold on to your 4$$, they are about to double your interest rate. Mine went from a "fixed" %7.99 to a variable prime plus 8.99% (minimum 14.99%) . Not bad treatment for someonewho has haad their card for 8 years, never missed a payment and was just raised in credit limit to $25,000 because he was a "preferred customer".
Don't bail them out, let them sink!
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