U.S. Should Take Its Citi Profit and Skedaddle

Now that the lock-up for the government on its Citigroup (C - commentary - Trade Now) stake has come and gone the U.S. has several ways to sell its gigantic stake in the bank and right now it looks like it is considering all the wrong ones.

Professionals know that you never turn a gain into a loss and the government's got a gain on its shares. So what the heck. Dispose them. We don't want the government to play market with its stock. If you read the commentary on this site you would think that the government's about to give up a buck and break even on the thing.

But what we hear is that the government's either going to sell some blocks over time or dribble it out on a daily or monthly basis. Given that we are talking about a paper profit of $10 billion on 7 billion in shares it should take its 39% gain and skedaddle. If it feels like it wants to play it safe, then sell half, make a loss hard to come by and then dribble it out.

But to put this stock out over time betting that the market will stay strong doesn't seem to be in the best interest of the government or the stock. You put a lid on the stock even if the upcoming quarter is good and you risk leaving a huge gain on the table if it isn't.

The whole episode with Citigroup and the government has been a tortured one. It is still considered the poster boy for all that is wrong with the banking industry with CEO Vikram Pandit being viewed as a villain. I think he has done everything in his power to turn around this franchise, which was the most poorly run of all financials, except Lehman, Bear, Washington Mutual and Wachovia, because of its disastrous Golden West acquisition. The best thing the government can do is take its gain and let Pandit work off the Troubled Assets Relief Program.

The worst thing it can do is bet the market goes higher.

At the time of publication, Cramer had no positions in the stocks mentioned.

---

Know What You Own: Cramer mentioned Citigroup. Related stocks are Bank of America (BAC - commentary - Trade Now), JPMorgan Chase (JPM - commentary - Trade Now), Wells Fargo (WFC - commentary - Trade Now), Goldman Sachs (GS - commentary - Trade Now), Morgan Stanley (MS - commentary - Trade Now) and HSBC (HBC - commentary - Trade Now).

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.