Today's Outrage: Hold Applause for Citigroup

<B>Citigroup</B> made a big to-do yesterday about boosting its balance sheet by converting all the preferred shares owned by the government and others into common stock. Woohoo!
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Citigroup

(C) - Get Report

made a big to-do yesterday about

boosting its balance sheet

by converting all the preferred shares owned by the government and others into common stock.

Woohoo!

This amazing feat prompted a proud proclamation from CEO Vikram Pandit that Citigroup will now be "among the best capitalized banks in the world." He went on to promise investors that "the strength of our franchise will be evident as the economy improves."

Let's hope so. At a midday price of $3.49, Citi's shares don't reflect much confidence at the moment, especially considering some investors bought the stock at $24 less than a year ago and back at the end of 2006 the price range was above $56.

The stock has been flat-lining in the $3 range for months and is down 49% this year.

The conversion of preferred shares into common stock, giving the government a 35% stake doesn't seem like much to crow about. It's not like Citi is suddenly flush with revenue and profit -- in fact this was the easy way to repay the $45 billion in taxpayer bailout funds that have kept the bank alive.

Now the government has to wait for a rebound in Citi's share price in order to be repaid in full. But I have to hand it to Pandit for brokering a great deal with the government that transferred the repayment risk to taxpayers instead of his bank.

Other rivals are showing true strength by lining up to repay Uncle Sam with cash.

The Treasury is allowing repayment of so-called Troubled Asset Relief Program funds by 10 financial institutions, including

JPMorgan Chase

(JPM) - Get Report

,

Goldman Sachs

(GS) - Get Report

,

BB&T

(BBT) - Get Report

,

Capital One

(COF) - Get Report

and

US Bancorp

(USB) - Get Report

.

Now those banks have something to celebrate. And so do their investors -- for example, JPMorgan stock is up 11.8% this year at $35.54 in midday trading and Goldman Sachs is up 77% at $147.06.

So please hold the applause for Mr. Pandit until his company's now-overloaded outstanding shares deliver that kind of value.

Hall is the editor of

TheStreet.com

. Previously, he served as deputy editor and chief innovation officer at

The Orange County Register

and as a news manager at

Bloomberg News

in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at

The Journal-Gazette

in Fort Wayne, Ind. His work also has been published in a variety of newspapers including

The Wall Street Journal

,

The New York Times

and

International Herald Tribune

. Hall received a bachelor�s degree in journalism and political science from The Ohio State University and has taken graduate management science courses at Boston University.