The Treasury Department purchased additional shares of Citigroup today:
After two multibillion-dollar lifelines failed to shore up Citigroup, the government will increase its stake to 36 percent, from 8 percent.
The chief executive, Vikram S. Pandit, will remain, but Citigroup will shake up its board so that it has a majority of new independent directors, a move that federal regulators had been pursuing. The announcement comes as the bank said its 2008 loss had spiraled to $27.7 billion, among the largest in corporate history. Under the deal, the Treasury Department agreed to convert up to $25 billion of its preferred stock investment in Citigroup into common stock, giving taxpayers more risk, but more potential for profit if the company recovers.
The door is open to additional purchases if necessary. Once the investment passes 50%, government has a controlling interest in the company. Apparently the Treasure Department wants to avoid that outcome.
