Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“We have a system that increasingly taxes work and subsidizes nonwork.”     Milton Friedman

February 27, 2009

Doublespeak — We’re Not Going To Nationalize

by Brad Warbiany

What would they call this, then?

A new Citigroup deal has finally been announced by the Treasury. The government will convert $25 billion in preferred shares to common shares. The move could give the Treasury close to a 36% stake in the company. The government’s influence is becoming apparent. Citi will eliminate its dividend and is facing pressure to participate in a new foreclosure prevention programme.

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  1. Brad, I know where you’re coming from but I don’t think you are right in your interpretation here.

    This action is the government bending over backwards NOT to nationalize the bank. The actual value of their investment would have bought 100% of citibank outright, but instead they’re making sure they avoid controlling the institution.

    It’s the worst of both worlds – taxpayer money to keep the bank running, without a corresponding amount of taxpayer input.

    Comment by Nicholas — February 27, 2009 @ 10:25 am
  2. They’re taking a 36% stake, they’re exerting pressure on management, including the executive pay cap, elimination of a dividend, and pushing on them to change their foreclosure procedures.

    It’s not de jure nationalization, but it’s getting pretty damn close.

    Comment by Brad Warbiany — February 27, 2009 @ 11:14 am
  3. If it walks like a duck and acts like a duck, its a duck. Everything the government is doing and will do is sheathed in more palatable language. Brad is correct. They are on the road towards nationalizing the banks. But they don’t call it that. They make it look like they are the same as you and my, going shopping at the Dow, buying a few stakes in something here or there.

    Comment by Stacey — February 27, 2009 @ 4:51 pm

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