Feds back off sale of Citigroup stock
Two days after Mr. Pandit trumpeted news that Citigroup would start untangling itself from the federal government, his bank stumbled  this time, on Wall Street. Badly misreading the financial markets, the company struggled on Wednesday to raise the money it needed to repay its bailout funds.
While Citigroup managed to raise $20.5 billion in the stock market and will forge ahead with the repayment, the sale went so poorly that anxious Treasury officials reversed course and delayed their plans to start unwinding the governmentÂs stake in the company immediately, according to people briefed on the matter.
The plan for was the Federal Government to sell part of it's stake in Citigroup at the same time as Citigroup sold a pile of new shares to get the money to repay the Feds. But Citigroup over estimated the price it could get and the Feds halted sale plans to avoid taking a loss on their shares. It's not a terrible failure, as Citigroup did raise enough money they can begin repaying. Still, it indicates that the markets don't think Citigroup is that strong yet.
Questions also swirled about a waiver that allowed Citigroup to preserve a $38 billion tax deduction  a move that administration officials say was appropriate given the intent of the tax rule. Still, they spent the day trying to stamp out potential outcry.
This was yesterdays news. The IRS gave Citigroup $38 billion in tax deductions by tweaking tax rules in their favor.
Jay