Citigroup stuck with Bernanke offer that rival banks plan to refuse!
NEW YORK - June 1, 2009 - When financial stocks slumped in February to the lowest level in at least 17 years, U.S. Federal Reserve Chairman Ben S. Bernanke told Congress the government might end up owning “substantial” stakes in the country’s biggest banks.
Three months later, New York-based Citigroup Inc. may be the only large bank that has to accept his offer.
Bank of America Corp., Wells Fargo & Co. and seven other firms judged to need extra capital by the Fed’s “stress tests” plan to raise the required $69.1 billion through a combination of share offerings, asset sales, private securities exchanges and earnings. They will do anything to escape the government meddling that probably awaits Citigroup, said Philip Orlando, who helps manage $410 billion as the New York-based chief equity strategist of Federated Investors Inc.
“You never want to have the government involved in your business,” said Orlando, whose firm owns 7.3 million JPMorgan Chase & Co. shares and 1,483 shares of Citigroup. “They’re not businessmen; they’re bureaucrats. They don’t understand capitalism, they don’t understand the profit motive and they don’t understand the financial industry.”
