December 16th, 2009 
admin 
Today we learned that CitiGroup will be pricing $20.5 billion in stock at $3.15 a interest to help repay the government TARP money. Once they have removed themselves from this TARP loan will they have learned their lessons when it comes to bad confidence loans. During the height of the subprime mortgage crisis CitiGroup was willing to offer almost anyone with a heartbeat and a signature a bad credit loan. Obviously this wasn’t the only reason for the fall of this company but it was part of it.
The significant amount of CDO’s on the books of CitiGroup were one of the main reasons we have seen the stock price drop to such deflated levels. Much of this CDO action was created because of the amount of risk that almost all of Wall Street was taking part in. These firms wanted to lend money to anyone. They did not care that these borrowers had horrible credit scores and very little gains; it was all about packaging these loans and selling them.
Now that CitiGroup has repaid TARP will they in the end have learned their lesson? No one knows the answer to this but it seems that Wall Street continues to repeat the same mistakes when it comes to risk so it will be very interesting to see how Vikram Pandit makes fully convinced that CitiGroup does not fall into the risk trap once again.
Author; Jesse Wojdylo
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Tags: Stock, Stock 315