Citi seeks a bigger government stake

It makes sense for Citigroup to seek permission to convert a portion of Uncle Sam's preferred shares into common shares. It would allow the bank to retire debt, and anticipate the need for a larger cushion of common stock--all the better to pass the upcoming stress tests, reports the New York Times. 

The big losers, of course would be existing shareholders, who would get diluted even more. It's unclear how the government will view such a request. The larger share would give it even more influence--and probably stoke nationalization fears to a greater degree. Other banks are said to be mulling similar action ahead of the stress tests. 

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