The slow nationalization of Citi?

February 27, 2009 | By Jim Kim

And so it has come to pass, as we all expected, the government has boosted its stake in Citi to 36 percent from 8 percent, by converting preferred shares and trust preferred securities. That's a huge chunk in taxpayers' hands. In exchange, the bank will be able to boost its tangible common equity and presumably pass its stress test.

The pound of flesh: The bank will required to add more independent directors, reports the New York Times. The big picture: The government has not nationalized Citi in the conventional sense, but it's hard to avoid the conclusion that it's playing a controlling role. The entire board and management, in a sense, now reports to the Treasury. The real issue is whether other banks will find themselves in similar positions. My sense is that the other big ones had substantially higher TCE rations.

For more:
- here's the article