In the high stakes battle to save America's biggest banks, a zero sum game seems to be emerging--one that pits common shareholders vs. taxpayers. Increasingly, as the government gets more and more involved with the likes of Bank of America and Citi, it looks like both cannot win. The sheer size of the government's holding, plus the souped-up interest rate it gets on its shares, comes at the expense of common shareholders, who are voting by selling out, it seems. On January 16, Bank of America cut its dividend to just $.01 per share. Business Week notes estimates that the preferred dividend payment to the U.S. Treasury will be $4.8 billion per year, about 75 percent of the net income expected for all of 2009. Of course, if the government were to take the ultimate step and nationalize banks, common shareholders likely would be wiped out. This is getting tricky. Of course all those TARP funds have to be paid back.

For more:
- here's the Business Week article

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