Taxpayers to take a bath on Citigroup, post-exchange?

Exchange offers have been touted as way to for the government to help banks enhance their capital positions without having to inject more capital. This is something taxpayers may not stand for, and you can't blame them. There is no guarantee taxpayers will not take a huge bath on its forced "investment."

The Motley Fool also notes however that while a big exchange, like the one Citigroup will undergo at some point, will enhance banks' capital positions, it will wreak havoc with shareholders and make it very difficult for the government to ever be made whole in its investment. Citigroup's current market cap hangs around $17 billion, valuing the government post-exchange stake (36 percent) at roughly $6.1 billion. But that stake was essentially bought with the $25 billion in TARP money. To get that back the stock will have to rise four-times over, which is not likely. 

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