1.The Citigroup capital raise of $5.5 billion that will be needed to meet stress test results is misleading. The number is actually over $30 billion, but Citi has already announced that it will convert the preferred stock that the Fed holds into common. This will make Barack Obama the largest shareholder in Citi. Forget all this talk about "the taxpayers" owning Citi. Will "the taxpayers" get to vote at Citi shareholder meetings? Will "the taxpayers" see Citi bank dividend checks in the mail? Answers: no and no. Bottom line, if you want a Citi bank loan, go see Obama and explain to him how many re-election votes he will get as a result of loan to you.
2. The notion that the conversion of preferred stock to common is the same thing as going out and raising money to strengthen a balance sheet continues to be one of the most bizarre concepts I have ever heard of. How come we aren't hearing anything about this nonsense from the major accounting firms? Have they all turned into Bob Newhart wimps?
3.You have to wonder how Goldman Sachs would have fared in the stress test if money wasn't shoveled to them through the AIG bailout. And just how did the government's fair haired boy Jamie Dimon at JPMorganChase end up not needing to raise any capital? Was it because, as we all suspected, he was gifted Bear Stearns and Washington Mutual where he sold off non-strategic for big time cash?