The charts below demonstrate why all the hoopla about whether or not one (or more) banks are nationalized is a moot point right now. The bottom line is that as a result of ongoing pumping of cash by the Fed and Treasury, more than 70% of bank liabilities and more than 20% of shareholders equity (via preferred stock) is currently supported by various federal programs. Additionally, support has been since extended to non-bank financials, the auto sector and homeowners. The government may or may not care about Citi's shareholders, but in the meantime it has nationalized essentially everything else. Allocated TARP funds now exceed $300 billion, while on the financing side use of the Feds cash liquidity program is hovering around $1 trillion, and issuance of the TLGP guaranteed debt program now exceeds $200 billion.
In a nutshell the government's actions have merely taken the historical leverage and moved it to the taxpayer's wallet. Nothing has been done to moderate the fact that the assets that these liabilities capitalize are trading on average at 60 to 70 cents on the dollar, and is the reason why Citi and BofA both need urgent additional capital as these assets gradually get marked to market.
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