apparently citigroup is pushing for a deal whereby the US government's current preferred stock holding in the company would be converted to common stock
the catch is that for about $45 billion in preferred stock the US would get less than 50% of the company, to avoid the stigma nationalization the appearance of pre-privatization, which is puzzling, since the total capital value of the company is only about $10 billion
current shareholders would lose 90% or more of their current depleted holding, but the capitalization of the company would be boosted by almost a factor of ten - a comparable amount of privately held preferred stock would also be converted to common.
if citigroup went bankrupt in the future, which is of course inconceivable, the US would lose everything, as common stockholders. Preferred stockholders have some faint chance of getting their money back in a bankruptcy.
My grandfather-in-law was once offered a deal: half a racehorse
his reply was that he might, as long as he got the "half that eats"
so which half would you want?
The half that eats, or the half that shits?
It is not a trivial question.
if citigroup went bankrupt in the future, which is of course inconceivable
I do not think that word means what you think it means.
At this point the reason C stock has not gone completely to 0 is because it is effectively an option on the possibility that the government will do everything it can to prevent nat^H^H^Hpreprivatization. (This theory is not original with me; I've seen it from Barry Ritholtz and some of the CR commentariat.)