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Gov't Reportedly Mulls Taking Larger Stake in Citi
WSJ: Citigroup in talks with officials about government taking up to 40 percent stake in bank
WASHINGTON February 22, 2009 (AP) The Associated Press

( Inc. is reportedly negotiating with government officials to have the U.S. boost its stake in the troubled bank to as much as 40 percent, The Wall Street Journal said late Sunday, citing people familiar with the situation.

Such a move by Citigroup would result in the New York-based bank ceding far more control to the feds than executives likely desire, and would dilute shareholders' investments. The Journal, which said Citigroup made the proposal to its regulators, noted that sources say executives would prefer to keep the government's stake closer to 25 percent.

Nationalization: Is It the Only Answer to Save Banks?WATCH: U.S. Banks to Nationalize?WATCH: Graham Open to Bank 'Nationalizing'But with the company's shares trading at their lowest point in nearly two decades, Citigroup is seeking ways to stem further losses.

On Friday, shares of Citigroup fell 22 percent to close below $2, and Bank of America Corp. shares also sank, as talk of the banks' nationalization spooked investors. Both banks already have received significant help from taxpayers as the government has rushed in to try to save the financial sector. The White House, however, has insisted it's not trying to take over the two ailing financial institutions.

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