Population Statistic: Read. React. Repeat.
Monday, February 23, 2021

The stock market spent the day being unkind toward big-bank stocks, particularly that of Citi, which is the target of nationalization fears thanks to reports of an increase of Federal ownership to 40 percent.

Forty percent is certainly a big chunk of change, especially in a behemoth like Citigroup. But that doesn’t have to amount to full control, by the government or any other entity. Consider:

The standard corporate definition of subsidiary status is 50 percent and up of ownership stake by a single entity. But an even more germane standard is the consolidated tax return threshold, which is 80 percent ownership of a business by another single entity, i.e. a parent company.

Granted, these are unusual times, so the textbook definitions don’t need to apply. On the other hand, we are talking mainly about perceptional standards: Whatever it takes to convince investors that Uncle Sam isn’t in charge at the teller windows will work. So the White House just needs to declare that nationalization doesn’t take effect, as long as Federal ownership stake stays below 80 percent (and ideally, well below that magic number). Market confidence restored!

by Costa Tsiokos, Mon 02/23/2009 07:13:09 PM
Category: Business, Politics
| Permalink | Trackback |

Feedback »
Say something!

Comment moderation might kick in, so please do not hit the "Say It!" button more than once.