Citi's Underwhelming Rescue

Felix Salmon at Conde Nast Portfolio was predicting Citigroup’s failure weeks ago, so pay attention to his thoughts on the bailout. In a pair of blog posts this morning, Salmon calls Citi’s rescue “underwhelming.” “Is a $27 billion cash injection, plus a $250 billion guarantee, really big enough to cause a change in trajectory of a $3 trillion institution?” Salmon asks. “Nothing in today's announcement makes Citi immune to a bank run, which means there's a very good chance the stock will remain under significant pressure.” Indeed, Citi’s stock opened at $5.80 per share today, which is still well below the $9.36 per share it opened at last week. “The Citi share price is likely to remain very low—and as a result of that, concerns over Citi's future are not going to go away,” he writes. “I'm not sure how to resolve this dilemma without nationalizing Citi.”