As if restricted compensation packages and congressional roastings weren't humiliating enough, the credit crisis has dragged former banking giants
Citi
For those prices, a Citi shareholder could barely trade one share for a dozen eggs or a loaf of bread. In the produce aisle, you could swap one Bank of America share for two pounds of apples, a jar of mayonnaise or a box of toasted oats.
Companies that are now bigger than Citi, at least on paper, include cereal makers
Citi is now in the same league as
What has become of banking's behemoths? The two companies spent the week deflecting speculation they were about to be nationalized by the federal government, after having to go to Uncle Sam twice already for money and guarantees on a combined $400 billion of assets.
Spokesmen for both firms were at pains Friday to diffuse the speculation, which got further momentum after Senate Banking Committee Chairman Christopher Dodd, D-Conn., suggested in a TV interview that nationalization was an option, at least for a short time.
Citigroup said Friday its capital base remains "very strong," and its tier one capital of 11.9% is "among the highest in the industry. We continue to focus and make progress on reducing the assets on our balance sheet, reducing expenses and streamlining our business for future profitable growth."
Bank of America, meanwhile, said it did not see any rationale to nationalization, adding that speculation about nationalization was based on a lack of understanding of its financial position. Bank of America logged $4 billion of profits for 2008, down from the $15 billion it recorded in 2007. Citigroup took an $18.7 billion loss for all of last year.
In the afternoon, the White House stepped in, saying it had a "strong belief" that a privately held banking system was the right approach. Treasury Secretary Timothy Geithner has outlined a plan to "stress test" the largest 15 U.S. banks, including Citi and Bank of America, before giving them new capital injections.
Still, the stock price decline for both companies, for awhile at least on Friday, reminded many of the lead up to the nationalization of mortgage giants