December 15th, 2009 
admin Reading the newspapers and watching TV one gets the impression that Citi (C) is about to exit TARP and all is well in the world. A few headlines to that effect:
Citi itself is pushing the notion that it is about to cross a big threshold:
This overview of the transaction comes from the red herring on Citi’s big secondary:
The dollar value of the “remaining equity stake” is $25 billion. There is no certainty that this amount can be paid back in the “6-12” months indicated in the prospectus.
Citi is not out of TARP. Those headlines were wrong. They will be out of TARP when they have repaid all of what is owed. If Citi receives the benefits of ‘being out of TARP’ before it is actually out of TARP the process will have been subverted.
A question: Were there others (like me) who misunderstood the recent announcements regarding Citi’s changing status?
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