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Citigroup Deal: What Collective Self-Interest Looks Like in Real Time


Every man for himself.

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Minyanville CEO and Founder Todd Harrison pinged me and asked if I had any thoughts on the Citigroup (C) deal.

At the risk of hyperbole, I'd offer that the outcome of the transaction may be the best real-time measure of the consequences of "competing self interests" out there.

To explain, let's look at the transaction from the perspective of its key players:

President Barack Obama -- who, per Cokie Roberts, needed to throw a bone to the liberal element of his party following his decision to put more troops into Afghanistan, threw the banking industry under the bus over the weekend in both his Saturday morning radio address and 60 Minutes interview. Even if they really do agree, calling Wall Street "fat cats" is hardly how most CEOs go about prepping the market for a $20 billion equity sale.

Treasury Secretary Timothy Geithner -- who needed to not only demonstrate that Citigroup repaid the TARP, but did so at a profit, chose to forego selling shares when it looks like Treasury will take a loss.

Citigroup CEO Vikram Pandit -- who simply needed to repay the TARP whatever it took.

Abu Dhabi Investment Authority -- who needed to renegotiate the terms of its deeply underwater convertible preferred, so lobs in a lawsuit right before the deal is struck hoping to bring Citi/Treasury to the table.

Wells Fargo (WFC) -- who, advised by its lead underwriter Goldman Sachs (GS), needed to get its own TARP repayment deal done, so thought nothing of stepping right in front of Citigroup.

The Rest of Wall Street -- who, two weeks before year-end saw no reason to take risk. Ditto most money managers.

So, $3.15 was the "collective" outcome of all their self interests.

All for one, one for all, and every man for himself.

Welcome to our new normal.
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