Citigroup Shareholders Agree on Increase on Outstanding Stock

http://www.forbes.com/feeds/ap/2009/09/03/business-financials-us-citigroup-shares_6845348.html

Summary
This article reveals that the shareholders of Citigroup Inc. has agreed upon increasing the number of outstanding shares, as it is necessary to complete a debt exchange program which gives the debt holders common stock. Shareholders have also agreed upon a reverse stock split which may happen any time before June 30, 2010, which will give shareholders 7 shares swapped for each held now. The article also explains how Citigroup has been the hardest hit American bank in the recent recession. Due to this recession, Citigroup saw its stock drop 17 dollars (750%) additional to the 30 dollars it dropped in the past 2 years. Citigroup has received 45 billion dollars from the government to aid its losses of more than 300 billion dollars in risky assets. Some of the fund will also be converted to stock as part of the debt exchange program, which will give the government 34% of the stocks. This process has been completed and Citi now has 22.88 billion shares of common stock outstanding.

Connection
This article relates to Ch.1 as we can see how although shareholders do not take part in everyday decisions, they are really a part of the corporation as a whole and can help make important decisions like this one. Furthermore, we can see how shares can be altered in order to make implications work. Citigroup is a great example of a bank who has to borrow money and issuing shares in order to repay debts. They also showed how bad equities and unreliable assets may lead to future problems which are often covered behind the temporary benefits.

Reflection
As hard as American banks were hit by the recession due to unreliable loans, they are able to temporarily recover by "making" more money from within the company itself. While this can help the economy recover, I believe this may only create future problems as the money from the government is coming from printers and borrowed from other countries. Furthermore, the current situation of Citigroup and other American banks have been caused by questionable decisions to invest on assets and loans which do not have a steady future.