The People paid taxes to the government for the bailout, Citi got some of that money, which allowed them to survive, which allowed them to pay dividends to its shareholders.
Therefore, Citi is using tax dollars to pay its shareholder dividend.
Since the government didn't insist on stricter terms, Citi is paying a 1 cent dividend. Blame the government for not negotiating stricter terms. If Citi didn't pay the max dividend it could under the terms, its shareholders could sue the board in a shareholder class-action suit for violating their fiduciary duty to maximize shareholder returns.
No, that bit about dividends can't possibly be right. Relatively few public companies pay a dividend, and basically none of the other companies face shareholder lawsuits about the absence of a dividend.
And if Citi were a poorly programmed automaton then it might make sense to avoid blaming its board for politically boneheaded moves; but its board is made up of directors who _ought_ to be spending some energy not pointlessly offending a public on whose dole they now find themselves. The shareholders will be (rightly) for more offended if the board so pisses off Treasury that the public assistance dries up.
I agree, however, that the (then-) government should have negotiated (decreed?) better terms for the bailout money.
>No, that bit about dividends can't possibly be right. Relatively few public companies pay a dividend, and basically none of the other companies face shareholder lawsuits about the absence of a dividend.
Relatively few public companies are in Citi's situation. I wasn't saying all public companies have to a pay a dividend or face a lawsuit. Supposing Citi is practically insolvent, it would be irresponsible (legally/fiduciarily, not morally) to shareholders not to try and launder out as a much money as possible. Once it is paid to shareholders as a dividend, creditors can't go after it.
Comments
Can you please provide some documentation for that? I'd be really interested in learning more!
I think it goes something like this:
The People paid taxes to the government for the bailout, Citi got some of that money, which allowed them to survive, which allowed them to pay dividends to its shareholders.
Therefore, Citi is using tax dollars to pay its shareholder dividend.
http://www.forbes.com/feeds/ap/2009/01/20/ap5943395.html
Since the government didn't insist on stricter terms, Citi is paying a 1 cent dividend. Blame the government for not negotiating stricter terms. If Citi didn't pay the max dividend it could under the terms, its shareholders could sue the board in a shareholder class-action suit for violating their fiduciary duty to maximize shareholder returns.
No, that bit about dividends can't possibly be right. Relatively few public companies pay a dividend, and basically none of the other companies face shareholder lawsuits about the absence of a dividend.
And if Citi were a poorly programmed automaton then it might make sense to avoid blaming its board for politically boneheaded moves; but its board is made up of directors who _ought_ to be spending some energy not pointlessly offending a public on whose dole they now find themselves. The shareholders will be (rightly) for more offended if the board so pisses off Treasury that the public assistance dries up.
I agree, however, that the (then-) government should have negotiated (decreed?) better terms for the bailout money.
>No, that bit about dividends can't possibly be right. Relatively few public companies pay a dividend, and basically none of the other companies face shareholder lawsuits about the absence of a dividend.
Relatively few public companies are in Citi's situation. I wasn't saying all public companies have to a pay a dividend or face a lawsuit. Supposing Citi is practically insolvent, it would be irresponsible (legally/fiduciarily, not morally) to shareholders not to try and launder out as a much money as possible. Once it is paid to shareholders as a dividend, creditors can't go after it.