By EAMON JAVERS | 3/4/09 4:14 AM EST
When the Treasury Department announced last week that the government would take a stake of as much as 36 percent in Citigroup, most of the focus was on how the deal would affect shareholders.
The buzzword of the day was “dilution,” which is what happens to existing shareholders when a new stakeholder takes a large position in a company, squeezing down the percentage owned by everyone else.
But there was another group diluted by the deal: taxpayers.
In the deal, the government is converting $25 billion of its preferred shares — which come with a guaranteed dividend — to common stock. Continue...
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