Bank Bailout Loans: Convert to Common Shares?

The Feds have negotiated with Citigroup to convert bailout loans into common shares – shares that the U.S. Government now owns, or so the New York Times says. The thinking is that, hey, this might be a very good thing, and so Treasury Department officials say this is a way to keep from asking Congress for “more money any time soon.” So, converting bailout loans to common shares…is that a good idea?

“While the option appears to be a quick and easy way to avoid a confrontation with Congressional leaders wary of putting more money into the banks, some critics would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.”

Read the story here and let me know what you think.