The curious case of "Slumdog Millionaire" is a pretty interesting journey. Having started off as a Hollywood underdog, it took many by surprise and garnered eight Oscars this week. This unexpected turn of events was nearly as unimaginable as the situation currently unfolding with banking giants Citi Bank and Bank of America. Barbara Meager, a mortgage broker with Granite Mortgage in Dallas, points out the difference:
Slumdog Millionaire is a "rags to riches" tale, while banks seem to be taking the opposite route from "millionaire" to "slumdog."
No one imagined earlier that the stock price of Citi would trade below $2. The Fed pumped
more money into Bank of America and Citigroup than those banks' entire market value, and in exchange, taxpayers received a six percent stake in BofA and 7.8 percent of Citi. Fears of nationalization continue to haunt traders, with The Wall Street Journal reporting that Citigroup is in talks with the government that may lead to the U.S. converting its preferred shares into common equity, in an effort to help Citigroup reinforce its capital,. The U.S. could end up
holding as much as 25 percent to 40 percent of Citigroup, the report said.
This week is busy with economic activity as investors try to focus on economic news which includes continued banking sector concerns, Fed Chairman Ben Bernanke's semi-annual testimony before Congress on yesterday and today, a Treasury auction and a host of housing data including S&P Case Shiller index, Existing Home Sales (today), Durable Goods Orders on Thursday and GDP on Friday.
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