CNN Financial News Producer
Citigroup is said to be in discussions with regulators about a plan for the federal government to take a larger ownership stake in the bank. The Wall Street Journal, citing sources familiar with the matter, is reporting that the government - and by extension taxpayers - could wind up holding as much as 40% of Citigroup's common stock.
The potential move would give the government its biggest ownership of a financial-services company since the September bailout of insurance giant AIG, which left taxpayers with an 80% stake.
Under the scenario reportedly being considered, a substantial chunk of the $45 billion in preferred Citigroup shares held by the government as part of the $700 billion bailout of the financial system would be converted into common stock. That means no new taxpayer money will be used.
The Wall Street Journal is also reporting that advisers to the Treasury Dept. have started lining up the largest bankruptcy loan ever, talking with banks and other lenders about at least $40 billion in financing for General Motors and Chrysler, in case the two automakers need it.
While acknowledging the grimness of the task, administration officials involved in the talks told the Journal they are trying to find a way to restructure the two companies without resorting to bankruptcy proceedings - characterizing the latest efforts as “due diligence” on the part of the advisers and stressing that bankruptcy financing may not be necessary.
A group of leading economists is now forecasting a far deeper and more painful recession ahead in the first half of the year, but a modest pickup in the second half of 2009, followed by a solid recovery in 2010.
According to a survey of 47 top forecasters conducted by the National Association of Business Economics in late January and early February, the economy is expected to decline at a 5% rate in the first quarter, even sharper than the 3.8% drop recorded in the fourth quarter of last year. And the group is forecasting another 1.7% drop in economic activity in the second quarter.
Gas prices dropped 7-tenths of a cent overnight to $1.910 a gallon ($1.91 for graphics). 9 states and the District of Columbia have regular unleaded gas prices of $2 and higher. 41 states have regular unleaded gas prices below $2. The highest gas prices are in Alaska ($2.495). The cheapest gas prices are in Missouri ($1.696)
Finally, while many major airlines have been finding new ways to charge passengers additional fees, at least one effort has apparently failed.
US Airways announced today it will no longer charge coach passengers $1 to $2 for non-alcoholic beverages beginning March 1. The carrier is still charging for checked bags, pillows and blankets, and choice seats however - and alcoholic beverages will still cost $7 a pop.
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