U.S. Government Sells More Citigroup, Shares Jump (C)

The federal government is starting to sell $2.2 billion in trust preferred shares that it holds in Citigroup (C). The government received these shares when it made its large $45 billion dollar investment in Citi. The Treasury had also agreed to a loss sharing agreement in the hundreds of billions with Citigroup.

This move is good news. While bank profits are likely to be depressed in the fourth quarter; this shows that the bailouts worked. Banks are in better financial shape. Citigroup had the worst balance sheet of any of the major U.S. banks. The fact that the government is able to withdraw its support is an encouraging sign.

Shares of Citi are up 2.5% this afternoon, to $3.98.