It may not be called nationalization, but the reported deal that has been struck between the government and Citigroup sure displays a lot of elements that would reflect such a move.

According to the Reutersstory and other news reports, “the U.S. government and Citigroup have reached a deal to convert up to $25 billion in government-held preferred shares in the bank to common equity.”

Although the reports say Citigroup will, for the time being, not receive any new government money, the Treasury department will match any private investments “dollar for dollar up to $25 billion.”

In the end, the government, taxpayers, should end up with roughly 40 percent of Citigroup’s common stock.

New directors

Additionally, according to the reports, under the agreed upon deal, the majority of Citigroup’s directors will be given the boot.

Technically, of course, a full nationalization would mean total government ownership that would wipe out all private shareholders.

But in many other ways, this is a nationalization without calling it by that name.  The government gets enough of a stake in Citigroup that it can pretty much call the shots—hence the shake-up of the directors–and there is nothing stopping a move to full nationalization should the bank’s condition worsen, which many think it most certainly will.

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