Government might increase stake in Citigroup; Administration will begin stress tests on bank.

Government might increase stake in Citigroup; Administration will begin stress tests on bank.

Government might increase stake in Citigroup; Administration will begin stress tests on bank.

A summary of what's in the major U.S. newspapers.
Feb. 23 2009 6:51 AM

A Citi With More Government

The Wall Street Journal leads its business newsbox with word that Citigroup is in talks with federal officials about the government possibly taking a larger ownership stake in the ailing bank. Nothing has been decided, and it's not even clear whether the White House supports the plan, but the government could end up with as much as 40 percent of Citigroup's common stock, although bank officials hope the number is closer to 25 percent. The New York Timesmentions the ongoing talks in its lead story, which takes a look at how the White House will begin to carry out the much-talked-about "stress tests" of the nation's 20 biggest banks this week to try to figure out whether they could stay afloat if the economic situation gets worse.

USA Todayleads with word that the Pentagon has not started to pay bonuses to soldiers who have been forced to stay on active duty past their enlistment period. The bonuses of up to $500 were mandated by law, but the Pentagon has yet to institute a plan to distribute the cash. The Los Angeles Timesleads with a comparison between the New Deal and the recently approved economic stimulus package. While Franklin D. Rossevelt's plan gave the country a number of memorable public works, the new package focuses more on repairing and maintaining existing projects rather than creating new ones in order to make it easier to spend the money as quickly as possible. The Washington Postleads with a look at how the success of the stimulus package will be determined by whether officials in all levels of government can disburse the money quickly and efficiently. Many agencies and offices will have more money than ever before to carry out their missions and are trying to figure out the best way to distribute the cash. The package is "the ultimate test of government's ability to deliver," declares the Post.

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If the White House does go through with the plans being put forward by Citigroup, it would "give the government its biggest ownership of a financial-services company since the September bailout of insurer American International Group Inc.," notes the WSJ. Under the plan, a substantial amount of the $45 billion in preferred shares that the government currently holds would be converted into common stock. This wouldn't involve any more taxpayer money, but it would dilute the value of existing shares and raise fears among investors that other banks could be next.

The NYT points out that by issuing more common shares, Citigroup would be "closer to the mix of equity that the government is likely to demand when it introduces the stress test." In carrying out its stress tests, the government will be presenting hypothetical events and examining how each of the nation's large banks would fare under "Depression-like conditions." While administration officials have long insisted that they don't want to nationalize banks, these stress tests could end up making the case for nationalization stronger by illustrating how some financial institutions wouldn't be able to stay afloat without more capital.

The NYT fronts word that a secret task force consisting of more than 70 American "military advisers and technical specialists" are working in Pakistan to help the country's armed forces fight against militants in the lawless tribal regions. The group mostly consists of Army Special Forces soldiers who not only train Pakistani forces but also provide intelligence and advice on combat tactics. Their work began last summer and "is a much larger and more ambitious effort than either country has acknowledged," notes the NYT. Officials apparently agreed to talk to the paper in order to counter the commonly held view that the continuing American missile strikes in the tribal areas have been preventing the two countries from cooperating in the fight against militants.

The LAT fronts a look at a "miracle liquid" that is slowly growing in popularity in the United States because it can do everything from clean a dirty counter to treat athlete's foot. Oh, and it's drinkable, too. The "simple mixture of table salt and tap water whose ions have been scrambled with an electric current" that is commonly referred to as electrolyzed water can kill anthrax spores and salmonella without the need for toxic chemicals. The main disadvantages of the product is that it can't be stored for long, and the machines to make the water are pricey, so it's unlikely to make its way into homes anytime soon. Many are skeptical, but those who have tried it swear by the results. "This sounds too good to be true, which is really the biggest problem," says a food scientist who found that the water killed a number of pathogens and could also be used on her children's skin. "But it's only a matter of time before this becomes mainstream."

Slumdog Millionaire was the big winner at last night's Academy Awards and received a total of eight Oscars, including for best picture and best director. The film's sweep "is unlikely to give the studios much to cheer about," notes the WSJ. The movie is the "kind of fluke that is next to impossible for Hollywood to replicate," while the kind of movies that the studios usually rely on for prizes "were mostly left to pick up minor awards." The big winner was undoubtedly Fox Searchlight, "which has become Hollywood's top advocate of the kind of daring works that movie studios have all but abandoned," says the LAT. It was the first time Fox Searchlight won a best picture award, and the victory cements its reputation as the go-to place for movies made outside the regular studio channels at a time when most in Hollywood are playing it safer than ever.

There was lots of talk about how the ceremony was going to be different this year, but the critics weren't impressed. "I guess reinventing the Oscars is harder than it looks," declares the LAT's Patrick Goldstein, who writes that the awards "tried to be something for everyone" and ended up "coming off like a movie script that had its edginess and guts airbrushed out by too many studio notes." The NYT's Alessandra Stanley says the ceremony "was at times so intent on putting on a rousing show that it lost sight of the purpose at hand." It may have been "fun for a while, but then it just started to seem long." Goldstein says host Hugh Jackman "was a bust" and "never radiated any real heat." The WP's Tom Shales is a bit kinder to Jackman, calling him "a competent host" although clarifying that "he was by no means an inspired choice." There were a few memorable moments, but as a whole, it was an "over-scripted evening that made Hollywood's oldest awards show feel even older and more in need of reinvention than ever," writes Goldstein.

Daniel Politi has been contributing to Slate since 2004 and wrote the Today’s Papers column from 2006 to 2009. Follow him on Twitter.