The news at a glance

Citigroup: Edging toward a federal takeover

Citigroup this week urged the federal government to acquire up to 40 percent of the bank’s common stock, a significant step toward full nationalization, said David Enrich and Monica Langley in The Wall Street Journal. The U.S. would expand its stake in Citi, currently at 7.8 percent, by converting into common shares some of the preferred stock it acquired last year when it injected $45 billion into the bank. Although current shareholders would suffer severe dilution, “bank executives increasingly believe the government needs to take a greater ownership stake” in Citi to prevent its complete collapse.

Nationalizing Citi may be “the least bad solution to a truly desperate situation,” said The New York Times in an editorial. As controlling shareholder, the U.S. could finally force Citi to come clean about the toxic assets eating away at its financial foundations. That’s assuming a takeover would be untainted by politics, said Gerald O’Driscoll in The Wall Street Journal. Fat chance. In government hands, a big bank like Citi “would become a conduit for politicized lending and grants disguised as loans.”

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Regulation: Another black eye for the SEC

Still stinging from criticism of its handling of the Bernard Madoff scandal, the Securities and Exchange Commission this week is on the defensive over its lax oversight of Stanford Financial Group, said Stephen LaBaton and Charlie Savage in the International Herald Tribune. The agency last week said Stanford fraudulently sold $8 billion in certificates of deposit to some 30,000 investors. But several times in recent years the SEC missed “telltale signs” of corruption at Stanford, instead fining the firm lightly for minor violations.

Media: More newspapers file for bankruptcy

With advertising and readership declining sharply in recent years, two newspaper companies this week filed for bankruptcy protection, said Harold Brubaker in The Philadelphia Inquirer. Philadelphia Newspapers, which owns the Inquirer and the Philadelphia Daily News, is seeking the bankruptcy court’s shelter while it attempts to restructure $390 million in debt. The Journal Register Co., which operates 20 local papers throughout the Northeast, also filed for protection, citing a 20 percent drop in revenue since 2006.

Bailouts: GM, Chrysler prepare for the worst

Treasury Department advisors to General Motors and Chrysler this week began lining up “the largest bankruptcy loan ever,” as the companies considered filing for Chapter 11 bankruptcy protection, said Jeffery McCracken and John Stoll in The Wall Street Journal. The two automakers are seeking at least $40 billion to continue operating while negotiating with creditors, employees, and retirees. “The initial discussions call for private banks to provide the financing, with the government guaranteeing or backstopping the loan.”

Carmakers: New leadership for Honda

Honda Motor Co. this week named a new president, “as the worst financial crisis since the Great Depression hammers demand for autos,” said Makiko Kitamura in Bloomberg.com. Takanobu Ito will replace Takeo Fukui, who last month presided over the company’s first quarterly loss in 15 years. Ito, 55, rose through Honda’s ranks as an engineer, working on the Acura MDX SUV, among other vehicles. He commutes to work in Tokyo on a Honda XR250 motorcycle.