Treasury Quickly Halts Plan to Sell Citigroup Stock

The U.S. government abruptly halted its plan to begin selling its 34 percent stake in Citigroup after investors demanded a price so low that the Treasury Department would have lost money on the deal, the Wall Street Journal reports. The decision comes an embarrassing two days after the department arranged major tax breaks with the IRS in order to broker a deal to help Citi repay its $20 billion in bailout money.

The government's shares in Citigroup got a lukewarm response on Wall Street this week, where investors were wary of earnings prospects and had already spent heavily on shares from rival banks. Citi shares sold for $3.15, 10 cents less than the government paid for its 7.7 billion shares. Investment analysts said the lack of interest was proof that Citi had prematurely rushed to exit the Troubled Asset Relief Program, or TARP.

Facing a $770 million loss, the Treasury Department decided to hold off on selling any Citi shares for at least 90 days, and said it would try to sell them over the next 12 months.