A Vote For Selling Citigroup (C) To Goldman Sachs (GS) Or Morgan Stanley (MS)

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There had been speculation for almost a week that the government has been trying to broker a marriage between Goldman Sachs (GS) and Citigroup (C). Goldman has apparently been cool toward taking on Citi’s problems even if the Treasury and FDIC are willing to guarantee a large portion of the Citi balance sheet.

There is at least one more vote for Goldman Sachs, or Morgan Stanley to takeover Citi (C) with government help.

According to Bloomberg, Buying Citigroup “would be significantly accretive to Goldman and Morgan Stanley’s earnings as the potential buyer would be acquiring a significant future earnings stream for a relatively low price,” David Hendler, an analyst at CreditSights in New York, wrote in a report yesterday. The buyer “would probably receive government support if it was needed.”

Douglas A. McIntyre