Citigroup, Merrill Seek More Foreign Capital

Citigroup and Merrill Lynch, two companies that just named new chief executives amid financial slides due to troubles in the U.S. housing market, recently raised billions of dollars from outside investors. Now, according to various news reports, they are in discussions to get additional infusions of capital from investors, primarily foreign governments.

The Wall Street Journal reports Merrill is expected to get $3 billion to $4 billion, much of it from a Middle Eastern government investment fund. Citi could get as much as $10 billion, likely all from foreign governments.

Such large investments would be the latest sign big banks are undergoing a rapid recapitalization to stabilize their shaky financial foundations. Already, foreign governments have invested about $27 billion in Merrill, Citi, UBS AG, and Morgan Stanley.

According to the WSJ article, the new investments are sure to draw attention in Washington and any questions will lengthen the time regulators need to review the deals. And federal lawmakers, who've given the string of government investments a pass, are more likely to take a harder look in this election year.