You are misusing the term "creditor" in this case, a "stock holder" is NOT a "creditor". A "stock holder" is a partial owner, equivelant to the amount of shares they own/control.<quoted text>
Not really, Zen. When creditors interfere in the management decisions of a company, that can have major consequences. Lenders can be held legally responsible for this interference; it's called "lender liability" and any good banker knows to be very careful to respect his role as a creditor and to not cross over and act like an owner. There's another idea called "equitable subordination" where a creditor can have his claim cut to that of an equity holder if he's found to have acted in that capacity. That would put that creditor's claims behind those of other true creditors.
The Feds have major over-reached their roles as creditors. In the case of Citibank, fine, the Feds own 30% and are entitlement to represent that ownership stake. But for much of the rest of the industry, the interference is inappropriate bullying that no one but the Feds would ever get away with. So, much for the rule of law.
So in effect, the US government now "owns" 30% of Citi. If you are part owner you have every right, and responsibility, to ensure the money you INVESTED (not loaned), is used wisely.
So that, when you give a business 40 billion dollars, and agree to back hundreds of billions of potentially bad debt, you have a vest interest, express right, and moral obligation to make sure the "management" making the "decisions" doesn't "decide" to give themselves a great big fat pay check to the detriment of the company's bottom line, reducing the value of the portion of the company you've paid for.