When the government gets involved in business, the rules of the game change. Creditworthiness becomes less of an “analyze the metrics” affair, and more of a “how strong of a guarantee” affair. What would it take to make the US Government change the way that it is behaving?

But first, how have the US Government, Citigroup and Bank of America been behaving? I’m going to begin this with timelines for Citigroup and Bank of America. Things have happened fast, so a review of how we got to this stage in the crisis could be instructive in where things might go from here.

Citigroup Timeline

9/29/08 – C agrees to buy WB’s banking business. WFC offers more, but C’s offer is backed by FDIC. (Share Price prior to news ~ $20, afterwards $18.)

10/9/08 – C abandons bid to buy WB’s banking business. (Share Price prior to news ~ $13, afterwards $14.)

10/14/08 – C receives $25 billion in TARP money. (Share Price prior to news ~ $16, afterwards $19.)

10/16/08 – C reports 3Q net loss of $2.8B. (Share Price prior to news $9.52, afterwards $8.89.)

11/17/08 – C announces plan to lay off 52,000 workers. (Share Price prior to news $8.89, afterwards $8.36.)

11/18/08 – Mike Mayo predicts that C could lose money in 2009. (Share Price prior to news $8.36, afterwards $6.40.)

11/19/08 – C forced to take SIVs back on balance sheet after $3.3B losses. (Share Price prior to news $6.40, afterwards $4.71.)

11/23/08 – US Government invest $20B in C, and guarantees $306B of their liabilities. Fitch downgrades rating to A+. (Share Price prior to news $3.77, afterwards $5.95.)

12/2/08 – C sells $5.5B of FDIC-backed debt. (Share Price prior to news $6.45, afterwards $7.22.)

12/19/08 – S&P cuts C’s rating by two notches to A. Moody’s cuts C’s rating by two notches to A2.

1/13/09 – C sells brokerage unit for $2.7B to MS. Most C units are rumored to be up for sale. (Share Price prior to news $5.60, afterwards $5.90.)

1/16/09 – C reports $8.3B loss, announces plan to split in two. (Share Price prior to news $3.83, afterwards $3.50.)

1/20/09 – C slashes dividend to .01/share. (Share Price prior to news $3.50, afterwards $2.80.)

1/23/09 – C is effectively nationalized, argues Bloomberg. Increasingly, as a ward of the US Government, C increases lending, and home loan modifications.

2/27/09 – C announces a goodwill writedown of $9.6B, adding $9B to the losses of 4Q08. US Government enters a deal to convert $25B of preferred stake to common, pari with private institutional investors, increasing C’s tangible capital, and raising US ownership to 36%. Moody’s cuts C’s rating by two notches to A3. (Share Price prior to news $2.46, afterwards $1.50.)

Bank of America Timeline

1/11/08 – BAC agrees to buy CFC. Regulators offer BAC capital relief, letting them lend more to their broker-dealer subsidiary. (39.41 — 38.50)

1/24/08 – No capital will need to be raised after a $12B sale of preferred stock.