You cannot be half-pregnant, is the saying. The question with the US government’s likely conversion of some of its $45bn of preferred shares in Citigroup into an equity stake of up to 40 per cent is: can you claim half-paternity?

Somehow, I doubt it. The US administration does not want to nationalise troubled banks such as Citi and Bank of America but this move feels like a compromise that will not satisfy anyone and will probably lead to more intervention.

Citi has been fighting a losing battle to convince investors that the government’s preferred shares, which have raised its Tier 1 regulatory capital ratio to respectable levels, are sufficient. The fact that its ratio of common equity to assets is uncomfortably low is irrelevant, it has argued.

But Citi has raised the white flag by asking the government to convert preferred shares into a currency that the market prefers. In effect, it has accepted the argument made by some hedge funds and analysts that its Tier 1 ratio is not a convincing measure of capital adequacy.

The problem is that this will only focus US investors even more heavily on equity to assets ratios at the large banks, most of which could do with more common equity. Their share prices are so low, however, that it is near-impossible for them to raise equity privately.

So the Citi deal has the nasty look of being only the first step in a process of the US government taking large equity stakes in a number of banks. Tim Geithner, the Treasury Secretary, has already signalled that he does not want to bail out banks’ shareholders.

That may not mean outright nationalisation, but the probability of the US government ending up in the same position as the UK one – holding substantial equity stakes in the country’s biggest banks – looks likelier by the day.

These are interesting times at Goldman Sachs, perhaps the most interesting since the convulsion that shook the firm in 1994, when it was still a partnership and Stephen Friedman stepped down abruptly as its senior partner, provoking a wave of other departures.

The announcement this week of the departure of Jon Winkelried, its president and co-chief operating officer with Gary Cohn, has set off a flurry of questions about what is going on at Goldman. The FT reported this morning that Goldman’s bankers are worried that this could tip the balance of power too far towards its traders.

Mr Cohn, Mr Winkelried’s fellow co-chief operating officer is, like Lloyd Blankfein, an alumnus of J. Aron, the commodities trading firm Goldman bought in 1981. Leaving Mr Cohn as the heir apparent to Mr Blankfein without a counter-balance from the banking side might cause ructions.

Meanwhile, Charlie Gasparino reported yesterday that several Goldman partners are facing a cash squeeze due to margin calls on investments made through Goldman’s broking arm (all Goldman employees must trade securities for their own account through the bank, for compliance reasons).

One of the advantages of being a Goldman partner in recent years has been the preferred access it provides to Goldman’s in-house hedge funds and private equity funds. Most partners have been able to borrow on margin to make investments, pledging Goldman and other stock as collateral.

The falling value of shares, combined with the travails facing Goldman’s in-house funds mean that partners have faced margin calls throughout this year (although senior executives such as Mr Winkelried are barred from borrowing on margin). That forces them to put up cash, which is also in shorter supply.

As the FT also reports today, a number of Goldman bankers have left recently. They include William Wicker, the former head of Goldman’s investment bank in China, who is moving to Morgan Stanley.

All of this has provoked me to look back at the account of the departure of Mr Friedman in 1994, when the bank faced losses on bond trading amid abrupt rises in interest rates, in Charles Ellis’s recent history of Goldman, The Partnership.

The departure of partners was more significant then because they supplied most of the bank’s capital and could take it out by retiring. Mr Friedman’s resignation helped to spark a crisis of confidence, which was staunched by the late John Weinberg, a former senior partner, urging partners to stay.

Mr Weinberg was not, however, pleased with Mr Friedman, whom he regarded as having stepped down when he was needed most:

“As an ex-Marine, he kept his true feelings in check that first day, but later his outrage would again and again break loose in angry invective: “Yellow-bellied coward!; “Abandoning his post and troops in combat!”; and “Cowardice in the face of the enemy!” were toward the gentle end of the spectrum of hostility Weinberg poured out at every provocation for many months.”

Incidentally, John Weinberg’s son John S. Weinberg is now vice-chairman of Goldman and the most senior investment banker in the firm. This raises the interesting question of what role Weinberg fils will play in addressing the current upheaval.

Goldman in 2009 has some advantages over Goldman in 1994. Although it made a loss in the fourth quarter, it made money overall last year. It also has readier access to capital, thanks to the federal government and Warren Buffett.

Furthermore, Mr Winkelried’s departure, unlike that of Mr Friedman, seems to have been expected for some time and planned-for. Nor is he the man in charge, as was Mr Friedman.

Nonetheless, all the signs are that, having navigated the credit crisis better than most financial institutions, Goldman is facing internal strains. Perhaps it is time for Mr Ellis to return and write another chapter of his book.

I note that the UK is moving in a gingerly fashion towards abolishing paper cheques. The Payments Council, an odd quango that is responsible for selling the idea of phasing out cheques by 2018 is already ruffling feathers among small businesses and older people.

Coincidentally, the Bank of England Museum held a party this week to commemorate the signing of the first cheque (or check, as the Americans have it) 350 years ago.

“During the 17th century, bills of exchange started to be used for domestic payments. Cheques, a type of bill of exchange, then began to evolve and on 16 February 1659, one of the earliest handwritten cheques known to be in existence in the UK was written. It was made out for £400, signed by Nicholas Vanacker, made payable to a Mr Delboe and drawn on Messrs Morris and Clayton, scriveners and bankers of the City of London.”

Being invited to the party did not mollify the Forum of Private Business, which says small businesses still need to use cheques.

I have two comments on the National Payments Plan document produced by the Payments Council, which suggests the elimination of cheques.

One is that it is written in bureaucratese, which serves the purpose of hiding what it is saying and reducing the chances of people protesting.

For example:

Opportunities for encouraging efficient means of making payments and for moving away from the less efficient and more costly ones should be identified. In particular, we see a move to electronic payment systems, away from paper-based forms of payment, bringing a benefit to the economy as a whole.

In other words: we want to get rid of cheques.

My second observation is that the plan has interesting statistics on how the British make payments these days. Cheques have fallen to only one in 25 payments, with their use having peaked at 4bn payments by cheque in 1990.

Debit cards, credit cards and automated payments accounted for 34 per cent of payments in 2006, with cash being used for 63 per cent of payments.

I wonder what the statistics are for the US, which strikes me as still being almost absurdly reliant on making payments by cheque. Bernie Madoff, for example, was found with $173m worth of cheques in his top drawer. If he had used electronic banking, the Feds might not have caught the money.