WASHINGTON - Citigroup Inc. Chief Executive Officer Vikrim Pandit on Thursday publicly thanked U.S. taxpayers for the $45 billion bailout that saved the company during the financial crisis in 2008, as a congressional watchdog panel examined the firm's finances and the government's continued ownership stake.
"Citi owes a large debt of gratitude to American taxpayers," Pandit told the Congressional Oversight Panel, which oversees the $700 billion Troubled Asset Relief Program. He said the bailout money "built a bridge over the crisis to a sound footing on the other side."
Pandit said Citi is now a smaller and healthier financial institution. In December, it repaid $20 billion in bailout money. The government also has removed the $102 billion in guarantees it extended in early 2009 for $301 billion of Citi's assets. Pandit noted that Citi also paid $3 billion in dividends and interest on the bailout money and $5.3 billion in premiums on the asset guarantee. The Treasury Department noted that taxpayers made a profit on those investments.
But the remaining $25 billion in bailout money owed by Citi was converted into a government ownership stake of 27 percent of the company. Treasury has said it plans to sell that stock over the next year.
"I want to thank our country for providing Citi with TARP funding," Pandit said. "Taxpayers still hold 27 percent of Citi's common stock, and we look forward to helping them make money on that investment."
Because of that ownership stake, members of the Congressional Oversight Panel convened the hearing to look at Citi's finances, the prospects of more taxpayer money going to the firm, and the effect of the government's decision to provide a much broader bailout to Citigroup than any other bank besides Bank of America.
"The sheer magnitude of Citigroup's operations, and the company's history of receiving extraordinary government support, has led this panel to an inescapable conclusion: Citigroup, along with a handful of other financial institutions, enjoys an implicit government guarantee," said Elizabeth Warren, the panel's chairwoman, noting that Citi's predecessor was saved during the Great Depression and it received regulatory assistance during the 1980s.
"The United States government will bear any burden and pay any price to ensure that Citigroup does not fail."
But Warren and other panel members were frustrated as they pressed for answers from Herbert M. Allison Jr., the assistant Treasury secretary who oversees TARP.
Because of the government's ownership stake in Citi, Allison said he could not comment on its financial health. Those determinations, he said, are made by federal banking regulators outside of the Treasury Department. He also would not comment directly on the reason for the bailout decisions on Citi in late 2008 and early 2009, which were made by the Bush administration.
But Allison said Obama administration officials did not expect to have to pump any more money into Citigroup and said taxpayers have made a profit on the investments in the company so far.
"I have no reason to expect, and we have no plans whatsoever, to make any further investments in Citigroup," he said.