Watchdog scrutinises Citi bailout
(8 March 2010 – USA) The Congressional Oversight Panel, an independent watchdog overseeing the US financial bailout, has questioned Citigroup’s chief, Vikram Pandit, and the assistant treasurer secretary, Herbert Allison, over the US$45 billion (A$ 49.9 billion) bailout the bank received during the financial crisis.
The bank bailout left Treasury owning 27 percent of Citi's common stock and now the risk taxpayers might shoulder losses on a financial portfolio worth US$301 billion, reported Business Day.
Citigroup’s CEO, Vikram Pandit, said, when facing the panel, that the bank is ‘fundamentally different’ than the tangled behemoth that needed the government’s aid during the financial crisis.
The bank is in a far different and much healthier position, Mr Pandit added.
The panel also had questions surrounding the Treasury’s handling of the Citigroup bailout, reported Business Day.
Herbert Allison, assistant treasury secretary, said that Treasury is a ‘passive’ investor of Citigroup and refused to answer any other questions relating to the bailout or conversations that took place between Citigroup and the Treasury.
Mr Allison’s refusal to answer questions prompted the panel’s chairman, Elizabeth Warren, to conclude the assistant treasurer’s actions meant that no one in Treasury monitors the financial condition of Citi, and no one in Treasury is paying attention to the systemic risk that Citi poses.
Mr Allison would only respond to the Chairman’s conclusion by saying Treasury does look at public information.
Ms Warren said the great danger is that Citi will always enjoy government support in tough times because of its sheer size; the United States government will bear any burden and pay any price to ensure Citigroup does not fail, reported Business Day.
Citigroup’s CEO, Vikram Pandit, said, when facing the panel, that the bank is ‘fundamentally different’ than the tangled behemoth that needed the government’s aid during the financial crisis.
The bank is in a far different and much healthier position, Mr Pandit added.
The panel also had questions surrounding the Treasury’s handling of the Citigroup bailout, reported Business Day.
Herbert Allison, assistant treasury secretary, said that Treasury is a ‘passive’ investor of Citigroup and refused to answer any other questions relating to the bailout or conversations that took place between Citigroup and the Treasury.
Mr Allison’s refusal to answer questions prompted the panel’s chairman, Elizabeth Warren, to conclude the assistant treasurer’s actions meant that no one in Treasury monitors the financial condition of Citi, and no one in Treasury is paying attention to the systemic risk that Citi poses.
Mr Allison would only respond to the Chairman’s conclusion by saying Treasury does look at public information.
Ms Warren said the great danger is that Citi will always enjoy government support in tough times because of its sheer size; the United States government will bear any burden and pay any price to ensure Citigroup does not fail, reported Business Day.
Subscribe