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Citi Is The Last Big Bank With Exceptional Assistance TARP Funds

Posted by: RateAPY Bank Rates News
December 10th, 2009

Exceptional assistance is the term used for a second helping of Troubled Asset Relief Program (TARP) funds. Those funds came with restrictions, including limits on compensation for banking executives. Bank of America made plans to pay back its $45 billion, so Citi is now the last of the big banks with Treasury’s restrictions on their banking executive’s compensation. This puts Citi at a serious disadvantage for hiring and retaining banking talent.

Citi’s situation is more complicated than Bank of America’s, and working out a repayment plan is likely to go slowly. Over half of Citi’s TARP money has been converted to stock so that the government owns equity in Citi. Also, $301 billion of Citi’s riskiest mortgages and other assets are currently guaranteed by the government. Citi will probably need to buy back its stock, and guarantee or sell its risky mortgages as part of its TARP exit strategy.

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