- The Washington Times - Monday, December 14, 2009

Citigroup announced Monday that it will repay $20 billion in public loans in a big move toward emerging from government oversight following last year’s taxpayer-funded bailout.

The banking giant said it immediately will sell $20.5 billion in stock, with the proceeds being used to buy back the preferred shares held by the Treasury Department under the Troubled Asset Relief Program (TARP).

“We owe the American taxpayers a debt of gratitude,” said Citibank Chief Executive Vikram Pandit. “By any measure of financial strength, Citi is among the strongest banks in the industry, and we are in a position to support the economic recovery.”

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Mr. Pandit said the bank will “recognize our obligation” to taxpayers by providing lending and assistance to homeowners and other borrowers in need.

Citigroup received $45 billion in federal assistance under TARP in 2008. Later that year, the Treasury Department and other government organizations also agreed to backstop $306 billion in questionable Citigroup assets.

Citigroup, once the world’s biggest banking group, converted a portion of its TARP loan into common stock, resulting in the government owning 34 percent of the company.

The $20 billion repayment means that Citibank no longer will be a beneficiary of “exceptional financial assistance” under TARP beginning in 2010.

In conjunction with Citigroup’s announced payback, the Treasury Department said it will sell up to $5 billion of its common stock held in the bank and will sell the remainder of its Citi shares in an “orderly fashion” within six to 12 months.

“The United States never intended to be a long-term shareholder in private companies,” Treasury Secretary Timothy F. Geithner said. “While much work lies ahead to improve lending and spur job creation, today’s announcement by Citigroup takes us another step in the right direction.”

Wall Street welcomed the news of Citibank’s payback. The Dow Jones Industrial Average rose 18.82 points, or 0.18 percent, to 10,490 by late morning, while the Nasdaq Composite Index edged up 8.44 points, or 0.39 percent, to 2,199.

The broad-market Standard & Poor’s 500 Index rose 4.63 points, or 0.42 percent, to 1,111.

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