Citigroup struck a deal with U.S. regulators, it was announced Monday, to pay back $20 billion in bailout funds and exit the Troubled Asset Relief Program. It was the last bank left in the bailout program, after Bank of America* repaid $45 billion last week.
“We are pleased to be able to repay the U.S. government’s trust preferred securities and to terminate the loss-sharing agreement,” Citigroup CEO Vikram Pandit said in a statement. “We owe the American taxpayers a debt of gratitude….”
Citigroup received approximately $45 billion in government aid under the TARP program. But because the government converted more than half of its assistance into company stock — it owns about 34 percent of the bank — the company needs to only pay back $20 billion to exit the bailout program. The government says it plays to sell much of its stock over the next year.
Citigroup says it plans to raise money for the repayment by selling stock and debt.
“We are pleased that Citigroup is moving ahead with plans to pay the taxpayers back,” the U.S. Treasury announced in a statement. “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.”
The announcement comes as the heads of major U.S. banks gather at the White House for a meeting with President Barack Obama. The president will reportedly urge the bank CEOs to encourage more lending to spur economic growth and to cooperate as the regulatory overhaul makes its way through Congress.
Banks have increasingly cut lending, even as they have shored up their own finances and profitability. They are now under pressure to pass on some of that progress to the public, particularly in the area of job creation.
In an interview yesterday with ABC’s “This Week,” Lawrence Summers, the White House chief economic adviser, said that bankers “need to recognize that they’ve got obligations to the country after all that’s been done for them, and there is a lot more they can do.”
*Bank of America is a funder of the PBS NewsHour