Citibank Unsolved Mysteries. Trouble for Geithner?

[chill_wind]

ProPublica : Journalism in the Public Interest

Why Did Citi Get Bailout Money Meant For ‘Healthy’ Banks?
by Jeff Gerth, ProPublica - February 4, 2009 12:13 pm EST


There remains an enduring mystery from the government's bank bailout <1>: Why did the initial rescue package last October, designed only for nine "healthy" banks, provide $25 billion to Citigroup, the faltering banking giant?

Some clues may emerge over the next week as the Senate Banking, Housing and Urban Affairs Committee conducts hearings about the bailout program <2>, known as TARP, or Troubled Asset Relief Program.

Lawmakers and congressional auditors have been unable to pin down details about the decision-making process for that initial round of the TARP.

Treasury Secretary Timothy Geithner, as part of his Senate confirmation, was asked to provide documentation of the "processes and criteria" used for the initial investments. In response, he pledged a "full explanation," if confirmed. But as of Tuesday, eight days after he took office, the senator who requested the information, Kentucky Republican Jim Bunning, had not received a reply, according to Senate aides. Geithner, now in his second week as secretary, has not yet responded, but intends to "in the near future," according to an e-mail on Wednesday from a Treasury official.


(...)

Geithner is slated to appear before the Senate panel on Feb. 10 to discuss the TARP. It will be his first appearance before the Senate committee with jurisdiction over banking issues.

The Congressional Oversight Panel, set up by Congress to monitor the TARP, has criticized the "Citigroup experience" in two reports. In a report last month <3> (PDF), the panel questioned how Citigroup had qualified as a "healthy bank" last October, yet, a few weeks later <4>, required another $20 billion government infusion and a federal guarantee of $300 billion of its troubled assets, as part of a different TARP program designed to avoid systemic risk.

Congressional aides and investigators have inquired about the initial bailout investments at the Treasury Department and the Federal Reserve Bank of New York. But so far, they say, they have not received a precise description of the process. Geithner is the former president of the New York Fed, which, as Citigroup's primary regulator, was involved in the TARP program.

The mystery traces back to Oct. 13, when Henry Paulson, then the secretary of the Treasury, summoned the heads of nine major financial institutions -- six commercial banks and three investment banks -- to a meeting. Congress had just passed emergency legislation to help bolster the seriously weakened credit markets and Paulson wanted to invest $125 billion in these leading firms. Geithner also attended the meeting.

more: http://www.propublica.org/article/why-did-citi-get-bailout-money-meant-for-healthy-banks-090204

see a nice chart:

Show Me The TARP Money
http://www.propublica.org/special/show-me-the-tarp-money

[KoKo]

1. So....guy who stalls on his taxes now thinks he's above answering a Senate Inquiry...

Sort of reminds me of something we've been through before. Stalling off Senate Investigations...not responding to Senators questions. Uh Oh....:eyes:

[chill_wind]

2. Senator Levin had to threaten a subpoena.

UPDATE:US Levin To Subpoena Treasury TARP Contract With Citibank
1-11-09 3:47 PM EST | E-mail Article



By Corey Boles
Of DOW JONES NEWSWIRES


WASHINGTON -(Dow Jones)- U.S. Sen. Carl Levin, D-Mich., said Sunday he will issue a subpoena to the Treasury this week for the contract it signed with Citigroup Inc. (C) when it first lent money to the bank under the Troubled Asset Relief Program.

Levin said Treasury officials promised to release the contract to him, but so far have failed to do so.

"They have not given the actual contract although they promised it," said Levin. "Well, I'm going to subpoena it. I'm going to subpoena a document that I shouldn't have to."

(...)

http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200901111547DOWJONESDJONLINE000295_univ.xml

That was a couple weeks ago. Sounds like they will have to come around.

[chill_wind]

3. An article from a couple weeks ago..

How Citigroup Unraveled Under Geithner's Watch

By Jeff Gerth, ProPublica. Posted January 15, 2009.

Obama's pick for Treasury Secretary has some serious strikes against him -- especially when it comes to regulation.


As president of the New York Federal Reserve Bank, Timothy Geithner often preached that gargantuan financial firms like Citigroup should be held to the highest regulatory standards to make sure they couldn't take on too much risk.

But when it came to supervising Citigroup in recent years, the record shows that the New York Fed eased the reins as the company blew billions on subprime mortgages and other risky deals that ultimately forced the biggest bank rescue in U.S. history.

Now, the 47-year-old Geithner heads to the Senate in coming days as President-elect Barack Obama's nominee for Treasury secretary. He's won accolades for his expertise and work ethic, but there's been little attention to his record as a Fed watchdog.

the rest (long):

http://www.alternet.org/workplace/119871/how_citigroup_unraveled_under_geithner%27s_watch/

(bold emphasis mine)

Who vetted this pick, tell us again?

[slipslidingaway]

4. K&R n/t