Citigroup Chief Set to Push for Bailout Repay Deal

It is shaping up to be a whirlwind stay in Washington, D.C. next week for Citigroup Chief Executive Vikram Pandit, as he reportedly plans to meet with President Obama and try to negotiate a bailout repayment deal with officials.

Pandit reportedly wants out of the unenviable spot of being the remaining top bank chief not to orchestrate a repayment of Treasury bailout funds under the Troubled Asset Relief Program. He is reportedly seeking to hash out a deal next week.

The meeting at the White House on Monday, however, was called by the President and will reportedly also feature in attendance the top executives of JPMorgan Chase, Wells Fargo, Morgan Stanley and Goldman Sachs. Obama is expected to ask the executives to work harder at increasing consumer and small business lending.

TARP’s Congressional Oversight Panel reported this week that banks are holding back capital as a safeguard against future losses, and this practice is contributing to the tight credit conditions, particularly in the commercial lending arena.

Treasury officials are working on refocusing TARP, which as been extended from Dec. 31 through October of next year, to rescue more homeowners from foreclosure and bolster credit access for small businesses.

The reshaping of TARP is possible because of the bailout repayments by Bank of America, quickly announced and facilitated in recent days, and that of other major banks, except for Citigroup and Wells Fargo.

It is Citi, however, that holds the single highest outstanding TARP portion of $20 billion. The Treasury has already converted $25 billion of Citigroup’s bailout money into an equity position with Citi.

And there is the issue of government guarantees on Citi’s high-risk loan portfolio.

The Treasury and the Federal Deposit Insurance Corp. have a guarantee agreement with Citigroup against “the possibility of unusually large losses on an asset pool of approximately $301 billion of loans and securities”  backed by residential and commercial real estate and other assets.

Pandit has said he wants to repay TARP as soon as possible, but more urgency set in after Bank of America announced its repayment. 

Pandit made headlines last month when he told the Boston Globe that he would support a credit card rate freeze, but only if it was applied fairly across the industry, and only on new accounts.