When Bank of America (NYSE: BAC) CEO Kenneth Lewis announced plans to repay the government debt related to the Troubled Asset Relief Program, Citigroup (NYSE: C) CEO Vikram Pandit, took the news as a wake-up call.
Just one day after Bank of America’s announcement, a group of Citigroup executives contacted the Treasury Department to discuss their options, according to a person close to the agency. The executives wanted to know how Bank of America negotiated such a quick exit from the Troubled Asset Relief Program and how Citigroup might be able to pay off their debt as well.
Pandit is now busy pressing regulators for a deal that would allow Citigroup to repay its remaining $20 billion in funds from the Troubled Asset Relief Program. People familiar with the situation have leaked to several sources that Pandit is hoping to develop a plan during the next week or two.
The negotiations between Citigroup and its regulators will likely be more complex than those for Bank of America, which has lending operations that are in better shape. Bank of America’s discussions stretched over a period of two months as the Treasury Department and Bank of America tried to come to terms. The Treasury is insisting that any exit strategy must also include a formal process for the government selling its 34% stake in the lender, currently worth $30 billion.
The Treasury Department, the FDIC and the Federal Reserve also must address what will be done with the $301 billion worth of guarantees that the government is providing for Citigroup’s riskiest mortgages, auto loans, commercial real estate and other assets.
