Citigroup (NYSE: C) is interwoven in the fabric of global finance, according to
Citi Chairman Richard Parsons.
Earlier this week the government announced plans to shed it’s remaining stake in the mammoth bank, which was as high as $45 billion when the bank teetered on the brink of disaster during the financial crisis. Thanks to rising Citi share
prices, the government will actually reap a significant profit on the deal, which should come to the chagrin of TARP detractors. Although wildly unpopular, the Troubled Asset Relief Program (TARP) enacted by the Treasury in conjunction with the Fed has quickly stabilized the nation’s major banks, and saved millions of jobs that would have otherwise been lost.
The Treasury Department has priced 2.4 billion shares of Citi at $4.35 a share, which will end its stake in the bank. Parsons commented that “allowing Citi to fail previously or in the future would be akin to having the heart, the pump of the economic system fail because then everybody else dies. It’s probably the most important private financial institution for maintaining our economic strength and presence around the world. You can’t let an institution like that go down. We can meet the needs, satisfy their needs and provide services to them in any country in the world in which they are operating. You have to have scale to be able to do that. You don’t have to be an enormous colossus to be deemed too big to fail. It’s the interrelatedness of your business to the global economy that matters.”
Citi is just one of the dozens of banks in the US financial system that received the so-called ‘bailouts’ following the financing crisis. Some 95 percent of the Fortune 500 companies are clients of Citi, he added. The firm continues to shed assets and non-core lines of business, but remains one of the largest players in global markets.
