Citi Struggles Under Fed Oversight, About to Get More

Treasury will take up to 40% of bank in return for boardroom overhaul

(NEWSER) - Citigroup and the federal government have reached a deal to boost the US stake in the bank to up to 40%, the parties announced this morning. The deal gives shareholders more protection, but in return, agrees to a Treasury Department demand for an overhaul of the embattled bank's board of directors. The new board will include a majority of independent directors; CEO Vikram Pandit is expected to keep his job, the Wall Street Journal reports. More»

Will issue $17B in common stock to meet capital requirements

(NEWSER) - Citigroup and the US government have reached a deal that will allow the bank to repay $20 billion in TARP loans, after weeks of wrangling over the bank's health. Citi will raise $20.5 billion, $17 billion of it in common stock, the company said in a statement, a sign that the government's still worried about its cash reserves. At the same time, the government will sell $5 billion of the Citi common stock it currently holds, with the remainder of its 35% stake gradually sold off within the next 6-12 months. More»

Pandit out at Citi?

(NEWSER) - The nation's biggest banks will start to learn how they did on the dreaded stress test today, reports the New York Times. Though the public won’t learn the results until May 4, analysts are predicting that many of the 19 banks will have to raise large amounts of new capital to survive a prolonged recession. Bank of America and Citigroup are thought to be in especially dire straights. More»

(NEWSER) - The Wall Street bailout has not failed, but it hasn’t worked yet, either, as evidenced by the renewed call from Barack Obama and the Fed to release more TARP funds, the New York Times reports. Banks that received bailout funds are clamoring for more to stabilize their finances, but the current administration and the incoming one are at odds over how to spend taxpayer money. More»

Citi's brokerage sale could signal regulators' plans for 'new order' in banking industry

(NEWSER) - The expected sale of Citigroup's brokerage business could be the first step in a government-instigated plan to cut the financial behemoth down to a manageable size, analysts tell Marketwatch. Citibank's CEO said only last month that the group had the right business mix, and many believe his sudden about-face is directly related to the government exerting influence through its 7.5% stake in the firm. More»