Is CITIGROUP OK?

On June 1, 2009, it was announced that Citigroup Inc. would be removed from the Dow Jones Industrial Average effective June 8, 2009 due to significant government ownership. Citigroup Inc. was replaced by Insurer Travelers Co.

Citi public exchange offer gets 99 percent shares

Mon Jul 27, 2009 6:48am EDT
NEW YORK (Reuters) -

Citigroup Inc said on Sunday some 99 percent of its stock was tendered in an exchange offer for publicly held securities, in a key step toward giving the U.S. government a 34 percent equity stake in the bank.
Citigroup said preliminary results showed about $20.3 billion worth of publicly held convertible and nonconvertible preferred and trust preferred securities were tendered in the exchange offer.
The bank will issue 5.83 billion common shares to the public exchange offer participants, it said. The exchange offer expired at 5 p.m. New York time on Friday.
The New York-based lender has been conducting a series of exchange offers on $58 billion of securities, as part of a federal bailout designed to bolster the bank's capital.
Public and private investors are exchanging up to $33 billion of securities for common stock, while the government is exchanging up to $25 billion of its own securities.

Citigroup is conducting the exchange offers after heavy losses led to a series of federal bailouts, including $45 billion of taxpayer money, for the third-largest U.S. bank.
The bank is the most troubled of the nation's largest lenders, after credit losses and writedowns led to $37.5 billion of net losses in the 15 months ended in December.( know more at )

Federal bailout 2008

On 24 November 2008 the U.S. government announced a massive bailout of Citigroup, designed to rescue the company from bankruptcy while giving the government a major say in its operations. The Treasury will provide another $20 billion in Troubled Asset Relief Program (TARP) funds in addition to $25 billion given in October. The Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) will cover 90% of the losses on its $335-billion portfolio after Citigroup absorbs the first $29 billion in losses.[44] In return the bank will give Washington $27 billion of preferred shares and warrants to acquire stock. The government will obtain wide powers over banking operations. Citigroup has agreed to try to modify mortgages, using standards set up by the FDIC after the collapse of IndyMac Bank, with the goal of keeping as many homeowners as possible in their houses. Executive salaries will be capped.[45]
As a condition of the bailout, Citigroup's dividend payment has been reduced to a mere 1 cent a share.
As the subprime mortgage crisis began to unfold, heavy exposure to toxic mortgages in the forms of Collateralized debt obligation (CDOs), compounded by poor risk management led the company into serious trouble. In early 2007 Citigroup began eliminating about 5 percent of its workforce, in a broad restructuring designed to cut costs and bolster its long underperforming stock.[15] By November 2008, the ongoing crisis hit Citigroup hard and despite federal TARP bailout money, the company announced further cuts.[17] Its stock market value dropped to $6 billion, down from $244 billion two years prior.[18] As a result, Citigroup and Federal regulators negotiated a plan to stabilize the company.[4] Its single largest shareholder is Prince Al-Waleed bin Talal of Saudi Arabia, who has a 4.9% stake.[46] Vikram Pandit is Citigroup's current CEO, while Richard Parsons is the current chairman.[35]
[edit]Political donations
Citigroup is the 16th largest political campaign contributor, out of all organizations, according to the Center for Responsive Politics. According to Matthew Vadum, a senior editor at the conservative Capital Research Center, Citigroup is also a heavy contributor to left-of-center political causes.[47] However, members of the firm have donated over $23,033,490 from 1989-2006, 49% of which went to Democrats and 51% of which went to Republicans.[48]

Terra Securities scandal

In November 2007 it became public that the Citigroup is heavily involved in the Terra Securities scandal, which involved investments by eight municipalities of Norway in various hedge funds in the United States bond market.[41] The funds were sold by Terra Securities ASA to the municipalities, while the products were delivered by Citigroup. Terra Securities ASA filed for bankruptcy November 28, 2007, the day after they received a letter[42] from The Financial Supervisory Authority of Norway announcing withdrawal of permissions to operate. The same letter also stated, "The Supervisory Authority contends that Citigroup's presentation, as well as the presentation from Terra Securities ASA, appears insufficient and misleading because central elements like information about potential extra payments and the size of these are omitted."
[edit]Theft from customer accounts
On August 26, 2008 it was announced that Citigroup agreed to pay nearly $18 million in refunds and fines to settle accusations by California Attorney General Jerry Brown that it wrongly took funds from the accounts of credit card customers. Citigroup would pay $14 million of restitution to roughly 53,000 customers nationwide. A three-year investigation found that Citigroup from 1992 to 2003 used an improper computerized "sweep" feature to move positive balances from card accounts into the bank's general fund, without telling cardholders.[43]
Brown said in a statement that Citigroup "knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps...When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice."[43]