Panel seeks regular updates on asset guarantee prog for Citi
Press Trust of India / Washington Nov 10, 2009, 16:22 IST
A US Congressional panel has recommended to the US Treasury Department to provide regular disclosures about its asset guarantee programme for embattled Citigroup.
The panel has also asked the Treasury to explain the "rationale" behind the creation of Asset Guarantee Programmes (AGP) and the reason why only Citi and Bank of America were selected for the same.
In the wake of the raging financial turmoil late last year, the US government came up with a flurry of measures including AGP, through which the administration decided to guarantee about $300 billion-worth assets of Citi.
The panel in its ''November Oversight Report' has asked for regular disclosures relating to the guarantee of Citi's assets under the AGP, including the final composition of the asset pool.
In addition, the report asked for regular updates on Citi's "total asset pool losses to date, as well as projected losses of the pool, and how these estimates have been calculated".
Further, the panel suggested that the Treasury disclose the rationale behind the creation of guarantee programmes, including a cost-benefit analysis of all options, and "why Citi and Bank of America were the only institutions selected" for AGP.
Vikram Pandit-led Citi is one of the worst hit by the financial turmoil and received billions of dollars from the Federal government.
The report pointed out that no significant flaws have been identified in the Treasury’s implementation of the guarantee programmes.
Noting that guarantees bear no upfront price tag, the panel said, "when government agencies agreed to guarantee $300 billion in Citigroup assets in late 2008, taxpayers paid no immediate price – and now appear likely to earn a profit from fees assuming economic conditions do not deteriorate further".
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