Citigroup Inc. on Wednesday repaid $20 billion in bailout money and received a government ruling that it's no longer covered by the pay restrictions imposed on companies receiving the most rescue money.
Kenneth Feinberg, the Obama administration's pay czar, said in a letter to the company that the repayment removes Citigroup from restrictions on executive pay and bonuses that were imposed on companies receiving exceptional assistance from the $700 billion bailout fund.
Special: Get Sarah Palin’s New Book – Incredible FREE Offer – Click Here Now.
Citigroup last week sold common stock to raise the cash it needed to repay $20 billion of the $45 billion stake the government held in Citigroup. But the Treasury postponed its own plans to begin selling its 34 percent stake in the company because it decided Citi's stock price was too low.
In his letter to the company, Feinberg said that because of the repayment, his approval would not be needed for pay packages received by the company's top executives in 2010. But he said compensation those executives received in 2009 would still be subject to the tighter restrictions.
In October, Feinberg had ruled that the top 25 executives at companies receiving exceptional assistance from the bailout fund, known as the Troubled Asset Relief Program, would have their pay capped in most cases at $500,000 for 2009. They were required to receive additional compensation in the form of company stock paid out over three years, to try to tie their performance to the fate of their companies.
Even before Feinberg's decision, banks that had received billions in government aid to cope with the worst financial crisis since the Great Depression had been scrambling to repay the government so they could escape the TARP restrictions.
In a related announcement, the government is ending an agreement it had with Citigroup under which Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. agreed to share losses on a pool of assets originally valued at $300 billion.
Treasury said the agencies had not had to pay any losses under the agreement. It said they would keep $5.2 billion of the $7 billion in preferred securities received as compensation for putting up the loan guarantees.
Treasury also confirmed that it received a $25 billion payment Wednesday from Wells Fargo & Co. That company had not been covered by the "exceptional assistance" pay restrictions.
Treasury said that with the $45 billion in repayments received Wednesday from Citgroup and Wells Fargo, the government has now been repaid $164 billion in TARP funds.
It forecast that the government would receive an additional $11 billion in repayments over the coming year. Treasury also said the government would earn a profit on its investments to shore up the banking system, rather than incurring a loss that it had once projected would total $76 billion.
The Obama administration is still forecasting a loss for the total TARP program. But it has trimmed the loss estimate to under $141 billion, down from an estimate of $341 billion it made in August. The reduction stems from less use of the TARP funds than expected and a quicker recovery by the financial system.
The bulk of the losses will occur in support TARP has provided to AIG, the auto companies and a $50 billion program that's providing incentives to banks to refinance mortgages for homeowners at risk of foreclosure.
© Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.