U.S. Treasury Secretary Timothy F. Geithner ignored an order in 2009 from President Barack Obama to prepare a plan to “wind down” Citigroup Inc., once the biggest bank in the world, according to a book to be released next week.
Geithner didn’t proceed with Obama’s order to develop a plan to dissolve New York-based Citigroup in March 2009, several months after the bank had received a $45 billion taxpayer bailout, according to “Confidence Men: Wall Street, Washington and the Education of a President” by Ron Suskind, a former Wall Street Journal reporter. Bloomberg News obtained a copy of the book’s manuscript. The book, published by New York-based HarperCollins, is to be released Sept. 20.
Citigroup, led by Chief Executive Officer Vikram Pandit, posted $29.3 billion in combined losses for 2008 and 2009, much of them tied to subprime mortgages. U.S. taxpayers also guaranteed more than $300 billion of the lender’s riskiest assets to prop up the company as it neared collapse. Obama wanted to consider restructuring the bank while Geithner would also proceed with stress tests of the country’s lenders, according to the book.
Geithner didn’t recall Obama getting angry at him for not implementing the order and said that he didn’t “slow walk the president on anything,” according to the book.
In the book, Obama doesn’t deny Suskind’s account and doesn’t reveal what he told Geithner when he found out that Geithner hadn’t followed his order, according to a report today by the Associated Press, which said it purchased a copy of the book.
“The Citibank incident, and others like it, reflected a more pernicious and personal dilemma emerging from inside the administration: that the young president’s authority was being systematically undermined or hedged by his seasoned advisers,” AP quotes Suskind as writing in the book.
Jenni LeCompte, assistant secretary for public affairs at the Treasury Department, had no immediate comment on the book. The White House didn’t immediately respond to e-mails requesting comment.
The Treasury Department largely exited its bailout of Citigroup last year and returned a profit of about $12 billion to taxpayers.
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