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Ledger Problems: $20 Billion to Citigroup Questioned

January 13, 2011

WSJ Deal Journal reports: After a weekend of marathon talks, the federal government pledged to guarantee more than $300 billion of toxic assets at the mega bank. The Treasury Department also plowed an additional $20 billion in fresh capital into Citigroup.

Turns out no one is quite sure why and how that decision was made.

The inspector general of the TARP program said in a report today that an investigation found “no written documentation of the decision-making process behind the $20 billion capital injection” in to Citigroup. Tim Geithner, then the president of the Federal Reserve Bank of New York and now the Treasury secretary, told the inspector general that “he did not recall exactly how the Government arrived at the $20 billion figure.”

Geithner said, according to today’s report, that “there’s no perfect science to this thing…You need to balance risk versus what the firm needs, but it was Treasury’s money.”

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