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Obama ally wants more government control over Citigroup
David Rothnie28.11.08
A key ally to US president-elect Barack Obama has called for greater government intervention in the strategy at Citigroup following its £13 billion bailout this week.
John Podesta, a top transition official for Obama, said the Government should treat Citigroup in the same way it has dealt with stricken carmaker General Motors.
The Government has asked GM to submit a strategy document before agreeing to a $12 billion (£7.7 billion) rescue package and may demand management changes.
By contrast, Podesta believes Citigroup got off lightly this week, when a plan was announced to insure Citigroup against losses on £200 billion of troubled assets and inject $20 billion of capital after its shares plunged by more than 60% in a week.
However, the US Government has not sought any assurances from Citigroup over its strategy, nor has it demanded the replacement of Vikram Pandit as chief executive.
In the UK, state-backed bank bailouts have led to greater intervention, with Prime Minister Gordon Brown demanding rescued institutions maintain lending levels.
Yesterday, the Government said the company set up to manage its stakes in Britain's state-backed banks will have annual running costs in the "single millions of pounds", after it appointed Merrill Lynch banker John Crompton to oversee the planned £37 billion investment in Royal Bank of Scotland and the merged Lloyds TSB and HBOS.
Reader views (2)
It is ironic how every nation surrounding constantly damns America for its faults when in actuality, everytime America faulters, so does the rest of the world
- Patrick, Houston USA
Not before time, these same Financial institutions have been extravagent throughout, with their lifestyle. Yet have looked to the US government for large sums of Taxpayers money to keep them afloat, when they got it all wrong. Their desire to perpetuate this same lifestyle within their company still persists. They have learnt nothing from their temporary setback.
And even now all these same Institutions continue to drive the Markets in the US followed by the UK, ever downwards, in search of a shorting profit. They are all without sufficient regulation, prepared to sacrifice staff, whilst at the same time taking taxpayers bail out money, in order to amplify the Financial chaos they are inflicting on the wider world of the business community.
Time for worldwide governments to reign in these excesses, and regulate them all.
- Mike, France
