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Citi got $45 billion from TARP, and now Citi is ready to pay it back. In order to help raise the funds, Citi plan to raise $20 billion by selling new equity. The idea is that by repaying TARP, Citi can get out from underneath the thumb of the “pay czar”.
The news that Bank of America received approval to repay its TARP money sent Citi (and Wells Fargo) into repay mode as well. However, officials have to give banks the go ahead in order to repay the money that they received. Banks know that if they don’t follow BofA’s lead, they could be at a disadvantage, since Bank of America would be able to lure top talent to the organization with large bonuses.
It will be interesting to see how things go, and how many banks line up to repay their money. This is good news for the Obama Administration and tax payers, since it means that the deficit won’t be as large as projected.
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