Citigroup is the only Wall Street giant to be chained to the Federal government.

The Bank of America has announced that it would pay back the money to the Federal government. Now Citigroup is the only Wall Street giant to be chained to the Federal government.

This has put the Citigroup, CEO, Pandit in a very uncomfortable position of being the only one to be still tied to the government.

Others are now free to hire talented people with the lure of higher compensation. That would also improve their rating amongst investors.

The fortunes of Citigroup have suddenly dipped what with losses from consumers suddenly increasing. This has definitely overshadowed the gains that the group has made in trading activities.

Pandit has categorically said that paying back the money which it received from the government will be a priority. The Citigroup received the money as part of the Troubled Asset Relief Program. However, it may be difficult for the bank to give back the money since it is still facing problems with loan losses and troubled assets. The group also needs to handle a few tax issues that is inevitable after repayment.

In fact, the group is in the middle of a crisis right from credit cards to soured Dubai bonds. The problems have made the group’s relationship with the government very unique. Besides giving $45 billion to the group as TARP money, the government has also decided to back soured assets that the group is desperate to sell. It may be noted that Citigroup is the only recipient of TARP recipient besides GMAC. This has given the government one-third stake in Citigroup.

Equity analyst at Standard & Poor’s, Stuart Plesser, said that BoA had a major reason for repaying government debt. It was looking for a new CEO. Earlier, there were several restrictions on the bank as far as giving out compensation was required. Now that restriction would not be there. Citigroup, however, is not looking for a new executive and its condition is even worse than BOA’s.

Plesser is of the opinion that the government may not be in a hurry to let them out. Even the group will not be able to resolve the foreclosure crisis in a hurry. Analysts are of the opinion that the may have enough reserves but it still needs to demonstrate that it will be able to tap the financial market. It needs to focus on asset sales and solvency issue. It need not even think of repaying TARP at the moment.

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