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626 Notes to Chapter 20

157. Edward J. Kelly III, interview by FCIC, March 3, 2010.
158. Roger Cole, interview by FCIC, August 2, 2010.
159. Kelly, interview.
160. James R. Wigand and Herbert J. Held, memorandum to the FDIC Board of Directors, regarding
recommendation for systemic risk determination for Citigroup, November 23, 2008, p. 5.
161. Kelly, interview.
162. Mark D. Richardson, email to John H. Corston, Jason C. Cave, et al., subject: “RE: CONFIDEN-
TIAL—Citigroup—Deterioration of Stock Price and CDS Spreads,” November 20, 2008; Mark
D. Richardson, email, to John H. Corston, Jason C. Cave, et al., subject: “11-21-08 Citi Liquidity call
notes,” November 21, 2008.
163. Wigand and Held, November memo to the FDIC board regarding Citigroup, p. 5.
164. Bernanke, closed-door session.
165. Arthur J. Murton, email to John V. Thomas, Michael H. Krimminger, et al., subject: “RE: Pro-
posed Conduit,” November 22, 2008; Michael H. Krimminger, email to Arthur J. Murton, John
V. Thomas, et al., subject: “RE: Proposed Conduit,” November 22, 2008.
166. Vikram Pandit, testimony before the Congressional Oversight Panel, Citigroup and the Troubled
Asset Relief Program, 111th Cong., 2nd sess., March 4, 2010, transcript, p. 79.
167. Kelly, interview.
168. GAO, “Federal Deposit Insurance Act: Regulators’ Use of Systemic Risk Exception Raises Moral
Hazard Concerns and Opportunities Exist to Clarify the Provision,” GAO-10–100 (Report to Congres-
sional Committees), April 2010, p. 2.
169. Wigand and Held, memo to the FDIC board regarding Citigroup, pp. 9, 10.
170. Department of the Treasury response to Congressional Oversight Panel, Questions for the
Record, p. 3, Citigroup and the Troubled Asset Relief Program, March 4, 2010, p. 44.
“Joint Statement by Treasury, Federal Reserve, and the FDIC on Citigroup,” joint press release,
November 23, 2008.
171. “Joint Statement on Citigroup.”
172. In total, Citigroup received almost $40 billion in capital benefits from the November 2008 gov-
ernment assistance. Half of the capital benefits were from Treasury’s $20 billion TARP investment in Citi-
group preferred stock; $16 billion of the capital benefits were derived from a change in the risk weighting
of the ring-fenced assets. In addition, Citigroup issued Treasury and the FDIC $7 billion in preferred
stock as payment for the guarantee on the ring fence; the result, after accounting for the insurance feature
of the arrangement, was a $3.5 billion increase in capital for Citigroup.
173. Kelly, interview.
174. The warrants gave the government the right to buy 254 million shares at $10.61 a share; at the
time, the stock was trading at $3.76 (Congressional Oversight Panel, “November Oversight Report:
Guarantees and Contingent Payments in TARP and Related Programs,” November 6, 2009, pp. 18–19).
175. FDIC Board of Directors meeting, closed session, November 23, 2008, transcript, p. 14.
176. Ibid., pp. 27–28.
177. Office of Financial Stability, “Troubled Asset Relief Program: Two Year Retrospective,” October
2010, p. 30; “Taxpayers receive $10.5 billion in proceeds today from final sale of Treasury Department
Citigroup common stock,” Treasury Department press release, December 10, 2010.
178. “Merrill Lynch Reports Third Quarter 2008 Net Loss from Continuing Operations of $5.1 Bil-
lion,” Merrill Lynch press release, October 16, 2008, p. 4; Merrill Lynch, 3Q 2008 Earnings Call transcript,
October 16, 2008, p. 2.
179. Federal Reserve System, “Order Approving Bank of America Corporation Acquisition of a Sav-
ings Association and an Industrial Loan Company,” November 26, 2008, pp. 7, 9. To approve such a pro-
posal, the Bank Holding Company Act requires the Fed to determine that a transaction “can reasonably
be expected to produce benefits to the public, such as greater convenience, increased competition, or
gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, de-
creased or unfair competition.” 12 U.S.C. 1843(j)(2)(A).
180. Timothy J. Mayopoulous, former general counsel of Bank of America, written testimony before
the House Oversight Committee, Bank of America and Merrill Lynch: How Did a Private Deal Turn into a
Federal Bailout? Part IV, 111th Cong., 1st sess., November 17, 2009.