NEW YORK — Citigroup Inc. and Wells Fargo&Co. are seeking to repay billions in federal bailout aid, but so far haven’t received permission from the government, people familiar with the talks told The Associated Press.
The main sticking point is over how much capital the banks would need to raise to repay taxpayers for the money they received at the height of the financial crisis, according to two people with direct knowledge of the talks who requested anonymity because the discussions are ongoing.
Citigroup received $45 billion in bailout money and is now 34 per cent owned by the government. Wells Fargo received $25 billion.
Citigroup and Wells Fargo declined to comment. Treasury spokesman Andrew Williams would not discuss the negotiations but said banks “are pursuing discussions to understand what needs to be done to move ahead with repayment.”
Their efforts to repay the money comes after Bank of America last week announced it would return $45 billion it had received, adding to the $71 billion already repaid by nearly 50 other financial companies.
Banking analysts have said Citigroup and Wells Fargo will face a competitive disadvantage as the last two large U.S. banks still holding funds from the Troubled Asset Relief Program. Both banks are subject to restrictions on employee compensation until they repay the government. That’s raised worries that top performers will defect to rival firms.
One proposal discussed was for Citigroup to partially repay its TARP funds as a way to escape pay restrictions set by the Treasury’s pay czar, Kenneth Feinberg, these people said. But Feinberg’s office rejected the idea, they said.