Bailout or Bonanza ?

Mr Vikram Pandit
Chief Executive officer
Citigroup Inc.
New York
United States of America

Dear Mr Pandit

You are probably used to receiving hate mail, but here’s a letter that you might be very pleased to read.

I read in the Wall Street Journal that the United States Government is planning to sell its 27% holding in Citigroup over the next few months. It is heartening to note that US tax payers are expected to make a profit of $ 7bn from their original “bailout” money that they gave to Citigroup. You have not only paid back the entire amount, but also let the taxpayer make a profit of $ 7 bn.

Yours was the last bank from which the government is completely recovering the money it lent under the Troubled Asset Relief Program, more popularly called as the bank bailout. The US government invested a total of $165bn in all the banks and in the end it has made a 14% return ; not bad considering that if the tax payer had invested in the S&P index at the same period he would have lost 3% by now.

This is of course only the banks – the government has lost money on the support it gave the auto companies like GM and Chrysler, insurance companies, like AIG and of course Freddie Mac and Fannie Mae. But then these are not banks. Public perception has been that the bailouts were some sort of a dole for bankers and aroused all the attendant anger against bank bonuses. The truth is that the bankers actually made a whopping profit for the tax payer , which the tax payer would not have otherwise earned. I would therefore suggest that the bankers be awarded extra bonuses !

Killjoys such as Simon Johnson, of the Massachusetts Institute of Technology have said that “it's baloney to say we've made money off the bank bailouts", because the banks actually survived only because of the government largesse to AIG who then paid back their dues to the banks. But that’s like saying that businesses make a profit only because government built the roads on which the companies can move their materials. The reality is that the “bailout” of the banks has gone incredibly well for the tax payer . Can you fail again please, so that we can once more bail you out and make these profits all over again ?? Only half joking.

I am well aware that you were summoned before the US Congress’s House Finance Committee in Feb 2009, when things were looking bleak, and you were railed at by pompous Congressmen. If they have any sense of fair play, they should be summoning you to the House again and showering you with praise. Of course, such magnanimous behaviour cannot be expected of elected representatives, so I suggest that you derive vicarious pleasure by cocking your nose, sticking your tongue out and saying “Boooo” to them while making a face.

I am also aware that while you achieved all this, you have taken home a salary of $1. The taxpayer has made money; the shareholders have made money, the customers have been protected and for all this, you are being rewarded an annual remuneration of $1. This is a crying shame. I propose that you be awarded a bonus of some $10m for outstanding achievement.

Yours sincerely

Just an ordinary Joe