For Immediate Release Citigroup Inc. (NYSE: C) March 04, 2010

Prepared Testimony of Vikram S. Pandit Chief Executive Officer, Citigroup Inc. Before the Congressional Oversight Panel

Washington, DC – Chair Warren and members of the Panel, I am Vikram Pandit. I appreciate this opportunity to appear today as the Chief Executive Officer of Citigroup.

Citi today is fundamentally different from the company we inherited when I became CEO two years ago. The write downs Citi took during the financial crisis – together with concerns about the quality of some of our assets – led to questions about the Bank's financial condition. Now, as a result of the government's response to the crisis, our new team's focused strategy and the commitment of all our employees, I am pleased to say we are in a far different and much healthier position. Today, Citi is operating on a very strong foundation and is positioned to contribute to the economic recovery and generate sustained profitability for the benefit of all our stakeholders.

We have bolstered our financial strength, overhauled our risk management, reduced our risk exposures, defined a clear strategy and made Citi a more focused enterprise by returning to banking as the core of our business. As a result:

These achievements reflect the lessons we have learned from the financial crisis and acted upon at Citi, and I will expand further on these and other issues you have asked me to address in my testimony.

First, however, I want to thank our Government for providing Citi with TARP funds. For Citi, as for many other institutions, this investment built a bridge over the crisis to a sound footing on the other side, and it came from the American people. As the result of a successful public securities offering, in December 2009 we repaid $20 billion of the Government's TARP investment in Citi in consultation with our regulators and the Department of the Treasury. The Government has earned $3.0 billion in dividends and interest on its investment and asset-guarantee program for Citi. In addition, we have paid the Government $5.3 billion in premiums on the asset-guarantee program, which we exited without the Government incurring any losses or making any payments. American taxpayers still hold 27% of Citi's common stock, and we look forward to helping them realize value on that investment. Citi owes a large debt of gratitude to American taxpayers.

The Lessons of the Last Five Years for the Financial System

Citi's financial condition, like that of every other major financial services company, was dramatically affected in late 2007 and throughout 2008 by the collapse in the residential real estate market, which led to an unprecedented global credit crisis and the recession that followed. The errors, mistakes and business practices that precipitated these macroeconomic events have been much discussed: housing policies that led to increased subprime lending in the residential real estate market; an explosion in new subprime mortgage products premised on the assumption of stable and, indeed, ever-increasing residential real estate prices based on decades of precedent; the Federal Reserve's policy of maintaining historically low interest rates in the post-9/11 period; the growth in demand for securitized and structured credit products by investors of all types in all sectors with widely varying risk appetites and abilities to absorb risk; the lack of transparency in certain financial markets, including derivatives markets; and a regulatory system that did not keep pace with the ever-increasing sophistication, complexity and interrelatedness of the financial markets, to name just a few.

The lessons we have learned from the many and complex causes of the financial crisis include the following:

Consistent with those lessons, Citi supports prudent and effective reform of the financial regulatory system. America – and our trading partners – need smart, common-sense government regulation to reduce the risk of more bank failures, mortgage foreclosures, lost GDP and taxpayer bailouts. Citi embraces effective, efficient and fair regulation as an essential element in continued economic stability. Such regulation should have three points of emphasis: financial institution reform, market structure reform and consumer market reform.

While some reform measures could have a significant cost impact on our industry, Citi believes they are necessary. Carefully considered reforms agreed upon by Government, business and consumers would lead to a healthier, more stable system. We commit to work with the Administration, with Congress and within our industry toward this goal.

How Citi is Embracing the New Reality

Given Citi's size and global reach, and its exposure to subprime-related asset classes, the systemic factors at the root of the financial crisis, and their confluence, combined to impact Citi's financial performance dramatically.

In response, we have taken responsibility for putting our own house in order. As a result, Citi is now a smaller institution that is focused on being a bank – not a financial supermarket. We are building on our distinctiveness as a global bank where everything is ultimately centered on helping our clients and customers connect with the world and facilitating the flow of capital that we believe is a catalyst to a U.S. economic recovery through manufacturing, exports and trade. And, we have developed a culture of responsible finance, including through a different approach to risk management, asset liability management and risk return.

Our revenues have also changed since 2007, driven by our reorganization. In 2009, Citicorp represented 76% of Citigroup's adjusted revenues (excluding revenue marks and other large one-time items like the sale of Smith Barney or the TARP repayment), compared to 61% in 2007. Citi Holdings represents 29% of Citi's total assets, compared to 41% at the beginning of 2008. The Transaction Services and Regional and Consumer Banking businesses represented 40% of Citigroup's adjusted revenues in 2009, compared to 36% in 2007. As the assets in Citi Holdings continue to be divested or wound down, Citicorp's revenue contribution will continue to increase. We believe that the increasing proportion of stable revenues from Citicorp will provide additional stability during future economic slowdowns.

As we move forward, we believe we have positioned our business to perform as well as possible through the credit cycle and to gain strength as the U.S. and global economies improve. Some credit fundamentals appear to be stabilizing, particularly internationally. It is still early days but on a managed basis, Citi had its second consecutive quarter of declining credit losses in the fourth quarter of 2009 and non-accrual loans declined slightly for the first time in this cycle. However, U.S. consumer credit remains an issue, particularly with respect to mortgages. Credit costs will likely remain a significant driver of Citi's results in 2010, particularly in North America, where credit trends will be driven by broader macroeconomic factors as well as the impact of industry factors such as CARD Act implementation and the outcome of the Government's Home Affordable Modification Program (HAMP) and other loss mitigation efforts.

We are confident that the measures Citi has taken to strengthen its capital position, build our reserves and maintain ample liquidity will allow us mitigate the risks as we work through the cycle. Our allowance for loan losses at year-end was among the highest in the industry at $36 billion, or 6.1% of total loans, and our cash liquidity was $193 billion. Firm-wide deposits were $836 billion at December 31, 2009, up 8% from the prior year and $3 billion from the prior quarter. Citi currently anticipates issuing less than $15 billion of Citigroup-level long-term debt in 2010 (down from $85 billion in 2009) due to our current strong liquidity position and anticipated asset reductions within Citi Holdings. In addition, Citi has a smaller percentage of its assets in later cycle-sensitive asset classes such as adjustable rate mortgages (ARMs) and commercial real estate loans than any of the other major U.S. banks.

I believe that as economic growth begins to take hold, Citi and the financial sector are on course for a sustainable recovery. Citi will continue to focus on our core business of serving our clients, and on managing risk. We also intend to continue to support our nation's economic recovery through responsible lending to consumers and small businesses, working with homeowners to modify their mortgages where appropriate, and lending to state and local governments, universities, and non-profits alongside our corporate clients.


Chair Warren and members of the panel, at Citi we are confident in the business strategy that I have outlined. In short, everything we have been doing is to ensure that Citi never again needs the assistance of the American taxpayer.

I also would like to take this opportunity to thank Citi's 265,000 employees, who are among the best in the industry. They distinguish Citi in their service to our clients and are unstinting in their volunteer support for the communities where they live and work. They are the backbone of our organization and fundamental to our future success.

Thank you.

Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Additional information may be found at or