Pandit returns to testify

Vikram Pandit, CEO of Citigroup, is facing a tough week this week as he returns to Capitol Hill to testify before the congressional panel in charge of overseeing the US government's rescuing of ailing finanical services firms.

Citigroup, which still owes the US Treasury $25 billion, will face tough questions - not least because the firm remains 27 percent owned by the Treasury, a fact that is reportedly making some lawmakers tetchy about the level of taxpayer exposure to the Wall Street giant.

As such, it is anticipated that on Thursday, when Mr. Pandit takes his seat at the hearing, he will be probed into whether the financial monster is being managing in a way that assumes an implicit government backstop, as well as signs that Citigroup is "getting credit flowing," says a spokesman for the panel.

The CEO is also likely to speak about Citigroup's $160 billion in mortgage and credit card loans from last year, a fact that helped more than 800,000 families avoid foreclosure.

Reductions

However, while analysts believe Mr. Pandit is likely to "big-up" the notable actions being taken by Citigroup, regulators are likely to continue to press Mr. Pandit to speed up its balance-sheet shrinkage by selling assets marked for sale and allowing loans to mature.

According to reports in the Wall Street Journal (WSJ), for instance, Citigroup needs to "rid itself of US government meddling and influence," including "pay limits" and "lending pressures," this according to David Trone, an analyst at Macquarie Capital. It would help Citigroup "regain independence and remove a key overhang to the stock."

Meanwhile, some Citigroup shareholders contend that the government's stake could be viewed as a positive. David Ellison, manager of FBR Large Cap Financial Fund, for instance, which held 175,000 Citigroup shares as of its latest report, told the WSJ that the government shadow could help motivate management to "simplify" its balance sheet.

Matthew Buttell

Matt Buttell graduated from Bath Spa University in 2006. Since then he has written for several publications, before moving to the web. He now writes solely for the internet, continuing to cover key business issues while managing his own personal blog.

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