November 23, 2008

Congressman Gregory Meeks Statement on Financial Agreement between Treasury, Federal Reserve, FDIC and Citigroup

(WASHINGTON, DC)–Congressman Gregory Meeks applauds the Department of Treasury, the Federal Reserve and the FDIC for taking the necessary steps to stabilize the economy and provide protection to U.S. taxpayers. Treasury, the Federal Reserve and the FDIC constructed an agreement with Citigroup to provide a package of guarantees, liquidity access and capital. “The success or failure of financial institutions like Citigroup has a direct impact on many American families who find themselves struggling in this economy,” said Congressman Meeks.

The purpose of this agreement is to stimulate credit flows to households and businesses, manage taxpayer’s resources, increase the involvement of government in the financial sector and support the efforts of financial institutions to attract private capital.

Under this agreement, the Department of Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities that are backed by residential and commercial real estate. The Treasury and FDIC are charging a fee for this arrangement with Citigroup. This fee consists of Citigroup issuing preferred shares to the Treasury and FDIC. If necessary the Federal Reserve will also issue backstop residual risk in the asset pool through a non-recourse loan. In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury.  Also under the agreement, Citigroup will be forced to comply with enhanced executive compensation restrictions and implement the FDIC’s mortgage modification program.

 “I am pleased with the agreement that the Treasury, FDIC and the Federal Reserve has crafted with Citigroup to ensure continued financial growth and economic stability for our country. I believe that it is important that we have government oversight to strengthen our banking institutions and increase protection for taxpayers, businesses and homeowners.  In addition, I believe that there is a need for a strong stimulus package to help American taxpayers be able to provide for their families,” said Congressman Meeks.

Now serving in his sixth full-term, Meeks was elected to the House on February 3, 1998. Representing New York's Sixth Congressional District in the United States House of Representatives, Meeks' district covers all towns of Southeast Queens, Far Rockaway and Howard Beach. He is a member of the House Committee on Financial Services and the Committee on Foreign Affairs.  Meeks is a Member of the Congressional Black Caucus (CBC), New Democrats Caucus and the Democratic Leadership Council (DLC).  He serves as the Co-chair of the Malaysia Caucus, Services Caucus, Dialogue Caucus and the Middle East Economic Partnership Caucus. 

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