President Barack Obama is meeting with financial industry executives later this morning. That news comes as banking giant Citigroup says it will repay $20 billion of the $45 billion it received in government bailout money.
The Associated Press reports that Citigroup was among the hardest hit by the credit crisis and rising loan defaults. It got one of the largest bailouts of any banks during the financial crisis. After the government loaned Citigroup $45 billion, the New York-based bank agreed to protect losses on nearly $300 billion in risky investments.
Citigroup is selling $20.5 billion in stock and debt to repay the government. It has to pay back just $20 billion instead of $45 billion because the government converted the remaining $25 billion into a 34 percent ownership stake in the bank. The government plans to sell that entire stake - which has risen in value by more than 20 percent - next year.
After repaying the funds, Citigroup will no longer face heavy scrutiny and restrictions from the government around executive pay and dividends.
However, the repayment comes at a heavy cost. Raising the new capital to pay the government back will significantly dilute current shareholders' stake in the company. Citigroup shares fell 7 cents to $3.88 in premarket trading Monday.
Wells Fargo & Co. remains the last national bank that has yet to pay back its bailout money.