This week news broke that Citigroup will be the latest entry in the growing list of financial companies to receive huge infusions of federal tax dollars. But the bank is used to having money of others to keep it warm at night. As colleague Phil Mattera notes in Dirt Diggers Digest, the Fed’s guarantee of over $300 billion in Citigroup assets, along with a $20 billion direct cash infusion, demonstrates only the most recent example of the company’s tendency to get into trouble that requires a bailout. Add Uncle Sam to the list of 19th century tycoon John Jacob Astor, a modern Saudi Prince, and the government of Abu Dhabi, who have all previously provided financial aid.
But Citigroup’s search for outside assistance has happened in good times as well as bad. Even when the company was raking in billions in profits, it relentlessly sought, and often received, state and local tax breaks without providing any benefits in return.
Last year, Good Jobs New York and New Jersey Policy Perspective released a report examining Citigroup’s systematic use of relocation threats to play localities against one another so the bank could extract hundreds of millions in state and local subsidies. In Pay or We (Might) Go: How Citigroup Games the States and Cities, we examined Citigroup subsidies in New York and New Jersey, Kentucky and Texas between 1989 and 2007, and discovered the company benefited from almost $300 million in public funds in those four states alone. In virtually every move Citigroup made, it sought taxpayer help in footing its bill, often by threatening to move jobs elsewhere.
So what then did these localities get in return for its investment in Citigroup? Here’s a telling example: Two years after the company (then Citicorp) received $90 million in New York City subsidies for its tower in Queens, it eliminated 500 jobs. And a few years after that, it decided to move hundreds of its New York City employees to Hillsborough County in Florida. New York will be hit (hard) again when the company lays off 52,000 jobs globally. Yet Citi is still trying to bolster its image by maintaining its $400 million plan to purchase naming rights for the new Mets “Citi Field” stadium.
Considering Citigroup’s demand for public money without providing benefits, there may be extra reason to worry about the returns federal taxpayers will see from their unprecedented investment.