Congressman Asks for Inquiry into Fed's Citi Guarantee

Rep. Alan Grayson (D-Fla.) is calling for an inquiry into the $300 billion government guarantee extended to Citigroup.

In a letter to Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP), Grayson asks how the deal was negotiated, why it benefits taxpayers and what the current potential losses are to the Federal Reserve.

The Fed and the Treasury combined in November to rescue Citigroup with a $306 billion insurance wrapper that protected the bank from various losses. The Fed is on the line for the vast bulk of potential losses that could arise from the portfolio.

Grayson points out in his letter to Barofsky that the government has never disclosed what assets were actually insured.

He asks Barofsky to find out, "Who should be held accountable for the reckless acquisition of a third of a trillion dollars in assets that ended up requiring a government guarantee?"