TARP Mysteries Abound, and Citi is One of 'Em

(Update: The mystery has been solved! Read all about it.)

Last week's 38-page report by the Congressional Oversight Panel for Economic Stabilization – or the COP, as they cutely call themselves - asked ten questions about the TARP. Ten very good questions. To save Mr. Paulson and Mr. Kashkari some time, I’ll boil the ten down to two:

1. Hey, is there any rhyme or reason to what you guys are doing with that TARP money, or are you just making it up as you go along?

2. Have all those billions done any good, and how the heck would you know anyway?

Buried in one of the ten questions is a Citigroup-related mystery. Why, asks the COP, has Treasury made Citi – but not the other banks receiving TARP funds - play along with the FDIC’s mortgage modification program?

One possible explanation: Citi’s second bailout may have taken place not under the humdrum CPP (Capital Purchase Program) but the more hands-on PSSFI (Program for Systematically Significant Failing Institutions). If so, Citi is now keeping company with the likes of AIG. I recently heard a smart lawyer say that it was "unclear" which program the second Citi bailout fell under. Why is it unclear? Because, I assume, no one wants to tell us. And if no one wants to tell us, the answer seems obvious.

The first time Citi got TARP money, its 8-K said the money came from the Capital Purchase Program. The second time, however, the 8-K just said the bank was getting dough under the TARP, with no mention of the CPP, which seems a bit suspicious.

I can understand why Treasury wouldn't want to come out and call giant Citi a “failing institution." That sounds way too scary. Perhaps they should follow the lead of the Australian educators who've banned the term “failure” from schools, replacing it with “deferred success.”

Dear Citigroup: Happy holidays, and please accept our sincere wishes for your deferred success.