Treasury Cop-Out at Citigroup

Of the 30% support achieved for faith-based investors resolution urging greater derivatives disclosure at Citigroup, ICCR Executive Director Laura Berry said:

“We are delighted with the clear support for the principles reflected in the apparent high level of shareholder support for this resolution. Given the history of ICCR attempts to bring these issues to the attention of our fellow shareholders, long before the crisis and bailouts began, the administration’s decision to vote with management is mystifying and inconsistent. The SEC’s recent ruling, allowing these resolutions to move forward, and the administration’s oft-stated commitment to financial reform and transparency led us to imagine the full support of our government in their stewardship of the shares they hold on behalf of U.S. taxpayers.” (Religious Shareholders See Big Boost for Derivatives Disclosure in Proxy Resolution Vote at Citigroup, but Criticize U.S. for Failing to Fully Vote its Shares in Support, 4/20/10)

The United States government, which controls 27% of Citigroup as a result of the bank bailouts, failed to fully support the resolution. “At the time of the exchange (acquisition), Treasury agreed with Citigroup that it would vote on all other matters proportionately–that is, in the same proportion (for, against or abstain) as all other shares of the company’s stock are voted with respect to each such matter.” (Treasury Announces Voting of Its Shares at Citigroup Annual Meeting, US Department of Treasury press release, 4/20/10)

Treasury copped out. There were plenty of issues at Citigroup worthy of support (see How I Voted at Citigroup) but they had “agreed with Citigroup” to vote most matters proportionately. Apparently the Obama administration thinks Citigroup is managers but the owners are in charge of the managers. Why would the owner defer to the employee?