TARP Inspector General Asked to Investigate Citigroup and Bank of America Donations to Rainbow/PUSH

Today the National Legal and Policy Center (NLPC) asked Neil M. Barofsky, the Special Inspector General for the Troubled Asset Relief Program (TARP), for a formal review of the sponsorship by Bank of America and Citigroup of the Rainbow/PUSH Wall Street Conference currently taking place in New York City. The January 13-16 event is one of two of Jesse Jackson’s annual fundraisers.

According to official conference materials, Citigroup is a “Gold Sponsor,” a designation costing $50,000. Bank of America is identified as a “Silver Sponsor,” a designation costing $30,000.

Both Citigroup and Bank of America are major recipients of TARP funds. Taxpayers are now Citigroup’s largest shareholder after infusions of $45 billion. Bank of America has already received $25 billion. According to today’s Wall Street Journal, it is seeking billions more in order to make possible its acquisition of Merrill Lynch.

NLPC’s Complaint reads, in part:

“When the TARP was presented to Congress, Secretary Henry Paulson and others argued that the situation was dire, and that the failure of major financial institutions posed a systemic risk to our economy. The stated goal was to unfreeze credit so that banks can make loans to businesses and individuals. It was never contemplated that banks use their capital to make donations to organizations founded by a controversial figure like Jesse Jackson.

It should be noted that shareholders have made objections to corporate donations to Rainbow/PUSH and the so-called Citizenship Education Fund (CEF) even before the onset of the financial crisis. CEF is a 501(c) (3) organization founded by Jesse Jackson that co-sponsors the Wall Street Conference. In recognition of these objections, the New York Stock Exchange itself ended its financial sponsorship of the event in 2005.

Citigroup’s management and board of directors cannot claim that it is unaware of the donations to Jesse Jackson’s groups, or that they have not sparked controversy. Indeed, in remarks at the company’s annual meetings in 2006 and 2007, I vigorously raised the issue in connection to our shareholder proposals asking for disclosure of Citigroup’s charitable contributions, a resolution management opposed.

It should be further noted that Citigroup’s relationship with Jesse Jackson began under questionable circumstances that have contributed in part to Citigroup’s present problems and its need to seek taxpayer support. When Travelers and Citicorp sought to merge in 1998, Jesse Jackson said he would oppose the merger. Citigroup initiated financial support to his organizations. Jesse Jackson changed his position and supported the merger. It was speculated in the media that Citigroup’s ‘charitable’ giving to Jesse Jackson’s groups did have a business purpose.

As shareholders, we have protested corporate support for Jesse Jackson’s organizations. Now that all taxpayers are shareholders in both Citigroup and Bank of America, these donations are completely objectionable, and should not be allowed. Unless you undertake a swift review of this matter, and take appropriate action, public cynicism about the use of TARP funds for their intended purpose will only increase.”