Company Name: Citigroup Inc. (Missionary Oblates)
Public Availability Date: February 20, 2008

Document Sections:

INQUIRY LETTER
APPENDIX 1
APPENDIX 2
APPENDIX 3
INQUIRY LETTER
STAFF REPLY LETTER

[INQUIRY LETTER]

December 20, 2007

Office of Chief Counsel
Division of Corporate Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re: Stockholder Proposal to Citigroup Inc. of Missionary Oblates of Mary Immaculate, The Sisters of Charity of Saint Elizabeth, Sisters of St. Dominic of Caldwell New Jersey, Maryknoll Sisters of St. Dominic, Inc., Dominican Sisters of Blauvelt, Sisters of St. Joseph of Carondelet, The Sisters of Saint Francis of Philadelphia, and Benedictine Sisters of Boerne, Texas ("Proponents")

Dear Sir or Madam:

Pursuant to Rule 14a-8(d) of the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the "Act"), enclosed herewith for filing are six copies of the stockholder proposal and supporting statement submitted by the Proponents, for inclusion in the proxy to be furnished to stockholders by Citigroup in connection with its annual meeting of stockholders to be held on or about April 22, 2008. Also enclosed for filing are six copies of a statement outlining the reasons Citigroup Inc. deems the omission of the attached stockholder proposal from its proxy statement and form of proxy to be proper pursuant to Rule 14a-8(i)(7) and Rule 14a-8(i)(10) promulgated under the Act.

Rule 14a-8(i)(7) under the Act provides that a registrant may omit a shareholder proposal from its proxy statement "if the proposal deals with a matter relating to the company's ordinary business operations."

Rule 14a-8(i)(10) under the Act provides that a registrant may omit a shareholder proposal from its proxy statement "if the company has already substantially implemented the proposal."

By copy of this letter and the enclosed material, Citigroup Inc. is notifying the Proponents of its intention to omit the proposal from its proxy statement and form of proxy. Citigroup Inc. currently plans to file its definitive proxy soliciting material with the Securities and Exchange Commission on or about March 12, 2008. Kindly acknowledge receipt of this letter and the enclosed material by stamping the enclosed copy of this letter and returning it in the enclosed self-addressed, stamped envelope. If you have any comments or questions concerning this matter, please contact me at 212 793 7396.

Very truly yours,

/s/

Shelley J. Dropkin
General Counsel,
Corporate Governance

Enclosures

cc: Missionary Oblates of Mary Immaculate. The Sisters of Charity of Saint Elizabeth, Sisters of St. Dominic of Caldwell New Jersey, Maryknoll Sisters of St. Dominic, Inc., Dominican Sisters of Blauvelt, Sisters of St. Joseph of Carondelet, The Sisters of Saint Francis of Philadelphia, and Benedictine Sisters of Boerne, Texas

[APPENDIX 1]

STATEMENT OF INTENT TO OMIT STOCKHOLDER PROPOSAL

Citigroup Inc., a Delaware corporation ("Citi" or the "Company"), intends to omit the stockholder proposal and supporting statement (the "Proposal") a copy of which is annexed hereto as Exhibit A, submitted by Missionary Oblates of Mary Immaculate, The Sisters of Charity of Saint Elizabeth, Sisters of Saint Dominic of Caldwell, New Jersey, Maryknoll Sisters of St. Dominic, Inc., Dominican Sisters of Blauvelt, Sisters of St. Joseph of Carondelet, The Sisters of St. Francis of Philadelphia, and Benedictine Sisters of Boerne, Texas (the "Proponents") for inclusion in its proxy statement and form of proxy (together, the "2008 Proxy Materials") to be distributed to stockholders in connection with the Annual Meeting of Stockholders to be held on or about April 22, 2008.

The Proposal requests that "the company disclose on its website (omitting proprietary information and at reasonable cost) quarterly collateral and other credit risk management policies for its off balance sheet exposures as well as dollar exposure in the following areas: Structured Investment Vehicles, Structured Securities and Conduits."

The Company believes that the Proposal may be omitted from the 2008 proxy materials pursuant to Rule 14a-8(i)(7) and Rule 14a-8(i)(10) of the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act"). Rule 14a-8(i)(7) provides that a proposal may be omitted if it "deals with a matter relating to the company's ordinary business operations." Moreover, the Proposal does not raise any significant social policy issues. Rule 14a-8(i)(10) provides that a company may omit a proposal if it has substantially implemented it.

THE PROPOSAL MAY BE OMITTED BECAUSE IT (i) REQUESTS ADDITIONAL REPORTS TO STOCKHOLDERS ON ORDINARY BUSINESS MATTERS PERTAINING TO LIQUIDITY AND RISK MANAGEMENT STRATEGIES AND (ii) SEEKS TO PRESCRIBE THE CONTENT, FREQUENCY AND METHOD OF SUCH ADDITIONAL DISCLOSURES, ALL OF WHICH ARE MATTERS THAT RELATE TO THE COMPANY'S ORDINARY BUSINESS OPERATIONS

Decisions Related to the Scope, Timing and Method of Disclosure Pertaining to Ordinary Business Matters Are Core Management Functions

The Securities and Exchange Commission ("Commission") promulgates rules governing the appropriate disclosure required to be provided by companies in order to allow stockholders and potential investors to evaluate an investment in the company based on ample and relevant information, including risks. Decisions to disclose additional information beyond that which is required by the Commission fall squarely within management's ordinary business judgment. The Proposal requests that the Company disclose on its website on a quarterly basis prescribed financial information pertaining to collateral related to off balance sheet exposures, as well as dollar exposures pertaining to structured investment vehicles, structured securities and conduits.

In Exchange Act Release No. 34-40018 (the "1998 Release"), the Commission explained the policy underlying the ordinary business exclusion by stating, in part: "Certain tasks are so fundamental to management's ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight." The additional disclosure requested in the Proposal relates to strategies employed by the Company primarily for the securitization of assets (for example, credit card receivables, mortgages and other loan products, as well as trade receivables of corporate clients) in order to enhance liquidity and manage risk. Because these risk management instruments and strategies are embedded in the constructs of a broad segment of the day-to-day transactions of a multi-national banking company, such as Citigroup, these matters implicate core management functions, and any decisions related to disclosure in this area fall squarely within the Company's ordinary business operations.

Disclosure regarding the matters that are the subject of the Proposal can be found on pages 6-7, 9, 45-47, and note 13 of the financial statements on pages 68-73 in Citigroup's 2007 Third Quarter 10-Q, as well as its 8-K of November 4, 2007. The relevant portions of these public filings are annexed hereto as Exhibit B. Management, in the exercise of its ordinary business judgment, has determined that the nature and extent of the disclosures related to such strategies is appropriate, in accordance with applicable laws, rules and regulations.

The Proposal is very similar to a number of other proposals that the Staff of the Division of Corporate Finance of the SEC ("Staff") has consistently deemed inappropriate for shareholder consideration under Rule 14a-8(i)(7), because they requested supplemental reports to stockholders on ordinary business matters, such as financial information and risk management.

In Peregrine Pharmaceuticals, Inc. (July 28, 2006), the Staff declined to recommend enforcement action against a company that omitted a proposal requesting it to post on its website monthly statistics regarding its clinical trials. See also AmerInst Insurance Group. Ltd. (April 14, 2005) (proposal requesting a company to provide a full, complete and adequate disclosure of the accounting, each calendar quarter, of its line items of Operating and Management expenses omitted under Rule 14a-8(i)(7)).

In Newmont Mining Corporation (February 4, 2004), the Staff declined to recommend enforcement action against a company that omitted a proposal requesting the board to publish a comprehensive report on the risks to the company's operations, profitability and reputation arising from social and environmental liabilities. Similarly, in The Chubb Corporation (January 25, 2004), the Staff declined to recommend enforcement action against a company that omitted a stockholder proposal requesting that the board of directors prepare a report providing an assessment of management's strategies for evaluating the risks and benefits of the impact of climate change on its businesses pursuant to Rule 14a-8(i)(7). See also The Mead Corporation (January 31, 2001) (proposal requesting a report on liability protection methodology and risk evaluation omitted under Rule 14a-8(i)(7) and Staff stated, "We note in particular that the proposal appears to focus on Mead's liability methodology and evaluation of risk.")

THE COMPANY ALREADY PROVIDES THE EXPANDED DISCLOSURE REQUESTED IN THE PROPOSAL IN ITS PERIODIC PUBLIC FILINGS AND THEREFORE, THE PROPOSAL MAY BE OMITTED UNDER RULE 14A-8(i)(10)

The Proposal may be omitted pursuant Rule 14a-8(i)(10) because the Company provides substantially all of the requested disclosures as demonstrated in a review of the information found in the pages of Exhibit B, cited above, in Citigroup's third quarter 10-Q and November 5, 2007 8-K, which include discussions and data pertaining to each of the items requested in the Proposal.

It is well settled that a proposal may be omitted under Rule 14a-8(i)(10) if a company has substantially implemented it. In Honeywell International Inc. (February 21, 2007), the Staff declined to recommend enforcement action against a company that had omitted a proposal seeking a sustainability report to stockholders pursuant to Rule 14a-8(i)(10) because the company already prepared such report and made it available on its website. Similarly, the Company believes its enhanced disclosures in its periodic filings and intent to continue doing so demonstrate that it has substantially implemented the Proposal.

CONCLUSION

For the foregoing reasons, the Company believes the Proposal may be omitted pursuant to Rule 14a-8(i)(7) and Rule 14a-8(10).

[APPENDIX 2]

November 7, 2007

Sir Win Bischoff
Acting Chief Executive Officer
Citigroup
399 Park Avenue
New York, NY 10043

Dear Sir Bischoff:

The Missionary Oblates of Mary Immaculate are a religious order in the Roman Catholic tradition with over 4,000 members and missionaries in more than 60 countries throughout the world. We are members of the Interfaith Center on Corporate Responsibility a coalition of 275 faith-based institutions committed to socially responsible investments. We are the beneficial owners of 7,955 shares in Citigroup and plan to hold shares at least until the annual meeting. Verification of our ownership of this stock is enclosed.

As a congregation with a presence in more than 60 countries we are deeply concerned about the long-term impact of financial crisis & turmoil on the financial system and any collateral impacts on people in developing countries. Over the years, we have expressed our concerns to representatives of our company and are profoundly distressed by the failure of the company to evaluate correctly the risks and credit worthiness of some of the instruments that were engaged.

It is with this in mind that we are submitting the attached resolution for consideration and action by the stockholders at the annual meeting. I hereby submit it for inclusion in the proxy statement in accordance with Rule 14-a-8 of the General Rules and Regulations of the Securities Exchange Act of 1934.

If you have any questions or concerns on this. please do not hesitate to contact me.

Sincerely,

/s/

Seamus P. Finn, OMI
Director
Justice, Peace and Integrity of Creation Office
Missionary Oblates of Mary Immaculate

[APPENDIX 3]

Disclosure of off balance sheet liabilities and exposure

Whereas the absence of reliable information about the many complex off-balance sheet instruments that are held in the portfolios of large financial institutions increases panictype behavior during times of crisis, a problem that the new accounting rules, which were put in place after the collapse of Enron, were intended to address but have not;

Whereas according to David Dodge, Governor of the Bank of Canada, "credit conditions were eased by increased securitization and movement of financial risk off the balance sheets" and now this cure is a significant source of the current crisis;

Whereas according the Financial Times "the toll of big bank losses from the [current] credit squeeze topped $180 billion";,

Whereas "history shows that panicky conditions end when information improves. Markets would stabilise when banks, hedge funds and other institutional investors start disclosing more about their holdings of questionable assets". (Henry T. Azzman, CEO of Middle East & North Africa/Deutsche Bank);

Whereas the IMF, in its September 2007, `Global Financial Stability Report' stated that "Financial institutions could be more transparent and disclose to investors and counterpartics how their market risk management systems would react and could be managed in a stressed environment.";

Whereas the instability triggered in the financial markets by the subprime lending problem is prompting calls by regulators and others to update regulations dealing with innovations in the mortgage business and the broader financial markets;

Whereas even Federal regulators have been unable to obtain needed information about off-balance sheet exposures. Treasury Secretary Paulson stated: `The regulators didn't have clear enough visibility with what was going on in terms of these off-balance-sheet SIV's.[Structured Investment Vehicles]";

Whereas Citigroup in its latest financial results showed that it administers off-balance-sheet conduit vehicles used to issue commercial paper that have assets of about $77 billion and is affiliated with structured investment vehicles that have an additional approximately $80 billion in assets, all of which remain off the bank's balance sheet;

Whereas Citigroup Inc.'s, 2007 third-quarter earnings declined 57 percent; it wrote off $3.55 billion from deteriorating securities prices, leveraged loans and bad trading bets and set aside an additional $2.24 billion to cover future losses from failing mortgages and consumer loans, indicating that its reserves had been substantially depleted, Therefore be it resolved that the shareholders request the company to disclose on its website (omitting proprietary information and at a reasonable cost) quarterly collateral and other credit risk management policies for its off balance sheet exposures as well as dollar exposure in the following areas:

Structured Investment Vehicles

Structured securities

Conduits

[INQUIRY LETTER]

February 15, 2008

Securities & Exchange Commission
100 F Street, NE
Washington, D.C. 20549

Att: Will Hines, Esq. Office of the Chief Counsel Division of Corporation Finance
Via fax 202-772-9201

Re: Shareholder Proposal submitted to Citigroup, Inc.

Dear Sir/Madam:

I have been asked by the Missionary Oblates of Mary Immaculate, the Sisters of Charity of St. Elizabeth, the Sisters of St. Dominic of Caldwell, New Jersey, the Maryknoll Sisters of St. Dominic, the Dominican Sisters of Blauvelt, the Sisters of St. Joseph of Carondelet, the Sisters of St. Francis of Philadelphia and the Benedictine Sisters of Boerne, Texas (hereinafter collectively referred to as the "Proponents"), each of which is a beneficial owner of shares of common stock of Citigroup, Inc. (hereinafter referred to either as "Citi" or the Company"), and who have jointly submitted a shareholder proposal to Citi, to respond to the letter dated December 20, 2007, sent to the Securities & Exchange Commission by the Company, in which Citi contends that the Proponents' shareholder proposal may be excluded from the Company's year 2008 proxy statement by virtue of Rules 14a-8(i)(7) and 14a-8(i)(10).

I have reviewed the Proponents' shareholder proposal, as well as the aforesaid letter sent by the Company, and based upon the foregoing, as well as upon a review of Rule 14a-8, it is my opinion that the Proponents' shareholder proposal must be included in Citi's year 2008 proxy statement and that it is not excludable by virtue of either of the cited rules.

The Proponents' shareholder proposal requests Citi to disclose periodically its "collateral and other credit risk management policies" and "dollar exposure" for "Structured Investment Vehicles", "Structured Securities" and "Conduits".

BACKGROUND

It is unnecessary to rehearse the credit crunch that has resulted from the sub-prime mortgage crisis. Suffice it to say that at the core of the problem has been the various bank and investment bank created off balance sheet investment vehicles that have been created in abundance in recent years to hold, among other assets, CMOs (containing many, or mostly, sub prime mortgages) and credit swaps (usually based on these types of CMOs). Since the underlying assets of these vehicles are themselves opaque, these off balance sheet entities themselves have been, to say the least, opaque.

This lack of disclosure has been widely decried. For example, the Financial Times of January 26/27, 2008, (all Financial Times dates refer to the US edition) stated, with respect to the underlying assets of these off balance sheet entities:

Banks that produce complex and illiquid derivative products that have been at the heart of the credit squeeze might be forced to provide more information about their products on public stock exchanges.

Leaders of NYSE Euronext, the US-European exchange group, said yesterday that global regulators were considering telling banks they must disclose basic data about such contracts, many of which have fallen sharply after the US subprime housing crisis.

The move would be a first step towards increasing disclosure on one of the most illiquid and little-understood areas of modern financial markets. The rapid growth of the credit derivative markets, and the lack of information about many contracts, has exacerbated the loss of investor confidence in debt markets.

Duncan Niederauer, chief executive of NYSE Euronext, told a media briefing in Davos that the exchange had been approached by global regulators asking whether it and other stock exchanges could become clearing houses for information on over-the-counter contracts such as collateralised debt obligations and credit default swaps.

"There is a severe lack of transparency in some of these instruments. You cannot punch a screen and say: `What is the quote for this exotic piece of paper?' I would think a natural first step might be to, say, turn us into a quoting and reporting facility," he said.

European securities regulators and the Securities and Exchange Commission in the US are reviewing the steps needed to prevent a recurrence of the credit crisis of the past few months. One of the biggest shocks was the rapid loss of confidence in complex instruments that were sold by banks to handfuls of investors.

Jean-Francois Theodore, NYSE Euronext deputy chief executive, said banks might initially be asked to provide some data about securities and disclose the price of transactions.

"They [regulators] want to oblige the person who creates the piece of paper to do a little more than absolutely nothing," he said.

Even if regulators tell banks that they must disclose data on OTC contracts, they may prefer to do so through their own trade reporting platforms rather than public stock exchanges, with which they compete for equity trades.

Similarly, The New York Times of January 27, 2008 (Financial Section) quoted the economist Henry Kaufman as indicating that the current credit problems are much more severe than other credit crunches of recent memory:

In the latter part of the 1970s and early 80s we had the problems of Brazil, Argentina, Mexico not paying their debts. Those were kind of nice, isolated items and could be clearly defined. They weren't as opaque and they weren't as heterogeneous as the problems in the credit market now.

One reason why the crisis is so severe is uncertainty concerning counter-party risk. The Wall Street Journal published, on January 18, 2008, a first page article entitled "Growing Default Fears Unnerve U.S. Markets", which, inter alia, described many interest swaps as the equivalent of naked short sales:

The turmoil on Wall Street is beginning to rock a foundation of the financial system: the ability of institutions to make good on their many trades with one another....

At the center of these concerns is a vast, barely regulated market in which banks, hedge funds and others trade insurance against debt defaults. This isn't like life insurance or homeowners' insurance, which states regulate closely. It consists of financial contracts called credit-default swaps, in which one party, for a price, assumes the risk that a bond or loan will go bad. This market is vast: about $45 trillion, a number comparable to all of the deposits in banks around the world. [An op ed by Wolfgang Munchau in the Financial Times of January 14, 2008, states that this $45 trillion market is "not an easy figure to imagine. It is more than three times the annual gross domestic product of the U.S."]

Not everyone who buys one of these contracts has bonds to insure; because the value of an insurance contract rises or falls with perceptions of risk, some players buy them just to speculate. In much the way gamblers make side bets on football games, a financial institution, hedge fund or other player can make unlimited bets on whether corporate loans or mortgage-backed securities will either strengthen or go sour.

If they default, everyone is supposed to settle up with each other, the way gamblers settle up with their bookies after a game. Even if there isn't a default, if the market value of the debt changes, parties in a swap may be required to make large payments to each other.

This being Wall Street, the investors often use heavy borrowing to magnify their wagers.

The article went on to state:

With many bond values falling and defaults rising, especially in the mortgage arena, some institutions involved in these trades are weakened. This has investors and regulators worried that, through such swaps, some market players could spread their own problems to the wider financial system.

"You are essentially counting on the reliability of strangers" to pay up on their contracts, notes Warren Buffett, the Omaha billionaire. In some cases, he says, market players can't determine whether their trading partners have the ability to pay in times of severe market stress.

The issue is raising broader concern among regulators and investors over what Wall Street calls "counterparty risk," the danger that one party in a trade can't pay its losses. A recent survey by Greenwich Associates found that 26% of investors were worried about counterparty risk, nearly double those who said so in a poll last March.

Federal Reserve Chairman Ben Bemanke, testifying before Congress yesterday, noted that "market participants still express considerable uncertainty about the appropriate valuation of complex financial assets and about the extent of additional losses that may be disclosed in the future." He said bad financial news has the potential to limit the amount of credit available to households and businesses....

This isn't the first time the financial world has shuddered at counterparty risk. In the spring of 2005, the downgrading of General Motors Corp. and Ford Motor Co. bonds to "junk" status led to losses for hedge funds that had bought exposure to these bonds through credit-default swaps.

A far bigger problem came in 1998, when the big hedge fund Long Term Capital Management nearly collapsed. Regulators scrambled to arrange an industry bailout, fearing broad damage to the world financial system if LTCM couldn't make good on billions of dollars of trades with others.

The LTCM crisis involved just one fund, enabling regulators to track its scope quickly. It's possible that as in the LTCM and auto-bond instances, the markets will soon stabilize without further trouble. But the landscape today is more complex. Traders increasingly sell their credit-risk commitments to other investors in multiple layers, making it difficult to know where the risk ultimately resides....

The market for swaps has grown fivefold just since 2004. It has no publicly posted prices; the contracts are sold privately among dealers. The market began 12 years ago with insurance against defaults on corporate bonds, expanding in 2005 to mortgage securities....

Bill Gross, chief investment officer at Allianz SE's Pacific Investment Management Co, or Pimco, recently told investors that if defaults in investment-grade and junk corporate bonds this year approach historical norms of 1.25% (versus a mere 0.5% in 2007), sellers of default insurance on such bonds could face losses of $250 billion on the contracts. That, he said, would equal the losses some expect in the subprime-mortgage arena.

With no central trade processing of credit-default swaps, defining trading-partner risks can be a Herculean task. Mr. Buffett learned the difficulty of unraveling such complex instruments in 2002 when he directed General Re Corp., a reinsurer that had been acquired by his Berkshire Hathaway Inc., to pull back from the business of these swaps and other derivatives. It took General Re four years to whittle the business from 23,218 contracts to 197 by the end of 2006.

Doing so involved tracking down hundreds of counterparties to General Re's trades, many of which Mr. Buffett and his colleagues had never heard of, he says, including a bank in Finland and a small loan company in Japan, to name just two. One contract, Mr. Buffett says, was designed to run for 100 years. "We lost over $400 million on contracts that were supposedly" safe and properly priced, "and we did it in a leisurely way in a benign market," Mr. Buffett says. "If we had to unwind it in one month, who knows what would have happened?"

Bill Gross, "manager of the world's largest bond fund at Pimco" and the bond world's equivalent to Warren Buffet in the stock world, was quoted in the Financial Times of January 11, 2008:

So when Bill Gross, manager of the world's largest bond fund at Pimco, warned this week the CDS world could create new systemic risks, investors were understandably concerned.

Mr Gross pointed out that in recent years credit derivatives had been heavily used by the so-called shadow banking system - or the assortment of thinly capitalised, off balance sheet vehicles that have been created by banks this decade. These entities might struggle to meet their obligations if derivative contracts are triggered, creating so-called counterparty risk for those expecting to be paid.

"The conduits that hold CDS contracts are, in effect, non-regulated banks," says Mr Gross. "[There are] no requirements to hold reserves against a significant `black swan' run that might break them."

The lack of transparency with respect to the types of off balance sheet vehicles that are the subject of the Proponents' shareholder proposal was discussed in the "Lex Column" of the Financial Times on January 10, 2008:

The idea that accounts represent the truth would amuse many seasoned investors. Still, even fanatical annual report readers would have struggled to predict banks' exposure to financial detritus such as structured investment vehicles, collateralised debt obligations and conduits. Citigroup estimates European banks could see [Euro-dollar]450bn worth of "involuntary" growth in assets as off-balance sheet activity is consolidated in their accounts.

The International Accounting Standards Board, with the blessing of US standard setters, is considering how better to capture off-balance sheet activity. One idea is to publish a "parallel balance sheet" in the form of a footnote. This would detail exposure to unconsolidated vehicles, along with a sensitivity analysis. There are some good arguments for this. Capital adequacy rules, unlike accounts, often define assets taking into account contingent commitments to extend loans to customers.

Similarly, according to the Financial Times (January 17, 2008):

Josef Ackermann, chief executive of Deutsche Bank, has called for a thorough overhaul of the operations of investment banks and regulators to combat a widespread loss of investor confidence in complex finance.

Banks needed to find ways of making complex structured products, such as mortgage securities, far more transparent, thus reducing investors' dependency on credit ratings, Mr Ackermann said.

"Improved transparency is decisive, including disclosure of off-balance-sheet exposures, such as structured investment vehicles," Mr Ackermann said in a private speech to the London School of Economics this week. Deutsche Bank is now circulating the speech to key clients and regulators.

Regulators had to shift from their emphasis on regulatory capital issues to a more "holistic" approach that also monitored banks' liquidity positions.

"In the early 1930s, the SEC restored confidence in markets by providing transparency on share prices ... sound pricing infrastructure needs to be developed [for complex] new products," said Mr Ackermann.

The comments are some of the most outspoken calls for reform made by a senior banker. But Mr Ackermann's remarks reflect an intensifying debate behind the scenes between policymakers and bankers about how best to respond to the credit squeeze.

These discussions are likely to intensify next week when regulators, bankers and world leaders gather for the World Economic Forum in Davos, not least because central bankers and regulators are expected to issue calls for policy reform in the spring.

Some Wall Street and City bankers fear the mounting toll of losses linked to subprime-linked securities and other debt will soon prompt US politicians and regulators to clamp down on complex finance.

However, bankers such as Mr Ackermann hope this can be avoided if the industry is seen to reform itself.

The Proponents' shareholder proposal is a step in the attempt to convince the industry to reform itself.

Many banks, including Citi, have been forced to liquidate their SIVs or to take them onto their own balance sheets.

As a result of the credit crisis, according to The Wall Street Journal of January 18, 2008, Citi has thus far written down certain of its assets by some $19,900,000,000. (or more than 10% of the total losses by all savings and loan associations in the S&L crisis of 1986-1995 according to figures published in The Wall Street Journal of January 16, 2008), and reported a fourth quarter, 2007, loss of $9,830,000,000. As a result of these losses (and presumably to shore up its balance sheet against future losses), Citi has been forced to raise some $30,000,000,000 in additional equity capital (mostly from foreign governmental agencies) via sales of preferred stock or similar instruments. (See Citi press release of January 22, 2008, available on its website.) These capital raising efforts included some $12,500,000. in convertible preferred stock sold in January mostly to foreign governments which will incur some $875,000,000. in annual dividend payments (thus decreasing income per common share). Similarly, sales of $7,500,000,000 in securities in December to an entity of the government of Abu Dhabi carry an annual "dividend" payment of some $875,000,000. The total annual "preferred" dividend payments on the $30,000,000,000 raised total in excess of $2,500,000,000 per annual. (thus decreasing income per common share). Citi, not coincidentally, has announced a 40% cut in its dividend on its common stock. Most of the newly issued "preferred" securities are convertible into common stock, which, if converted, will dilute the current common stock holders. Citi has also announced major layoffs

RULE 14a-8(i)(10)

We are more than a little perplexed by Citi's contention that it has already disclosed the information requested in the Proponents' shareholder proposal. Citi, without citing any specific page or statistic, simply attached two exhibits and says that everything is to be found in those exhibits. Without more specificity, this hardly meets the burden of proof, that rests on Citi, to establish the applicability of Rule 14a-8(i)(10).

One of those two exhibits is an 8-K filed on November 5, 2007. That document talks about Citi's "sub-prime direct exposures". Since the Proponents' shareholder proposal does not request any information about the Company's direct sub-prime exposure, but rather information pertaining to off balance sheet vehicles, the entire exhibit is irrelevant. Apparently Citi has decided to use the kitchen sink approach, throwing everything that it can find, no matter how irrelevant, at the problem hoping that something will somehow stick. (We note also that the 8-K says that Citi "has no plans to reduce" its dividend. It lowered its dividend a few weeks later.)

A search of the 10-Q is only slightly more productive. The information provided concerns mostly securitizations by the Company and Citi's direct ownership of CMOs, CDOs and VIEs that are already consolidated on the balance sheet. Thus, of the 13 pages provided by the Company, only two pages plus part of one footnote contain information on SIVs and conduits. To ease the search for the relevant data lost in the sea of materials submitted that information is as follows:

From the MD&A (at P. 7):

CAI's Structured Investment Vehicles (SIVs)

CAI's Global Credit Structures investment center is the investment manager for seven Structured Investment Vehicles (SIVs). SIVs are special purpose investment companies that seek to generate attractive risk-adjusted floatingrate returns through the use of financial leverage and credit management skills, while hedging Interest rate and currency risks and managing credit, liquidity and operational risks. The basic investment strategy is to earn a spread between relatively inexpensive short-term funding (commercial paper and medium-term notes) and high quality asset portfolios with a medium-term duration, with the leverage effect providing attractive returns to junior note holders, who are third-party Investors and who provide the capital to the SIVs.

Citigroup has no contractual obligation to provide liquidity facilities or guarantees to any of the Citi-advised SIVs and does not own any equity positions in the SIVs. The SIVs have no direct exposure to U.S. sub-prime assets and have approximately $70 million of indirect exposure to sub-prime assets through CDOs which are AAA rated and carry credit enhancements. Approximately 98% of the SIVs' assets are fully funded through the end of 2007. Beginning in July 2007, the SIVs which Citigroup advises sold more than $19 billion of SIV assets, bringing the combined assets of the Citigroup-advised SIVs to approximately $83 billion at September 30, 2007. See additional discussion on page 46.

The current lack of liquidity in the Asset-Backed Commercial Paper (ABCP) market and the resulting slowdown of the CP market for SIV-Issued CP have put significant pressure on the ability of all SIVs, Including the Citi-advised SIVs, to refinance maturing CP.

While Citigroup does not consolidate the assets of the SIVs, the Company has provided liquidity to the SIVs at arm's-length commercial terms totaling $10 billion of committed liquidity, $7.6 billion of which has been drawn as of October 31, 2007. Citigroup will not take actions that will require the Company to consolidate the SIVs. [Note: five weeks later the SIVs were consolidated on Citi's balance sheet.]

Master Liquidity Enhancing Condult (M-LEC)

In October 2007, Citigroup, J.P. Morgan Chase and Bank of America Initiated a plan to back a new fund, called the Master Liquidity Enhancing Conduit (M-LEC) that intends to buy assets from SIVs advised by Citigroup and other third-party institutions. This is being done as part of an effort to avert the situation where the SIVs will be forced to liquidate significant amounts of mortgage-backed securities, resulting in a broad-based repricing of these assets in the market at steep discounts.

SIVs, including those advised by Cltigroup, have experienced difficulties in refinancing maturing commercial paper and medium-term notes, due to reduced liquidity in the market for commercial paper.

We note that the plan for the M-LEC, described above, was subsequently abandoned. On page 46 of its 10-Q Citi stated the following about the types of off balance sheet vehicles that are the subject of the Proponents' shareholder proposal:

Creation of Other Investment and Financing Products

The Company has established SIVs, which issue junior notes, medium-term notes and short-term commercial paper to fund the purchase of high quality assets. The SIVs provide a return to their investors based on the net spread between the cost to issue the short-term debt and the return realized by the medium-term assets. The Company acts as investment manager for the SIVs, but is not contractually obligated to provide liquidity facilities or guarantees to the SIVs.

The following tables summarize the seven Citigroup-advised SIVs as of September 30, 2007 and the aggregate asset mix and credit quality of the SIV assets. See page 7 for a further discussion.

[See the two tables set forth in the Company's letter that show $83.1 billion in assets in the SIVs, with 54% in AAA rated investments and 100% in A rated or higher. The tables also show that the SIVs were funded with $78.6 billion of Commercial Paper and Medium Term Notes.]

The SIVs have no direct exposure to U.S. sub-prime assets and have approximately $70 million of indirect exposure to sub-prime assets through CDOs which are AAA rated and carry credit enhancements.

The Company packages and securitizes assets purchased in the financial markets in order to create new securities offerings, including arbitrage CDOs and synthetic CDOs for institutional clients and retail customers, which match the clients' investment needs and preferences. An arbitrage CDO is an investment vehicle designed to take advantage of the difference between the yield on a portfolio of selected assets and the cost of funding the CDO through the sale of notes to investors. Arbitrage CDOs are classified as either "cash flow" CDOs, in which the vehicle passes on cash flows from a relatively static pool of assets, or "market value" CDOs, where the pool of assets is actively managed by a third party. In a synthetic CDO, the entity enters into derivative transactions which provide a return similar to a cash instrument to the entity, rather than the entlty's actually purchasing the cash instrument. Typically these Instruments diverslfy investors' risk to a pool of assets as compared with Investments in individual assets.

At September 30, 2007 and December 31, 2006, unconsolidated CDO assets where the Company has significant involvement totaled $84.2 billion and $52.1 billion, respectively.

See Note 13 on page 68 for additional information about off-balance sheet arrangements.

The pertinent portion of Note 13 to Citi's financials appears to be the following:

In addition to the VIEs that are consolidated in accordance with FIN 46-R, the Company has significant variable interests in certain other VIEs that are not consolidated because the Company is not the primary beneficiary. These include asset-backed commercial paper conduits, structured investment vehicles (SIVs), collateralized debt obligations (CDOs), structured finance transactions, and numerous investment funds. In addition to these VIEs, the Company issues preferred securities to third- party investors through trust vehicles as a source of funding and regulatory capital.

The following table represents the total assets of unconsolidated VIEs where the Company has significant involvement:

[The table shows Commercial Paper Conduits of $73,3 billion, SIVs of $83.1 billion, CDOs of $84.2 billion, $52.2 billion of various other structured products, plus other items (trust preferreds etc) of $50.6 billion, for a total of $343.4 billion as of September 30, 2007, up some $50 billion since the first of the year.]

Asset-Backed Commercial Paper Conduits

The Company administers several third-party-owned, special purpose, asset-backed commercial paper conduits that purchase pools of trade receivables, credit card receivables, and other financial assets from multiple third-party clients of the Company. As administrator of these multi-seller finance companies, the Company provides accounting, funding, and operations services to these conduits. Generally, the Company has no ownership interest in the conduits. The sellers continue to service the assets they transferred. The condults' asset purchases are funded by issuing commercial paper and medlum-term notes. The sellers absorb the first losses of the conduits by providing collateral in the form of excess assets. Typically, the issuance of commercial paper is done on a revolving basis, in which the maturing paper is retired with the funds received from issuing new commercial paper at current market terms. The Company, along with other financial institutions, provides liquidity facilities, such as liquidity asset purchase agreements and commercial paper backstop lines of credit to the condults, which offer an alternative source of funding should the conduit be unable to replace fully the maturing commercial paper in the commercial paper market. In the event of liquidity problems in the commercial paper market, the Company's asset purchase agreements require the Company to purchase only high quality performing assets from the conduits at their fair values. The Company also provides loss enhancement in the form of letters of credit and other guarantees. All fees are charged on a market basis.

To comply with FIN 46-R, many of the condults issued "first loss" subordinated notes such that one third-party investor in each conduit would be deemed the primary beneficiary and would consolidate the conduit.

Structured Investment Vehicles

A SIV is a special purpose investment company, which holds high quality asset portfolios that are funded through the issuance of junior notes, medium-term notes and short-term commercial paper. The junior notes are subject to the "first loss" risk of the vehicle. The spread between the short-term funding (commercial paper and medium-term notes) and high quality asset portfolios provides a leveraged return to the junior note holders. SIVs are subject to liquidity and refinancing risk and must repay a significant portion of maturing commercial paper and medium-term notes through the issuance of new debt. Should a SIV not be able to meet its funding needs due to a lack of liquidity in the market, it may be forced to sell assets at a time when prices are depressed.

CAI's Global Credit Structures investment center is the investment manager for seven SIVs. Citigroup has no contractual obligation to provide liquidity facilities or guarantees to any of the Citi-advised SIVs. Citigroup is not the primary beneficlary of any of the Citi-advised SIVs and therefore does not include the SIVs in its consolidated financial statements.

Collateralized Debt Obligations

The Company also packages and securitizes assets purchased in the financial markets in order to create new security offerings, including arbitrage CDOs and synthetic CDOs for institutional clients and retail customers, which match the clients' investment needs and preferences. An arbitrage CDO is an investment vehicle designed to take advantage of the difference between the yield on a portfolio of selected assets and the cost of funding the CDO through the sale of notes to investors. Arbitrage CDOs are classified as either "cash flow" CDOs, in which the vehicle passes on cash flows from a relatively static pool of assets, or "market value" CDOs, where the pool of assets is actively managed by a third party. In a synthetic CDO, the entity enters into derivative transactions which provide a return similar to a cash instrument to the entity, rather than the entity's actually purchasing the cash instrument. Typically, these instruments diversify investors' risk to a pool of assets as compared with investments in an individual asset. The VIEs, which are issuers of CDO securities, are generally organized as limited liability corporations. The Company typically receives fees for structuring and/or distributing the securities sold to investors. In some cases, the Company may repackage the investment with higher rated debt CDO securities or U.S. Treasury securities to provide a greater or a very high degree of certainty of the return of invested principal. A third-party manager is typically retained by the VIE to select collateral for inclusion in the pool and then actively manage it, or, in other cases, only to manage work-out credits. The Company may also provide other financial services and/or products to the VIEs for market-rate fees. These may include: the provision of liquidity or contingent liquidity facilities; interest rate or foreign exchange hedges and credit derivative instruments; and the purchasing and warehousing of securities until they are sold to the SPE. The Company is not the primary beneficlary of these VIEs under FIN 46-R due to its limited continuing involvement and, as a result, does not consolidate their assets and liabillties in its financial statements.

We note that despite the statements in the second paragraph under "Structured Investment Vehicles" in financial footnote 13, quoted immediately above, five weeks after filing the 10-Q Citi filed an 8-K to which it attached a press release announcing that it was consolidating the SIVs onto its own balance sheet. The press release begins:

NEW YORK - Citi announced today that it has committed to provide a support facility that will resolve uncertainties regarding senior debt repayment currently facing the Citi-advised Structured Investment Vehicles (SIVs).

This action is a response to the recently announced ratings review for possible downgrade by Moodys and S&P of the outstanding senior debt of the SIVs, and the continued reduction of liquidity in the SIV related asset-backed commercial paper and medium-term note markets. These markets are the traditional funding sources for the SIVs. Citis actions today are designed to support the current ratings of the SIVs senior debt and to allow the SIVs to continue to pursue their current orderly asset reduction plan. As a result of this commitment, Citi will consolidate the SIVs assets and liabilities onto its balance sheet under applicable accounting rules.

We submit that nothing in the above quoted portions of the 10-Q (the only portions that appear to be relevant to the Proponents' shareholder proposal) respond to its request for information about Citi's "collateral and other credit risk management policies" (emphasis supplied) (although there is a disclosure of the liabilities ($78.6 billion) of the SIVs plus, in footnote 13, the gross amounts of total assets of various structured products)

The Proponents' have requested information about existing Company policies. Nothing in either the 8-K or the 10-Q addresses Company policies. Although some data is given, no information of the type requested appears. Consequently, the Proponents' shareholder proposal is not excludable by virtue of Rule 14a-8(i)(10).

RULE 14a-8(i)(7)

The no-action letters relied on by the Company seem particularly inapposite. The Peregrine and Amerinst no-action letters asked for extremely detailed operational data. In contrast, the Proponents are requested a statement of Company policy. The Newmont, Chubb and Mead no-action letters are also inapposite. In each case the proponent requested the Company to evaluate its own actions to see if they were creating a risk to the registrant. Thus, in Newmont, the request was "to publish a comprehensive report... on the risk to the company's operations, profitability and reputation" arising from its environmental activities. The Staff deemed the proposal to request an "evaluation of risk" and therefore to be an ordinary business matter. In Chubb, the proponent asked the registrant to provide "a comprehensive assessment of Chubb's strategies to address the impacts of climate change on its business". Again, since Chubb is in the business of evaluating what will be the impact on its insurance business of hurricanes, sea level changes etc, the Staff held that the matter was an ordinary business one. Finally, in Mead, the proponent asked the company to evaluate the risks to it arising from climate change, requesting a report that covered "a description of Mead Corporation's own liability projection methodology ... and an assessment of other major environmental risks, such as those created by climate change". The Staff response stated that "We note in particular that the proposal appears to focus on Mead's liability methodology and evaluation of risk." None of these letters resemble the instant situation. The Proponents are not asking the Company to evaluate the risks inherent: in SIVs and conduits. Instead, they are asking the Company to inform its shareholders of its existing risk management policies concerning these off balance sheet investment vehicles.

Finally, we believe that the Proponents' shareholder proposal clearly raises an important policy matter so as to preclucle the application of Rule 14a-8(I)(7). As briefly outlined in the "Background" section of this letter, the inadequacy of disclose is at the core of the current credit crunch. Since the Proponents' shareholder proposal is an attempt to get at one important aspect of that inadequate disclosure, their proposal is not subject to exclusion by virtue of Rule 14a-8(i)(7).

In conclusion, we request the Staff to inform the Company that the SEC proxy rules require denial of the Company's no action request. We would appreciate your telephoning the undersigned at 941-349-6164 with respect to any questions in connection with this matter or if the staff wishes any further information. Faxes can be received at the same number. Please also note that the undersigned may be reached by mail or express delivery at the letterhead address (or via the email address).

Very truly yours,

/s/

Paul M. Neuhauser
Attorney at Law

cc: Shelly J. Dropkin, Esq.
Rev Seamus Finn
All proponents
Nadira Narine
Laura Berry

[STAFF REPLY LETTER]

February 20, 2008

Response of the Office of Chief Counsel Division of Corporation Finance
Re: Citigroup Inc. Incoming letter dated December 20, 2007

The proposal requests that the company disclose collateral and other credit risk management policies for its off balance sheet exposures as well as dollar exposure in three areas specified in the proposal.

There appears to be some basis for your view that Citi may exclude the proposal under rule 14a-8(i)(7), as relating to Citi's ordinary business operations (i.e., evaluation of risk). Accordingly, we will not recommend enforcement action to the Commission if Citi omits the proposal from its proxy materials in reliance on rule 14a-8(i)(7). In reaching this position, we have not found it necessary to address the alternative basis for omission upon which Citi relies.

Sincerely,

/s/

Peggy Kim
Attorney-Adviser