WASHINGTON — There is no U.S. government guarantee to protect the largest financial firms, a Treasury Department official said Thursday, as a congressional watchdog criticized the $45 billion in government aid provided to Citigroup Inc.
Herbert Allison, who oversees the Treasury’s $700 billion financial rescue plan, disagreed with members of a congressional oversight panel that some financial firms benefit from the assumption that the government would step in to prevent their failure.
“There is no too big to fail guarantee on the part of the U.S. government,” Mr. Allison said.
No need to tweak that one.
Meanwhile Reuters reports:
Herbert Allison, assistant Treasury secretary for financial stability, told a Congressional Oversight Panel that the government had to act in the fall of 2008 because further deterioration of Citigroup would have caused doubt that U.S. policymakers would support the banking system.
“More generally, given Citigroup’s substantial international presence, global liquidity pressures would likely have increased and confidence in U.S. assets more broadly would have declined,” Allison said.
In case you missed it, that was spoken by the same guy in the same meeting.