Citigroup returning billions to investors by Radka Konkolova

American largest financial institution Citigroup has got some troubles now. It will have to buy back more than $7 billion in auction-rate securities and pay big amount for various fines. Because the bank marketed investments as safe despite the liquidity risks, it has to pay back such great amount to nearly 40,000 individual investors, small business and charities and pay $100 million as part of settlements with federal and state regulators. It is because this company probably caused great losses for the investors who sold auction-rate securities at a loss after the market collapsed in mid-February.

This huge bank provides of course also some loans as well as student loans. It wouldn’t be anything unconventional, because also other banks do so. But other banks use secure loans and stable interest rates during the whole time you have and pay for the loan. But Citigroup Inc. offers kind of loans you don’t have to have any guarantee or limitations from your side, except of given level of your monthly income and age limitations. You can say, yes, it is much better than borrowing money in other banks. It can be for someone who needs money immediately without be care about interest rates and for someone who is not given a loan in other bank. But the problem, or disadvantage, is that interest rates are not always the same and they depend on economic results of this bank. So rates fluctuate and they can reach relatively high level.

In spite of the fact this company will have to spend about $8 or $10 billion to their clients in order to reimburse and for fines, it won’t be a matter for it and probably this amount won’t cause bigger financial problems. And this should mean a satisfaction to everyone. But we will see, finally.

related story: http://news.yahoo.com/s/ap/20080807/ap_on_bi_ge/citigroup_investigation;_ylt=AjTnGfThFEAyvSFf3fdVIles0NUE

by Radka Konkolova for PocketNews (http://pocketnews.tv)

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edited by beata Biskova