Shareholders: Treasury Should be Consistent on Capitol Hill and on Wall Street by Voting Citi Shares for More Derivatives Disclosure

Major Citigroup Shareholder Meeting Vote Tuesday Gives U.S. Chance to be Consistent on Derivatives/Financial Reform; U.S. is Biggest Citi Shareholder With 27% Stake

NEW YORK, April 16 /PRNewswire/ -- In order to send the same message to Wall Street that it is sending to Congress, the United States government – which controls 27 percent of outstanding Citigroup shares – should vote its shares Tuesday in favor of a shareholder resolution urging the company to provide more disclosure about its derivatives trading, according to faith-based institutional investors belonging to the 300-member Interfaith Center on Corporate Responsibility (ICCR).

The call today comes ahead of a planned ICCR phone-based news conference (with full, two-way Q&A) at 1:30 p.m. EDT on Tuesday, April 20, 2010 by dialing 1 (800) 860-2442. That news event takes place in the wake of the vote Tuesday morning by Citi shareholders on a proxy resolution asking the financial institution to explain its policy on how collateral is secured for the derivatives they use and what their policy is about using customer funds for other speculative activities.  The full text of the resolution is available online at http://www.onlineethicalinvestor.org/eidb/wc.dll?eidbproc~reso~8851.

ICCR officials noted that, in recent weeks, top Commodity Futures Trading Commission (CFTC) and U.S. Treasury officials have urged Congress and Wall Street to embrace the financial services reform bill now on Capitol Hill.  On March 11, CFTC Chairman Gary Gensler was quoted in the Financial Times:  "Who would not want the transparency [for derivatives] that you have in the stock market? … The only parties that benefit from a lack of transparency are Wall Street dealers."

On April 12th, Deputy Secretary of the Treasury Neal Wolin told the Council of Institutional Investors:  "… under the leadership of Chairman Dodd, the Senate Banking Committee has now voted out its own financial reform bill. Senator Dodd's bill, too, is comprehensive and strong.   We expect that bill to go to the Senate floor soon.   As the President has made clear, we will fight hard against any efforts to weaken that legislation, and we will work to strengthen it further where we can … We cannot afford to wait to fix our flawed, outdated regulatory system …  to [wait to] bring transparency and oversight to derivatives and other key financial markets … That's what the Senate bill will do." 

Rev. Seamus Finn, director, Justice, Peace & Integrity of Creation, Missionary Oblates of Mary Immaculate and an ICCR board member, said:   "The U.S. government controls over a quarter of outstanding Citigroup shares today.   It has an extraordinary opportunity here to send a clear message to Wall Street that more derivatives disclosure is vital.   Even more to the point, the Treasury Department really has no choice other than to support our resolution since a failure to do so would directly undercut its campaign for critical financial reform."

ICCR Executive Director Laura Berry said:  "To adopt an inconsistent posture at this critical juncture on derivatives disclosure would be disastrous both in terms of how Wall Street reads the signals from Washington and how seriously Congress sees the Obama Administration as being in its support of vital financial services reform."

Subsequent shareholder votes will take place at Bank of America (April 28), Goldman Sachs (May 7), and JP Morgan Chase (May 18).  Taken together, the resolution targets are four of the five U.S. financial institutions accounting for a reported 96 percent of all derivatives trading in the U.S.

The four 2010 proxy season resolutions mark the first time that the banks will face such a vote, though JP Morgan Chase shareholders consider a 2004 resolution dealing with other aspects of derivatives.

A vote in the low double digits in favor of the new shareholder resolutions would be considered a major victory by shareholder advocates, who frequently only achieve single-digit support for new resolutions submitted at financial institutions.  (With only 3 percent of the vote, shareholder resolutions may be resubmitted in a subsequent year.)  However, there are signs of major and growing shareholder support for the notion of improved disclosure about derivatives.

ABOUT ICCR

For nearly 40 years the Interfaith Center on Corporate Responsibility (ICCR) has been a leader of the corporate social responsibility movement. ICCR's membership is an association of 300 faith-based institutional investors, including national denominations, religious communities, pension funds, foundations, hospital corporations, economic development funds, asset management companies, colleges, and unions. Each year ICCR-member religious institutional investors sponsor over 200 shareholder resolutions on major social and environmental issues.  For more information, visit http://www.iccr.org.

SOURCE Interfaith Center on Corporate Responsibility, NYC