Obama ally wants more government control over Citigroup

A key ally to US president-elect Barack Obama has called for greater government intervention in the strategy at Citigroup following its £13 billion bailout this week.

John Podesta, a top transition official for Obama, said the Government should treat Citigroup in the same way it has dealt with stricken carmaker General Motors.

The Government has asked GM to submit a strategy document before agreeing to a $12 billion (£7.7 billion) rescue package and may demand management changes.

By contrast, Podesta believes Citigroup got off lightly this week, when a plan was announced to insure Citigroup against losses on £200 billion of troubled assets and inject $20 billion of capital after its shares plunged by more than 60% in a week.

However, the US Government has not sought any assurances from Citigroup over its strategy, nor has it demanded the replacement of Vikram Pandit as chief executive.

In the UK, state-backed bank bailouts have led to greater intervention, with Prime Minister Gordon Brown demanding rescued institutions maintain lending levels.

Yesterday, the Government said the company set up to manage its stakes in Britain's state-backed banks will have annual running costs in the "single millions of pounds", after it appointed Merrill Lynch banker John Crompton to oversee the planned £37 billion investment in Royal Bank of Scotland and the merged Lloyds TSB and HBOS.