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CITI 1

FOIA Confidential Treatment Requested by Citigroup Inc.

August 27,
2008

Kevin
W. Vaughn

Branch
Chief

Securities
and Exchange Commission

100
F Street, N.E.

Mail
Stop 4561

Washington,
DC 20549

  RE:

  Citigroup
  Inc.

  Form 10-K for Fiscal Year Ended
  December 31, 2007

  Form 10-Q for the period Ended
  March 31, 2008

  File No. 001-09924

Dear
Mr. Vaughn:

Enhancement
of the overall disclosures in filings by Citigroup Inc. (“Citigroup,” the “Company,”
or “we”) is an objective that we share with the Staff and one that we consider
in all our filings.  This letter sets
forth the responses of Citigroup to the comments of the staff of the U.S.
Securities and Exchange Commission (SEC) contained in your letter dated July 16,
2008.

2007
Form 10-K

Citigroup
Derivatives, page 57

1.                                       We note your
response to comment 5 to our letter dated May 7, 2008 where you tell us
the portion of the market value adjustments for your derivatives liabilities
related to your own credit risk.
Considering the significant impact of your own credit on the valuation
of your derivative liabilities and on your results of operations and potential
trends in this area, please provide disclosure of the effect in Management’s
Discussion and Analysis (MD&A).  In
this regard, we note that on page 171 of your 2007 Form 10-K, you
provide disclosure, as required by SFAS 159, of the effect of your own credit
on the value of your liabilities for which you have elected the fair value
option.  However, it does not appear that
the number disclosed on page 171

CITI 2

FOIA Confidential Treatment Requested by Citigroup Inc.

Kevin W. Vaughn

August 27, 2008

Page 2 of 14

includes the effects of your own credit on your derivative liabilities,
as these are not accounted for under SFAS 159.
In future filings, to the extent material to your results of operations,
liquidity, or capital resources, please provide full disclosure of the impact
of your own credit on the valuation of all of your liabilities carried at fair
value within MD&A.

Citigroup's Response: [***]

[***]  The following information has been redacted
in accordance with Citigroup's request for confidential treatment.

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FOIA Confidential Treatment Requested by Citigroup Inc.

Kevin W. Vaughn

August 27, 2008

Page 3 of 14

Citigroup's Response (cont’d): [***]

[***]  The following information has been redacted
in accordance with Citigroup's request for confidential treatment.

2.                                       We note your
disclosure on pages 55-56 of your Form 10-K about your “direct
exposure to monolines” and your disclosure in the last paragraph of this
section that you also have “indirect exposure” to the monoline insurance
companies in various other parts of the business.  Your disclosure indicates that since you are
not a party to the insurance contract, you have not provided your “indirect”
exposure to the monoline insurers in this section.   Please respond to the following:

·                  Please tell us why you don’t
believe it is relevant or practicable to quantify your “indirect” exposure to
the monoline insurers in this section.
In this regard, it

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FOIA Confidential Treatment Requested by Citigroup Inc.

Kevin W. Vaughn

August 27, 2008

Page 4 of 14

appears that you do provide some indication of your “indirect” exposure
to the monoline insurers related to your trading assets, as you state on page 55
that you had $1.7 billion of net market value exposure to the monolines related
to your trading assets, including long and short positions in U.S. subprime
residential mortgage-backed securities and related products.  Please clarify in these instances whether you
are referring to insurance provided by the monlines on your residential
mortgage-backed securities.

·                  Given that the value of your
investments in corporate or municipal bonds is likely impacted by the insurance
provided by the monoline issuers, please tell us why you don’t believe it is
relevant to provide disclosure of at least the value of securities that you
have that have some type of insurance provided by the monolines on, similar to
what you have done for insurance provided by the monoline insurers on your mortgage
loans.

Citigroup’s Response:
We believe our current disclosures quantify relevant information where
possible, and provide informative qualitative disclosures where more precise
information is not readily available.  As
explained below, the significant differences between direct and indirect
exposure make necessary the differences in disclosures provided for each.

On pages 55-56 of our Form 10-K, Citi quantified our direct
exposure to monolines, including:

·                  $7.5 billion notional of purchased protection
against Subprime ABS CDO Super Senior positions.

·                  $1.7 billion of net market value of
derivatives relating to trading assets.
The 10-K further segregated these contracts into two groups:

·                  $1.2 billion of net market value exposure
relating to U.S. subprime residential mortgage-backed securities and related
assets other than Super Senior positions.
These contracts include both purchased protection and written protection
related to these underlyings and are managed in our trading portfolios
separately from the Super Senior exposures.

·                  $0.5B of net market value exposure relating
to other derivative contracts, including interest rate swaps and credit default
swaps and total return swaps with non-subprime underlyings.

These exposures are all direct exposures, with Citi and monolines as contractual
counterparties.

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Kevin W. Vaughn

August 27, 2008

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In addition, we provided
qualitative disclosures regarding indirect exposures, where Citi is not a
contractual counterparty to the monolines, but instead owns securities which
may benefit from embedded credit enhancements from the monolines.  The fair value of these securities reflects
the embedded credit protection provided by monolines and the fact that the
credit protection is embedded in an owned security (rather than existing in a
bi-lateral contract) is a significant difference between the indirect exposures
that we address qualitatively and the direct exposures that we discuss
quantitatively.  With respect to the
indirect exposures, the credit quality and valuation of any individual security
is dependent upon the non-separable interplay among a) the specific monoline
insurance company providing protection;
b) whether insurance is provided by one single insurer, or whether
multiple levels of insurance have been obtained;  c) the credit quality of the issuer itself
(for municipal bonds, the municipality, or for other types of securities, the
underlying cash flows or assets owned by the issuer);  and d) the exact nature of the insurance
agreement and the specific tranches of securities covered by the
insurance.  Because of the complexity of
these characteristics, we believe that any straightforward presentation of
indirect exposure (for example, providing the value of securities covered by
some kind of insurance) is not meaningful or useful information without
understanding all of the specific circumstances addressed above.  We believe it is not practicable to provide
summary level information that would be meaningful and not misleading to
readers of financial statements.
Furthermore, it is not transparent what the effects of specific monoline
enhancements have on the value of the securities we own — in some cases we have
found that securities with credit enhancement provided by a monoline actually
have a lower market price than a similar security without such enhancement.

These complexities do not exist related to the direct exposure, because
the direct exposure contracts are identifiable, freestanding bi-lateral
contracts, and the value of those contracts can be separately measured,
including an adjustment for counterparty credit risk that is unique to each
monoline counterparty.

·                  We note your disclosure on page 93
of your 2007 Form 10-K related to your municipal securities tender option
bond (TOB) trusts that due to downgrades of certain monoline insurance
companies you have proactively managed the TOB programs by applying additional
secondary market insurance on the assets or you proceed with the orderly unwind
of the trusts.  Please tell us how you
account for this obligation and whether you are contractually obligated to do
so.  Please also tell us why you do not
believe that further disclosure related to your

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Kevin W. Vaughn

August 27, 2008

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exposure/obligations to the monoline insurers in the area of the TOB
trusts would not be relevant in this section.

Citigroup’s Response:
The Company has no contractual or implied obligation to any third party
to obtain additional secondary market insurance to the TOB programs.  In customer TOB trusts, our third-party
customer, through its residual interest or reimbursement agreement, bears the
credit and market risk of the municipal security owned by the TOB trust.  Upon certain triggers in our liquidity
agreement, we may contact customers seeking to unwind a current trust.  As an alternative, customers may seek to
obtain additional secondary market insurance to eliminate the need for such
unwind, and in those cases the Company may choose to permit such activity and
facilitate the transaction between the customer and an additional insurance
provider.  The Company does not incur any
indirect contractual or implied obligation and incurs no costs in facilitating
such activities.

For proprietary TOB trusts, Citi may seek to obtain such insurance
(subject to third-party approval, where required) to protect Citi’s own
interests in the case of a downgrade of or other market concern about an
existing insurance provider.  Such
activity is for the Company’s own benefit and does not relate to any
incremental obligation to any third party, since Citi already bears the
residual credit and market risk of the municipal security through its
contractual liquidity or reimbursement agreements.  The value of any insurance on the underlying
municipal security owned by a proprietary TOB trust is incorporated in the
valuation of Citi’s residual interest for QSPEs and in the value of the
municipal security for consolidated proprietary TOB trusts.

As addressed above in our response to the first two bullet points of
Comment 2, we believe that additional discussion regarding the coverage of
monoline insurance would not be meaningful or useful without dealing in an
unusual level of detail.  We believe that
the disclosures provided on page 92 of our 2007 Form 10-K regarding
the weighted average life and the credit rating (and the methodology used to
determine that credit rating) of the TOB trusts is the most relevant and useful
information for readers of our financial statements.

Municipal Securities Tender Option Bond (TOB) Trusts, page 92

3.                                       We note your
response to comment 6 to our letter dated May 7, 2008.  Please respond to the following:

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FOIA Confidential Treatment Requested by Citigroup Inc.

Kevin W. Vaughn

August 27, 2008

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·                  We note your disclosure on page 92 of
your 2007 Form 10-K that in certain cases you sell assets to the municipal
securities tender option bond (TOB) trusts.
Please tell us how you determined whether or not the transfer of these
assets qualified for sale accounting pursuant to paragraph 9 of SFAS 140.

Citigroup’s
Response:
The Company, as transferor of the municipal securities, evaluates sale
accounting under paragraph 9 of SFAS 140.
In the case of transfers to consolidated proprietary TOBs, including
those TOBs whose residual interests are held by a consolidated hedge fund, the
transfers are accounted for as secured borrowings, rather than sales, in Citi’s
consolidated financial statements.

In the case
of transfers to the QSPE TOB trusts and the customer TOB trusts, both of which
are unconsolidated, the transfers are accounted for as sales.  Specific to the requirements of paragraph 9(a) of
SFAS 140, the Company evidences legal isolation of the transferred securities
by obtaining “would” level opinions from external legal counsel, positively
opining on both the characterization of the transfer as a sale, as well as the
non-consolidation of the transferee in an event of insolvency.  With regard to paragraph 9(b) of SFAS
140, the Company confirms that the TOB trusts have the ability to either pledge
or exchange the transferred securities.
In cases where the TOB trust is a QSPE, the Company confirms that the
trust’s beneficial interest holders have the ability to either pledge or exchange
their interests.  With regard to
paragraph 9(c) of SFAS 140, the Company confirms that it has no explicit
call options on the transferred securities nor any other forms of continuing
involvement, which when considered individually or together, provide it with
effective control over the transferred securities.

·                  Please provide further information as to how
the hedge funds that are consolidated by the company account for their
liability pursuant to the “reimbursement agreement” discussed on page 93 between
the hedge fund and the liquidity provider.
Please also explain how this is considered in preparing the consolidated
Citigroup accounts, as it appears from your disclosure that Citigroup is often
the liquidity agreement provider.

Citigroup’s
Response:
Consistent with the AICPA Investment Company Audit Guide, the hedge fund
accounts for its residual interests in the underlying TOB trusts at fair
value.  The hedge fund considers the
reimbursement agreements (executed with Citigroup and with third parties) in
the valuation of those residual interests, and the reimbursement agreements may
cause the residual interest to be marked at a negative value (representing

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FOIA Confidential Treatment Requested by Citigroup Inc.

Kevin W. Vaughn

August 27, 2008

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the
reimbursement agreement, measured at current fair value).  Because the hedge funds typically create and
unwind TOB trusts on a frequent basis (thus realizing gains and losses related
to the fair value of the underlying municipal bond), we believe that measuring
this reimbursement agreement at fair value is the most relevant and appropriate
measurement attribute.  Where Citigroup
is the liquidity provider, the reimbursement agreements represent an
intercompany relationship that does not exist in Citigroup’s consolidated
financial statements.  In those
circumstances, the sole third-party contract is the liquidity agreement to the
unconsolidated TOB trust.  The liability
under the liquidity agreement is measured pursuant to FAS 5 as a loan
commitment.

·                  We note your disclosure on page 93
that for the nonconsolidated TOB trusts and QSPE trusts, you recognize only
your residual investment on your balance sheet at fair value and the third
party financing raised by the trusts is off-balance sheet.  Please tell us, and clarify in future
filings, whether you are accounting for your residual investment as either
available-for-sale or trading securities.

Citigroup’s
Response:
Generally, the Company’s residual interests in QSPE TOB trusts are
evaluated for bifurcation as required by SFAS 133 and DIG Issue B40. Any
embedded derivative is bifurcated (and separately accounted for at fair value)
and the debt host contracts are classified as available-for-sale
securities.  In a limited number of cases
involving short dated transactions, the residual interests may be classified as
trading securities for operational simplicity.
In cases where the TOB trust resid