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CITI 1

FOIA Confidential Treatment Requested by
Citigroup Inc.

December 5, 2008

Kevin W. Vaughn

Branch Chief

Securities and Exchange Commission

100 F Street, N.E.

Mail Stop 4561

Washington, D.C. 20549

  RE:

  Citigroup Inc.

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

  Form 10-Q for the Period Ended
  June 30, 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 October 27, 2008.

2007 Form 10-K

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

1.                                      We
note your response to comment 3 to our letter dated July 16, 2008. Please
provide additional background information about the QSPE TOB structures.
Specifically, please discuss the following:

A.          Tell us who has the
ability to dissolve the QSPEs and how you concluded that this meets the
criteria that the QSPE be demonstrably distinct from the transferor;

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Confidential Treatment Requested by Citigroup Inc.

Kevin W. Vaughn

December 5, 2008

Page 2 of 11

Citigroup’s Response:
Dissolution of the trust is a scheduled event which is specified in the trust
agreement. Dissolution occurs at maturity of the underlying bonds or at 80% of
the expected maturity of the underlying bonds. The TOB may terminate in advance
of its scheduled dissolution upon the occurrence of certain events. These
events, which are outside the unilateral control of Citigroup, are specified in
the TOB trust agreement. These events are related to the solvency of the
underlying bond issuer, timely receipt of principal and interest payments on
the underlying bonds, the tax status of the bonds, and other items which are
subject to the beneficial interest holders’ election to retain their
certificates.  Because the occurrence of
these events is outside the unilateral control of Citigroup, we have concluded
that the QSPE is demonstrably distinct pursuant to paragraph 36 of Statement
140. In addition, Citigroup does not hold any rights to call the assets
transferred to the SPE and does not hold any right to call or prepay the
beneficial interests issued by the QSPE to third parties.

To the extent that Citi purchases
certificates following their optional tender by third parties, we monitor the
resulting ownership levels (based on the 10% requirement of third-party
beneficial interests in paragraph 36 of Statement 140) and conclude accordingly
on the demonstrably distinct status of the QSPE.

B.            Your response
indicates that Citigroup has no “explicit” call options on the transferred
securities nor any other forms of continuing involvement that provide you with
effective control over the transferred securities. Please tell us whether there
are any “implicit” call options that could provide you with effective control
over the transferred securities. For example, please discuss how you concluded
that the liquidity agreements that you generally provide to the trust do not
represent “implicit” call options;

Citigroup’s Response:
Citigroup does not have effective control over the transferred securities,
either through an explicit or implicit call feature. The liquidity arrangement
provides the TOB trust with a short-term funding facility in the event that
third-party investors tender their beneficial interests. However, that
liquidity arrangement does not give Citigroup any explicit or implicit call
option on the beneficial interests held by third parties; any decision to
tender securities is solely in the control of the third-party investors.

In addition, if a third-party holder chooses
to tender its beneficial interest, Citigroup may elect to acquire that
beneficial interest in its capacity as market maker in the beneficial
interests. Again, there are no features that either contractually or economically
compel the third-party investor to tender their

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Confidential Treatment Requested by Citigroup Inc.

Kevin W. Vaughn

December 5, 2008

Page 3 of 11

beneficial interests to Citigroup. Accordingly,
Citigroup does not have a unilateral ability to accumulate beneficial interests
in the TOB trust and, thus, cannot unilaterally obtain all of the issued
beneficial interests (in order to dissolve the trust and cause the return of
the transferred securities). Other factors considered in our determination that
Citigroup does not have effective control over the transferred securities
include:

·                 Termination of the trust is a scheduled event upon which Citigroup is
precluded from bidding on the sale of the assets;

·                 As described in the preceding response, early termination of the TOB
trusts is outside of Citigroup’s control;

·                 Citigroup, in its role as remarketing agent, must find
a replacement provider if it elects not to renew its annual agreement (thus
preventing Citigroup from causing the termination of the trust by resigning as
remarketing agent); and

·                 In cases where Citigroup is liquidity provider, the
liquidity agreement is for the term of the TOB trust. (Thus, Citigroup cannot
unilaterally terminate the liquidity agreement to create an economic incentive
for the third-party beneficial interest holders to tender their beneficial
interests).

C.            Tell us how much of
the beneficial interests are held by the third party floater holders;

Citigroup’s Response:

[Redacted in accordance with Citigroup’s
request for confidential treatment.]

D.           Your response to
comment 2 indicates that you may seek to obtain insurance (subject to third
party approval, where required) to protect your interests in certain of your
proprietary TOB trusts. Please tell us the following:

·                 The steps
involved in obtaining approval to purchase the insurance;

·                 The party
responsible for paying for the insurance;

·                 An indication of
how common it is for you to seek to purchase insurance to protect your
interests in the TOB trusts;

·                 Whether there
have been any circumstances where you were unable to obtain the required
approvals to purchase the insurance; and

·                 How you concluded
that the purchase of insurance after the QSPE was established does not
invalidate QSPE status (paragraph 35(c)(2) of SFAS 140)

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Kevin W. Vaughn

December 5, 2008

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Citigroup’s
Response: Application of insurance on the bonds
underlying a TOB trust is effected via an amendment to the trust agreement
which is distributed by the trustee to the beneficial interest holders. The
trustee collects the approvals and, provided a majority of the third-party
beneficial interest holders consent, the amendment is effective at the next
optional tender date. [Redacted in accordance with
Citigroup’s request for confidential treatment.] Upon amendment to the trust document, the trustee deposits the underlying
bonds in a custodial account which also holds the purchased insurance. The
resulting custodial receipts are held by the trust. The insurance premium is
paid by Citigroup on behalf of the trust.

We
have concluded that the insurance does not meet the definition of a derivative
and thus is not subject to analysis under paragraph 35(c)(2) of SFAS 140.
The purchased insurance protection provides for payment only upon the failure
of the bond issuer to make principal and/or interest payments when due and in
the amount of the loss and qualifies as a financial guarantee contract under
paragraph 10(d) of Statement 133.

Instead,
we have evaluated the permitted status of this financial guarantee contract
under paragraph 35(c)(3) of SFAS 140. With regard to the timing of the
purchased protection, we have concluded that a majority-approved amendment to
the trust documents effectively establishes a new QSPE (which requires
reevaluation under Statement 140) and that the application of the insurance at
the time of the amendment is therefore consistent with paragraph 35(c)(3)’s
requirement that financial guarantees be applied “when the [QSPE] was
established.”

Financial Statements

Note 4. Business Segments, page 128

2.                                      Please
refer to your response to comment 4 to our letter dated July 16, 2008.
Please provide additional background on your impairment analysis of goodwill.
Please address the following:

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Kevin W. Vaughn

December 5, 2008

Page 5 of 11

·                 Please provide us
examples of the market comparables and multiples used in preparing the analyses
of the fair value of your reporting units. In your response, please include
Securities and Banking and the actual multiples and market comparables used in
your analysis of that reporting unit. Please explain how those multiples and
market comparables are similar to your Securities and Banking reporting unit
(and the other examples provided), in regards to nature, scope and size of
operations, as contemplated in paragraph 25 of SFAS 142;

Citigroup’s Response:
As requested, we are including the market comparables used for certain of our
reporting units as examples of what was used in determining the fair values of
the reporting units as of February 29, 2008.

[Redacted in accordance with Citigroup’s
request for confidential treatment.]

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Kevin W. Vaughn

December 5, 2008

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Generally, the factors considered in
selecting comparable companies for purposes of fair valuing Citigroup’s
reporting unit were:

·                 Each company was actively traded on a stock exchange.

·                 Each company was in a business similar to that of the reporting unit
and was identified by management of the reporting unit as a competitor.

·                 Each company was generally profitable in the latest five years prior to
the valuation date with 2007 as the exception.

·                 Adequate financial information for each company was available to the
general public.

·                 We note that you
use a single valuation approach to determine the fair value of all of your
reporting units except for Securities and Banking. In light of the guidance in
paragraph 19 of SFAS 157, which indicates that multiple valuation techniques
could be appropriate in determining the fair value of reporting units, and the
fact that it is often difficult to identify market comparables for single
reporting units, please tell us how you concluded that it was appropriate to
only consider one valuation approach for these reporting units.

Citigroup’s Response:
[Redacted in accordance with Citigroup’s request for confidential treatment.]

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Kevin W. Vaughn

December 5, 2008

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·                 Please tell us
when you are evaluating your individual reporting units for impairment how you
validate the reasonableness of the fair values determined. For example, tell us
whether you reconcile the fair values determined in your analyses to your total
market capitalization. In this regard, we note that paragraph 23 of SFAS 142
indicates that the fair value of a reporting unit refers to the price that
would be received to sell the unit as a whole in an orderly transaction between
market participants at the measurement date, and that quoted market prices in
active markets are the best evidence and should be used if available. In
circumstances where an entity has multiple reporting units and all reporting
units have goodwill that are tested for impairment, a tool that could be used
to validate the reasonableness of the fair values determined for the individual
reporting units is a reconciliation of the total fair values of the reporting
units, to the market capitalization of the company, adjusted for any control
premium as deemed appropriate. If you do not perform such an analysis, please
indicate whether this is due to the fact that such an analysis cannot be easily
performed (for example, because not all of your reporting units contain
goodwill or there were not triggers of impairment at each of your reporting
units at each of the times you tested goodwill for impairment), or whether you
don’t believe such an analysis is meaningful. Additionally, if such an analysis
is not performed, please tell us whether you perform any other procedures to
evaluate the reasonableness of the fair value of the reporting units. If such
an analysis is performed, please tell us the results of your procedures,
including a discussion of any control premium assumed in the analysis, and how
the reasonableness of that premium was evaluated.

Citigroup’s Response:
We do not believe a quantitative reconciliation of
total fair value of our reporting units to the market capitalization of the
company adjusted for the control premium is meaningful in the current
environment. We have used alternate tools such as using multiple valuation
methodologies, actual transactions and independent affirmation of our valuation
methodologies and assumptions to validate the reasonableness of our results.

Paragraph 23 of SFAS 142 states that quoted
market prices in active markets are the best evidence of fair value of a
reporting unit and should be used as the basis for the measurement, if
available. Though Citigroup is a publicly traded company,

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Confidential Treatment Requested by Citigroup Inc.

Kevin W. Vaughn

December 5, 2008

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its individual reporting units are not.
Therefore it is not possible to use quoted market prices as the basis of
measurement for individual reporting units. In addition, paragraph 23 also
acknowledges that the market capitalization of a reporting unit may not be
representative of the fair value of the entire reporting unit as substantial
value may arise from factors such as synergies and other benefits that flow
from acquiring control. This analysis is further complicated when you take into
consideration multiple reporting units operating in different international
geographies spanning a wide array of products.

We acknowledge that absent the crisis and
volatility facing financial markets presently, the market capitalization of
Citigroup may be used as one tool to test the overall reasonableness of the sum
of individual reporting unit fair values. However, we believe that under
current market conditions, a quantitative reconciliation to the market capitalization
plus a control premium is not an appropriate and meaningful measure of the
reasonableness of the fair values attributed to individual reporting units for
the following reasons:

·                 In line with stock prices of all financial institutions, the stock
price and market capitalization for Citigroup has experienced significant
volatility over the last year for a variety of reasons unrelated to the
underlying performance or outlook for the business. It would be difficult to
explain these frequent and often extreme fluctuations in terms of increases and
decreases of fair values (as defined by SFAS 157) of individual reporting units
that a willing buyer would pay in an orderly transaction at a point in time.

·                 The stock price of Citigroup is also affected by other factors which
may not affect the value of its individual reporting units. For example,
various analysts have expressed the view that one of the causes of Citigroup’s
depressed stock price is that the markets believe the company may be more
valuable if broken up into various businesses. Although the impact of this view
is di