Bailout Recipient Citigroup Gets Contract to Run ‘Cash for Clunkers’

As the Senate gears up for debate this week on approving $2 billion more in "cash for clunkers" new-car rebates, Transportation Secretary Ray LaHood has vowed to work with the program's main private contractor -- Citigroup -- to iron out any kinks in the system that auto dealers use to apply for taxpayer-subsidized reimbursements.

Transportation Secretary Ray LaHood (Photo: AP)

Citigroup, one-third of which is controlled by the government that gave the bank a $45 billion bailout, is reportedly tripling the number of workers on its "clunkers" contract to handle the increased demand.

That extra work could involve more money for Citigroup, but the amount the bank is getting from the Obama administration to help manage the car rebates remains unknown.

Streetsblog Capitol Hill has asked the U.S. DOT for a copy of the contract, as well as data on any other companies that may have bid on the opportunity, and will update this post as more information becomes available.

What is known, as LaHood noted yesterday, is that the government did not anticipate the size of the car-deal backlog that ended up accumulating between July 1, when the "clunkers" rebates got an initial $1 billion infusion, and July 27, when the program officially launched.

"There were some bureaucratic problems in the process, in
making sure we had enough people contracted with to do the paperwork,"
LaHood told
C-SPAN's Newsmakers show. "You don't want to have these kinds of
problems, but it's the kind of problem that shows the program has been
very successful."

LaHood also made no bones about the Obama administration's desire to see the rebates extended without any stronger fuel-efficiency requirements for cars that are traded in. Sens. Dianne Feinstein (D-CA) and Susan Collins (R-ME), have suggested they would not support any new money unless greater environmental benefits were ensured from the auto purchases.

"In a way, we're meeting the metric they would like," LaHood said of the two senators, asserting that fuel efficiency benefits have been enhanced by the amount of trucks that are being swapped for smaller vehicles.