Citigroup Scores 'Cash for Clunkers' Contract

(Updated from Thursday, Aug. 6 with stock movements and additional links.)

NEW YORK (TheStreet) -- Citigroup(C) has reaped considerable scorn for the significant investments the government has made to keep the company afloat. But being on the dole has its privileges -- as possibly evidenced by the report today that the Obama administration has awarded Citigroup a $7.7 million contract to help administer the "cash for clunkers" program.

Word of the contract comes as the Senate approved late Thursday a $2 billion extension of the program.

It also comes on the heels of complaints that the government has not sufficiently managed the books on the program, resulting in the confusions over the past week regarding how much, if any, money remained in the coffers of the surprisingly popular car-voucher initiative.

Earlier this week, the Transportation Department announced that Citigroup had been hired to process applications for vouchers for the program. Thursday, Transportation Department spokeswoman Sasha Johnson told Dow Jones that the estimated cost of that contract was $7.7 million.

Officials said the program's initial $1 billion probably already has been spent, but a paperwork backlog prevented an accurate accounting. The government was able to confirm Wednesday that more than $775 million of the original funds had been spent, accounting for the sale of nearly 185,000 new vehicles.

The additional $2 billion should be enough to help consumers purchase a half-million more new cars, they added, estimating that the extra funding would last into Labor Day.

Shares of Citigroup, which have climbed by more than 30% in the past week, rose 33 cents, or more than 8%, to reach $4.13 in Friday trading. In doing so, the stock cleared the magical $4 mark that had served as its glass ceiling for the past six months.

-- Written by Ty Wenger in New York

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