U.S. Steps Up Oversight of Citigroup: Report

Federal banking regulators are involved in the internal discussions about Citigroup's strategic direction, according to a report.
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Federal banking regulators are involved in the internal discussions about

Citigroup's

(C) - Get Report

strategic direction and are discouraging executives from pursuing certain acquisitions, the

Wall Street Journal

reports.

The newspaper reports Wednesday the unusually close degree of oversight is the culmination of mounting regulatory concerns about the bank's financial situation in the past year. Until recently, the government hadn't taken an especially assertive stance supervising Citigroup, according to the

Journal

.

But a second capital infusion into the bank last month from the U.S. government coincided with federal regulators putting Citigroup on a tighter regulatory leash, the

Journal

reports, citing people familiar with the situation. The U.S. government's stake in Citigroup is 7.8%, making it the bank's largest shareholder.

Citigroup's two main regulators, the

Federal Reserve

and Office of the Comptroller of the Currency, expect to essentially have veto power over key strategic decisions at the firm, the

Journal

reports. In some cases regulators have approached the bank about its interest in buying troubled banks or have told Citigroup to back away from deals that looked overly ambitious.

This article was written by a staff member of TheStreet.com.