Citi Confronts Trump, DOGE Fallout as US Government’s Go-To Bank

President Donald Trump’s campaign to cut spending at every level of the government is creating a series of headaches for its go-to banker: Citigroup Inc.

For years the New York lender has performed mostly predictable and largely invisible work for the federal government, including issuing corporate cards for civil servants and processing agency payments and payroll. Now its role as financial middleman has landed the bank in political fights it’s keen to avoid.

Citigroup is named as a defendant alongside US agencies in at least six lawsuits that claim the government and the bank illegally withheld funds. Meanwhile, Trump’s executive order freezing spending on government employees’ corporate cards in February sparked intense discussion at the bank, which earns millions of dollars from those card transactions.

Now the bank is also reeling from the effects of the new administration’s tariffs, which on Thursday sent Citigroup’s stock down 12%, the biggest one-day drop since 2020.

$1 Cap

Trump in February limited charges on hundreds of thousands of government cards to $1 while Elon Musk’s Department of Government Efficiency reviews spending across accounts, according to its updates on X.

US civil servants spent nearly $13.8 billion on Citigroup cards in the last government fiscal year, according to data from the General Services Administration. That’s almost 20% of the $70 billion charged to Citigroup commercial cards by all its clients in 2024.

Citigroup, which has been trying since 2020 to resolve regulators’ concerns over data-management and risk controls, would want to be careful not to jeopardize its relationship with the administration, said Rodney Lake, director of George Washington University’s investment institute.

“Citi is basically stuck in the middle,” Lake said. “I don’t think anybody would want to lose the US government as a client, so it puts them in a difficult situation with how to comply with new demands.”

Citigroup Chief Executive Officer Jane Fraser

Photographer: Ting Shen/Bloomberg

Jane Fraser, Citigroup’s chief executive officer, was in Washington last week for meetings on a range of issues, according to a person familiar with her travel schedule.

“We are very proud to call the United States government a client and bring our capabilities to support several different federal agencies,” Ed Skyler, head of enterprise services and public affairs at the bank, said in a statement. “We have been through many presidential transitions and have always adapted to the natural change in priorities which takes place.”

Caught in the Middle

The bank arranges many of the payments functions for government agencies, including transfers that the Trump administration has recently frozen. In suits brought by environmental groups, Citi has been named alongside the Environmental Protection Agency, which demanded a freeze on billions of dollars for green initiatives.

The bank in February “unexpectedly began refusing” requests for disbursements from the Biden-era Greenhouse Gas Reduction Fund, despite its “unambiguous contractual obligation to do so,” according to a legal filing by the Justice Climate Fund. It became clear that the bank’s behavior “was not voluntary, but was rather the result of an extended and unlawful pressure campaign by EPA,” the JCF argued.

The bank has tried to distance itself from the administration’s actions, arguing it is bound by law to comply with instructions from the EPA and the Treasury, which asked it to pause the accounts. A judge hasn’t ruled yet on the fate of the funds in dispute.

Citigroup was also caught between two powerful clients last month, when the federal government reversed an $80 million payment from the Federal Emergency Management Agency to New York City’s Citigroup account. The move was called “unprecedented” by Brad Lander, the city’s comptroller.

The administration said the initial transfer was a mistake and that the payment was being paused to ensure the money wasn’t being used to facilitate criminal activity. Citigroup waived the city’s overdraft fee after its account unexpectedly went into the red, and New York is now suing the government to restore the funds.

Bloomberg Big Take: Firms Seeking to Appease Trump Spin Old Plans as New

Citigroup isn’t alone among corporations trying to avoid the ire of the Trump administration.

The government has publicly criticized private institutions it says oppose its policies, barring law firms from government work and revoking funding from universities. Trump has also claimed that big banks have limited the business they do with conservatives, in January singling out Bank of America Corp. — an allegation the company denied.

Even if the revenue hit from frozen spending is modest, Citigroup is already adapting to constraints imposed by Trump. Like other federal contractors, it was forced in February to cancel a fleet of targets for diversity in its workforce after an executive order that banned “illegal DEI.”

--With assistance from Emily Birnbaum, Zoe Tillman, Aaron Gordon, Gregory Korte and Peter Jeffrey.

To contact the reporter on this story:
Todd Gillespie in New York at tgillespie30@bloomberg.net

To contact the editors responsible for this story:
Sally Bakewell at sbakewell1@bloomberg.net

Janet Paskin, Peter Jeffrey

© 2025 Bloomberg L.P. All rights reserved. Used with permission.