The debate has been on as to what the status of the economy is and how effective the Troubled Asset Relief Program (TARP) has been. With talks of the recession having bottomed out and being poised to rise again, albeit slowly and rather unpredictably, the Democrats and the Republicans are pretty much divided on whether to go ahead and plough further money into the system and extend the TARP into the next year to continue with the current impetus to the economic stimulus, or to stop short and take stock of what has transpired in the time that the Democrats have been liberal in propping up business houses and industries out of the holes that they had dug themselves in.

One look at the financial world and we find that there have not been any fresh regulatory mechanism put in place to make sure the finance guys are in their senses when they make their business decisions. But even at a much simpler level, how well have the banks fared in repaying the TARP money that kept them afloat? If you are talking of Citigroup, the picture is far from encouraging.

Citigroup’s problems: Citigroup is getting set to raise fresh capital so as to honor its commitments to repay taxpayers’ money to the government, the funds that it had received under TARP. We may recall that Citigroup had to go through broad reshuffles in its board as many of its existing directors were let go and were replaced with a fresh set of faces. That’s as far as the administration, management and processes are concerned. The more vital piece of information into the puzzle would be if Citigroup has indeed been able to function appropriately with the funds that it received, rotate the money in the market, wipe its problems away and repay its TARP funds. The straight answer is that it hasn’t been successful in that.

The TARP has been restrictive in the sense that Citigroup, which is 34% owned by the Administration, has not had the freedom to operate its way, coming under severe regulations and restrictions. Citigroup would want to pay off the money so that it could be free to move around in the market. But the problem is that Citigroup would find it tough to raise money from the market when it’s the end of the year; further, to come out of its miseries and perform to bring in cash flow would take time, as the economy is still in doldrums.

So, we are back to the same question – how effective has the TARP been in extricating businesses off their woes and in getting the economy back on track? As of now, Citigroup’s future is at stake, and time would tell.