Citigroup Details Plans to Increase Lending Backed by TARP Funds
Feb 3rd, 2009 | By Rob | Category: economy
Citigroup, which has received $45 billion in capital from the TARP program, issued a “First Quarterly Progress Report on Its Use of Tarp Capital” today, according to the press release on its website. I’m pretty much rolling on the floor laughing over that headline, because it has me eagerly awaiting the second progress report. If you can’t tell, I’m a bit skeptical that Citi will continue the progress reports for very long. My assumption is that it prepared the report, which headlines with the fact that it engaged in $75 billion in new lending in the U.S. in the fourth quarter of 2008, because of public and government criticism that banks are not lending to consumers despite receiving billions of dollars in assistance from the government.
The 45 page report is titled “What Citi is Doing to Expand the Flow of Credit, Support Homeowners and Help the US Economy.” You can find the pdf here. It indicates that Citigroup is putting $36.5 billion of capital to work, including $5.8 billion for credit card lending. Here’s the relevant sections with regard to what the funds from the Troubled Asset Relief Program will mean for Citi’s credit card lending:
- “Since receiving the first installment of TARP capital, Citi has made plans to expand its lending activities further and extend affordable credit to lower risk borrowers.”
- “The special programs Citi is offering include expanded eligibility for balance-consolidation offers, targeted increases in credit lines and targeted new account originations, subject to Citi’s customary sound lending standards.”
- “For example, Citi is offering new forbearance programs with broadened eligibility criteria, affecting accounts in earlier stages of delinquency. These include payment incentives, match payments and balance-consolidation programs that accelerate the reduction, or amortization, of card loans without materially increasing the cost to consumers.”
- “We are also marketing programs to customers who, although current on their accounts, may need additional help to repay their balances. We expect to ramp up these programs through mid-2009.”
The announcement follows criticism about Citigroup’s $400 million contract to fix its name on the New York Mets stadium for the next 20 years and its cancellation of a contract to buy a new $50 million dollar corporate jet following another uproar over its spending habits.
Wouldn’t you know that a bank decides to make a big announcement about its lending practices the day after I post about the banks tightening lending and about the same time as I wrote about how I wasn’t going to talk about credit cards for a little while. Oh well - stay tunded for more from the mortgage and foreclosure front soon.
