Citigroup to spend $36.5b on lending
NEW YORK - Citigroup, under pressure to increase its lending, says it will spend $36.5 billion to issue mortgages, make credit card loans, and buy mortgage-backed securities in the tight credit markets in the coming months.
The decision arrives after the bank received $45 billion in capital from the federal government late last year, and taxpayers' questions mounted about the use of that money.
In a report reviewed by the Associated Press that Citigroup Inc. plans to release this morning, the bank detailed how it is boosting lending efforts by using funds from the Troubled Assets Relief Program.
It's not that the $45 billion in TARP is being doled out by Citigroup directly to borrowers. Rather, having the extra capital allows the bank to borrow more money from various funding sources, and then lend that money out to others.
Meanwhile yesterday, the Federal Reserve said many banks have made it harder for borrowers to obtain all kinds of loans over the last three months.
The Fed in its quarterly survey of bank lending practices found large numbers of banks reporting tighter credit standards across a broad range of loan products - from credit cards and home mortgages to business loans.
Nearly 60 percent of banks responding to the survey said they had tightened lending standards on credit card and other consumer loans, about the same share as in the previous survey released in early November. And about 80 percent of domestic banks said they tightened lending standards on commercial real estate loans, slightly less than the roughly 85 percent that reported doing so in the previous survey.