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Citigroup Inc. will spend $5.8 billion of the $45 billion it has received from the federal Troubled Asset Relief Program to support and expand its credit card-lending activities, Citi says in a report released today. During the fourth quarter of 2008, Citi executives overseeing TARP funds authorized use of $36.5 billion to support a variety of lending activities, including residential mortgages, personal and business loans, student loans, and corporate loans, according to the report "What Citi is Doing to Expand the Flow of Credit, Support Homeowners and Help the U.S. Economy." Some approved lending programs are "already under way," the report says, "although it is important to note that new primary-lending programs take time to roll out and depend on factors that include loan demand, which declined substantially during the quarter and remains weak." Citi managed $149.3 billion in average credit card loans during the quarter, the report notes. "In this difficult environment, Citi will not—and cannot—take excessive risk with the capital the American public and other investors have entrusted in the company," the report says of Citi's tightened lending practices. However, this year Citi plans to use TARP funds to extend a "significant" amount of new card loans to lower-risk U.S. consumers. And the issuer says it plans to "ramp up" programs this year that provide additional assistance to struggling Citi cardholders, including payment incentives, matching payments and balance-consolidation loans for cardholders whose accounts are in earlier stages of delinquency. Citi will issue TARP-spending updates each quarter following its earnings announcements, Citi CEO Vikram Pandit said in a statement accompanying the report. Citi will not use TARP capital for compensation, bonuses, dividend payments, lobbying or government-relations work, marketing, advertising or corporate sponsorships, he said. "Our responsibility is to put these funds to work quickly, prudently and transparently to increase available lending and liquidity," Pandit said in the statement. Citi's report comes nearly a week after President Obama chastised Wall Street executives for doling out and receiving large bonuses despite dismal earnings and receipt of TARP assistance. The president chided Citigroup for planning to purchase a $50 million corporate jet after agreeing to receive bailout funds in November, an order the government demanded Citi cancel. "They should know better," Obama said.

 

 

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