Pandit’s Citi pours $25.7 bn in bailout funds

February 3rd, 2009 - 10:56 pm ICT by IANS  

Washington, Feb 3 (IANS) Citigroup Inc. Tuesday said it has poured $25.7 billion of its government-supplied funding into bolstering the US residential mortgage market and approved $36.5 billion in loans as part of initiatives to spur the crisis-hit economy.”Citi is working in partnership with the government to increase available lending and liquidity in the US financial markets and to help put the US economy back on track,” Citigroup’s Indian American CEO Vikram Pandit said in a statement.

Amid heavy scrutiny from taxpayers and lawmakers, the ailing US banking offered a first glimpse Tuesday of how it is spending the $45 billion in government bailout money in its first quarterly progress report on the Troubled Asset Relief Programme (TARP).

The report by the New York City-based bank said it had approved $36.5 billion in loans and other commitments backed by TARP during the fourth quarter of 2008.

These included making $1 billion in student loans and $2.5 billion in business and personal loans. The bank also said it expanded credit lines and opened new accounts for credit cardholders.

But the bulk of the spending was earmarked for the housing market. Citigroup said it spent $27.5 billion to that end during the last three months of 2008, much of which went to purchasing mortgages in the secondary market, including $10 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

About $8.2 billion was earmarked for making mortgage loans to families and individuals with good credit histories.

Banks’ willingness to lend money has become a focal point in the ongoing crisis after the US government provided nearly $200 billion to financial firms in an effort to get credit flowing again.

Fearing further backlash, Citigroup was forced to rethink its planned purchase of a $42 million corporate jet last month following Congressional scrutiny.

The bank is also said to be now considering nixing its corporate sponsorship deal with the New York Mets that involves the naming rights for the team’s new stadium, according to a report in the Wall Street Journal Tuesday.

Citigroup told CNN in a statement, though, that it has a “legally binding agreement” with the Mets and that it is “using no TARP capital for Citi Field, or for marketing purposes”.

Meanwhile, a survey of top loan officers across the US published Monday by the Federal Reserve revealed that credit remains tight at banks, despite the government aid.

Lawmakers and taxpayers have accused banks of using much of the TARP money to fund acquisitions, pay lavish bonuses or other seemingly frivolous expenses.

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