Unlike other banks Citi generously lends TARP money to borrowers

Citigroup Inc. has revealed it would use its $45 billion in government capital to make $44.75 billion in new loans. As for other ways the bank plans to spend its finances the Citigroup would spend $2 billion more to finance suppliers, $1 billion more in residential mortgages, and $250 million more in auto loans.

It should also be reminded that Citigroup has received an additional $20 billion, making its total TARP finances $45 billion. Banks like Citigroup do not lend the TARP money directly to borrowers. Instead, the banks keep the extra capital on their books, which allows them to borrow more money from funding sources. Then, they lend that borrowed money to others. A bank makes money by borrowing cheaply for the short-term and lending at higher rates for the long-term; if a bank has no capital, other institutions and investors won't lend to it.

Furthermore, the "stress test" had found out that Citigroup had a capital shortage of $5.5 billion. The bank said it planned to make up that amount by converting more preferred stock into common stock.