Citi reports about its lending programs under TARP

The New York-based bank Citigroup said on Tuesday that so far it has approved $50.8 billion in lending programs tied to receiving money as part of the Troubled Asset Relief Program, launched by the Treasury Department to help stabilize the lending markets at the peak of the credit crisis. Two new programs, worth up to $6 billion, were approved by Citi in the second quarter. Citigroup will provide up to $4 billion in municipal letters of credit and another $2 billion for mortgage originators.

A portion of $45 billion, received in TARP money since last October, was recently converted into a 34% ownership stake for the government. Citigroup has deployed $15.1 billion of the money approved for lending, the bank said in its third quarterly update on how it is expanding lending efforts after receiving government money.

The lending initiative for municipalities builds on a $5 billion program Citi approved in the first quarter that provides loans to municipal clients to directly fund capital projects, such as building new infrastructure. The letters of credit will be available to local governments, municipal agencies, health care groups and other public finance clients for up to three years. And another $2 billion for mortgage originators will be available as loans known as warehouse lines of credit. Mortgage lenders will tap the lines of credit to originate new mortgages. When the new mortgages are then sold in the secondary markets, the money is repaid on the credit line. It then becomes available again to write new loans.

Since receiving TARP funds, a majority of Citigroup's lending initiatives have been geared toward the mortgage market, which began to collapse in 2007 and helped push the country into recession. Mounting loan losses on failed mortgages and the declining value of investments tied to the real estate loans have been the primary drivers of losses at banks and other financial institutions. Besides, More than half the money Citi has deployed so far has been used to purchase bonds backed by mortgages in the secondary market.

Additionally, the bank has made $330 billion in new credit available to U.S. consumers, small business and communities, including $129.7 billion in the second quarter, since it received an initial $25 billion in October.