Citigroup Inc has boosted its lending after receiving government money and has set up a committee of senior executives to make sure it is using those funds properly, according to an internal memo obtained by Reuters.
The government agreed to give an additional $20 billion of capital to the bank last month under the Troubled Assets Relief Program, on top of the $25 billion it received in October.
Critics have charged that US banks receiving TARP money are using the funds mainly to make up for writedowns and loan losses, and are not actually lending more money.
In an interview last month, US Representative Barney Frank, chairman of the House Financial Services Committee, told Reuters that TARP money was meant to be pumped into the economy through loans.
“Let's put it this way: If the money isn't being lent out, then I suppose there's no harm done if it's cut off,” Frank said. “I hope they will redouble their efforts to get it lent out.”
Citigroup Chief Executive Vikram Pandit said in a memo sent to employees Wednesday evening that the bank has been increasing lending and expanding available credit lines to customers, particularly those that use several Citigroup products.
“Citi remains strongly committed to sound lending to consumers, businesses and institutions,” Pandit said in the memo.
A special committee will help insure that TARP money is being used to help boost lending, the memo said. The committee will oversee, approve, and monitor how the TARP money is used.
The $700 billion TARP program was originally intended to buy bad assets from banks, but is now being used to buy equity stakes in banks. (Reuters)