It seems that Citigroup (C) is launching some new PR offensive today aimed squarely at people with minimal understanding of banks, but who may have heard on The O’Reilly Factor or Lou Dobbs that the banks aren’t doing enough lending with government money.
The company is releasing a report on what it’s done with its $45 billion in TARP funds, and it got the AP to publish a piece starting with:
NEW YORK (AP) — Citigroup Inc. is using its $45 billion in government capital to make nearly that much in new loans.
Citigroup said its committee overseeing the use of taxpayer money approved $44.75 billion in lending initiatives as of March 31. That is up from the $36.5 billion in lending initiatives announced in February, and now includes $5 billion in loans to municipalities.
Ah, how wonderful! They’re using the entire TARP to make new loans. You’d almost think they’re totally maxed out.
That’s not how it works, of course. The TARP cash is used to bolster its capital base, which is just a sliver of its total balance sheet. For them to actually be putting their TARP capital to full use, they’d be lending out multiples of it.
At least near the bottom of the piece, the AP explains:
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.
Whatever, we assume most people will have moved on by that point.