Razvan Pandor

… via mucea!

Citigroup released a report today explaining how it “spent” the $45 billion provided to the company by the government as part of the Troubled Asset Relief Program (TARP). On a high level, the report accounts for $46.5 billion spent or allocated to a variety of programs across five categories: residential mortgages, personal and business loans, student loans, credit cards, and corporate loans.

First, $10 billion was used to purchase mortgage bundles from Fannie Mae. The bundles mature this month, which means Citi will receive the $10 billion back and be able to use the funds elsewhere. The report says that this decision was to “help provide liquidity to the secondary market.”

$10 billion is being used to invest directly in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. Half of this amount is invested in 15-year fixed rate mortgages while the other half is invested in split between 3-year and 5-year adjustable rate mortgages.

$7.5 billion is being used to buy other mortgages on the secondary market; that is, Citi is buying mortgages offered by other lenders from those other lenders.

$8.2 billion is being used to offer non-conforming mortgages directly to consumers. Non-conforming loans are those with high values, starting at an average of about $500,000, usually necessary in areas with high property values. Interest rates on these loans are higher and so are the risks associated with offering these mortgages.

$1 billion is earmarked for loans to businesses facing short-term financial problems. These loans would be secured by commercial property of illiquid assets.

$1.5 billion is being offered to consumers who would like to consolidate personal debts or who need money to meet other financial obligations.

$1 billion will offered to students as loans through the Federal Family Education Loan Program (FFELP) to help middle income and low income families afford tuition.

$5.8 billion is earmarked for credit cards in order to expand offers for balance transfers, increase credit lines, and acquire new customers. In the statement, Citigroup says, “Credit cards play a critical role in helping people and businesses purchase basic goods and services. Based on available national economic figures, Citi estimates that 20 percent of total personal spending flows through credit card transactions, often for everyday essentials.”

$1.5 billion is being invested in securities backed by commercial loans.

The above amounts are earmarks. Citi did not describe in detail amounts that have already been invested or used vs. amounts that are waiting to be spent at the right time, for example, when there is sufficient liquidity or supply.

more here

“What separates the winners from the losers is how a person reacts to each new twist of fate”

“I was relentless, even in the face of total lack of encouragement, because much more often than you’d think, sheer persistence is the difference between success and failure. When somebody challenges you, fight back. Be brutal, be tough, Just go get them. “