Citi(Bank) outlines support for Citi credit card customers
By Ed | February 5th, 2009 | Category: Banking & Finance | No Comments »Citi has announced the first edition of a new quarterly report on its use of TARP funds.
The report, titled “What Citi Is Doing to Expand the Flow of Credit, Support Homeowners and Help the U.S. Economy” (pdf document) includes a section on Citi’s credit card business, on page 23, where it states -
“Citi’s primary objective, particularly in this environment, is to fund the expansion of credit to existing card members and target new account originations, based on their ability to repay their loans”
and that
“in 2009, Citi Cards plans to extend a significant amount of new credit to U.S. consumers, within Citi’s customary sound lending standards.”
What’s not clear from Citi’s TARP report is how these plans fit with Citi increasing interest rates on outstanding credit card balances, which they began implementing in 10 – 11 weeks ago.
To me this is a bit like eBay having $5bn in the bank, but then borrowing a billion to purchase a couple of companies in early Q4-2008. Dare I say it feels like abusing the purpose of the TARP fund? US Taxpayers’ tax-dollars created the fund, then US-taxpayers pay higher interest rates to borrow from an institution bailed out by it. Doesn’t smell right does it?
Ed
