Citigroup (C) said it will put up  $26.7 billion in capital for mortgage loans. It will also provide money for corporate loans, personal loans, credit cards, and student loans. The entire package totals $36.5 billion in initiatives.

Citi made it clear that the money is being loaned out from TARP funds provided by the government. But, up until now, it has been the habit of big banks to hang on to that money to improve balance sheets.

Vikram Pandit, Citi’s CEO said "Our responsibility is to put TARP capital to work quickly, prudently, and transparently to support U.S. consumers, businesses and our communities during these challenging times." What he did not say is the extent to which he had a gun held to his head to put together the program.

Citi did get $308 billion of its "bad assets" guaranteed by the government and it appears that the government forced the company to break itself in half to wall off the toxic paper from the healthier parts of the firm.

Odds are Citi did not want to make more than $36 billion in loans, many of which are probably relatively risky. Did it have an option? Probably not, now that the government effectively owns the company.

Douglas A. McIntyre

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