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CITIGROUP 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. The loans being

offered by Citigroup to state and local governments, municipal agencies, universities and non-profit hospitals would not likely have been made had the bank not received money from the

Troubled Assets Relief Program, or TARP. David Brownstein, Citigroup's managing director and co-head of public finance, said in an interview with The Associated Press that these

municipal borrowers are still very secure, but their borrowing costs have shot higher because of turbulence in the credit markets. In Citigroup's report, reviewed by the AP and

scheduled for release Tuesday morning, the bank also said it is spending $2 billion more to finance suppliers, $1 billion more in residential mortgages, and $250 million more in auto loans.

In total, Citigroup has extended more than $200 billion in new credit in the United States since last October — when the bank got its first $25 billion injection of bailout money from the

government. Last fall, Congress approved the $700 billion TARP fund, which got handed out to hundreds of financial institutions in an effort to stabilize the financial system and revive

lending. Citigroup Mark Lennihan 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. A bank makes money by borrowing cheaply for the short-term and lending at higher rates for the long-term; if a

bank has no capital, other institutions and investors won't lend to it. In November, Citigroup got an additional $20 billion, bringing its TARP total to $45 billion. In February, it

agreed to convert a portion of the TARP investment from preferred stock to common stock. After the government's funding and other capital raising efforts, the Federal Reserve found last

week in its "stress test" of the country's 19 largest banks that Citigroup has a capital shortfall of $5.5 billion. Citigroup said last week it plans to make up that

shortfall by converting more preferred stock into common stock.