The Citigroup Watch, from Inner City Press & Fair Finance Watch

Citigroup, formed by the 1998 merger of Travelers and Citicorp, is the largest U.S.-based bank holding company. It engages in questionable high interest rate lending in low income communities across the United States, and now globally, through its CitiFinancial unit. Though its investment bank, Citigroup underwrites and trades in pools of loans issued by other predatory lenders. It has assisted Enron, WorldCom, and others; it has settled a slew of securities charges on the cheap. Citigroup finances and is involved in such environmentally destructive projects, including as a purchaser, despite contrary claims and its surreal inaccurate advertisements. Citigroup is nearly the definition of "predator;" this is the Citigroup Watch.

Update of June 29, 2009 -- Japan's financial regulator ordered Citigroup Inc.'s Citibank Japan Ltd. to suspend all promotional sales activities in its retail-banking division for one month as punishment for lax compliance in preventing money laundering.....

Update of June 15, 2009: While supposedly recused at the Federal Reserve Bank of New York, Tim Geithner was weighing in on Bank of America, in support of the shotgun marriage with Merrill Lynch, it emerged in Congress last week. What was his role in Citigroup?

From the WSJ, emphasis added: "Mr. Geithner, then head of the Federal Reserve Bank of New York, had recused himself from individual bank matters in November after being tapped as Treasury Secretary. Treasury officials say Mr. Paulson kept Mr. Geithner apprised of what was happening with the merger. A separate note from Mr. Lewis recounts a conversation with Mr. Bernanke and suggests that Mr. Geithner approved of the agreement to infuse the bank with more money and guarantee its assets. A similar structure had been used to help Citigroup Inc. A Treasury spokesman said Mr. Geithner was informed about what was happening but didn't weigh in on specifics."

Update of June 8, 2009: So the regulators' idea of change at Citigroup would be to hand the reigns from Pandit to former U.S. Bancorp CEO Jerry Grundhofer, who bought a 25% stake in now-failed predatory lender New Century? Plus ca change, plus c'est la meme chose.

Update of May 25, 2009: High rate, subprime accounts make up one-third of Citigroup's credit card portfolio...

Update of May 18, 2009: Airports operator BAA Ltd last week said Citigroup Inc.'s consortium had been eliminated from the auction for Gatwick Airport, leaving just two bidders still in the running. BAA said the Citigroup proposal "was uncompetitive on price and there were no assurances on deliverability." Many are saying that of the current Citigroup...

Update of May 11, 2009: Now Citi sells its Japanese domestic securities business for 774.5 billion yen ($7.9 billion) in cash. "We will continue to look for additional opportunities to maximize the value of businesses and assets as we rationalize and restructure Citi," Citi Chief Executive Vikram Pandit said. Citi had bought Nikko Cordial for $7.7 billion as the largest foreign bidder in Japan in April 2007. However, it is now being forced to sell its non-core assets after being hit by credit-related losses in wake of the global financial meltdown. Citi is also selling its Nikko Asset Management business in a separate deal. The sell off continues...

Update of May 4, 2009: Amazingly, CitiFinancial continues to sponsor a Ford car -- NASCAR TARP.

Update of April 27, 2009: According to the WSJ, “a long procession of grumpy investors took to the microphone to vent about the crippling losses that have decimated Citigroup's share price. Some shareholders lashed out at the New York bank's directors for failing to adequately shield the company from the credit crisis and recession. Still, by the time the meeting adjourned roughly six hours later in the ballroom of a Manhattan hotel, Citigroup's slate of directors had been handily elected, with each director receiving at least 70% of the votes cast. Also, Chief Executive Vikram Pandit managed to dodge much criticism of his 16-month tenure. There was no sign of representatives of Citigroup's soon-to-be-largest shareholder, the U.S. government, which is poised to own as much as 36% of the company.” How about the taxpayers? Or the predatory lending victims Citi previously tried to belatedly buy off?

Update of April 20, 2009: In the run-up to its annual shareholders' meeting, this time in the Hilton and not Carnegie Hall, Citigroup has been criticized for misleadingly offering $5,000 loans and not disclosing in the advertising the interest rate -- 30%. But CitiFinancial has been doing that for a long time...

Update of April 13, 2009: Job well done? "Citigroup said longtime executive Steve Freiberg plans to retire after nearly three decades with the company. 'Steve has been an extraordinary leader and has made significant contributions to building the great global franchise that Citi is today,' Chief Executive Vikram Pandit said in a statement." What exactly was so well done about the job?

Update of April 6, 2009 -- In the first study of the just-released 2008 mortgage lending data, Inner City Press / Fair Finance Watch has found that Citigroup, perhaps due to its shrinking, some say dying, business confined African American to higher-cost loans above the rate spread 1.90 times more frequently than whites, and 1.23 time more frequently than whites for Latinos. 2008 is the fifth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of 3 percent over the yield on Treasury securities of comparable duration on first lien loans, 5 percent on subordinate liens.

Update of March 30, 2009: Geithner Promotes Megabanks' including Citigroup's Monopoly, in DC as at Fed, 17 Cut to 7 on Derivatives

NEW YORK, March 28 -- Seven megabanks' renewed grab for monopoly power in the over the counter derivatives market shows how little Wall Street's real power has changed in the transition from the Bush to Obama administrations.

The banks, including Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank, are paying over $1 million to p.r. firm Prism Public Affairs to "educate" the voters weary of bonus and bailouts that those who caused the crisis should benefit from it.

Already, Congress members hungry for campaign contribution have submitted to closed door briefings by Ed Rosen of the law firm Cleary Gottlieb, who drafted the legislative language for monopoly.

The connector in this story is Timothy Geithner, under Bush the president of the Federal Reserve Bank of New York and now Obama's Treasury Secretary. Geithner in June 2008 convened closed door meetings with 17 banks, essentially allowing them to propose and draft their own rules for the derivatives market.

Update of March 23, 2009: Pandit put out this spin last week "The work we have all done to try to stabilize the financial system and to get this economy moving again would be significantly set back if we lose our talented people because Congress imposes a special tax on financial services employees," Mr. Pandit wrote in a memo distributed to Citi's 300,000 employees.

WASHINGTON, March 13 -- The ongoing bailout of insurer AIG and its counterparties was apologized for but defended by a range of Obama administration officials this week. Treasury Secretary Timothy Geithner, until recently the president of the Federal Reserve Bank of New York and before that at the IMF, said he hated to have to bailout AIG, but "it's systemic."

His advisor Gene Sperling, a member of President Bill Clinton's economic team, said the Obama administration took office only to find AIG too big to fail, implying that this was entirely attributable to the two terms of George W. Bush. But AIG was allowed to grow without control under Bill Clinton, just as Citigroup was increasingly unsupervised under the tenure at the New York Fed of Timothy Geithner, as CitiFinancial got deeper into predatory lending ...

Update of March 2, 2009: With Citigroup partially nationalized, who would join the board of directors? According to the WSJ, more of the same: James Hance formerly of Bank of America, Jerry A. Grundhofer the ex-CEO of U.S. Bancorp; and Robert K. Steel, who the Journal describes as "CEO of Wachovia Corp. when it was acquired by Wells Fargo & Co. and now is a director at Wells Fargo." Yeah, and just before that he was with the Treasury Department. This is no change that can be believed it, much less with Citi's argument that re-treads "Robert Ryan and Lawrence Ricciardi, who joined in 2007 and 2008, respectively, count as 'new' and don't necessarily need to be replaced." Oh yes they do...

Update of February 23, 2009: Pandit last week said, "The future of Citi is in emerging markets, is in Latin America, and is in Mexico with Banamex." While the last is dubious, one thing seems true: the future of Citigroup, if it has one, is not in the United States, although it might be WITH the United States (government)...

Update of February 16, 2009: Citigroup, to defend its plastering of its discredited name on the Mets new stadium in Queens, rounded up the support of Dem Reps Eliot Engel, Joseph Crowley, Yvette Clarke, Gregory Meeks, Anthony Weiner and Steve Israel. Would they write in favor of Citigroup's jet? During the Congressional hearings last week, Nydia Velazquez called Pandit “a convincing person." Convincing to whom?

Update of February 9, 2009: American Eagle Outfitters sued Citigroup and accused it of fraudulently inducing it to buy $258 million worth of auction rate securities that it now can sell only at a significant loss, if at all. Citigroup represented the securities as safe and liquid and therefore compatible with the Pittsburgh-based clothing retailer's conservative investment policies, according to the suit. Instead, American Eagle claimed, Citigroup knew there was not enough demand for the securities to keep them liquid. A Citigroup spokeswoman declined to comment.

Update of February 2, 2009: Too little too late, accountability awaits: Sanford "Sandy" Weill says he will end a 10-year consulting contract with the bank that gave him millions of dollars in perks, including an office, car and driver and the use of company jets. Weill, who retired as chairman and started the consulting job three years ago, now wants to opt out. But what about returning ill-gotten gains?

Update of January 26, 2009: Endgame, Here is what will make up Citi Holdings:
-CitiFinancial, a consumer finance company with over 3,000 branches in the U.S., offering products like personal loans and auto loans, has provided little of what Pandit called "linkage" with Citi's banking business.
-CitiMortgage deals to a large extent with mortgages originated by brokers rather than Citi branches. (Citi had only in recent years started to built a relationship between Citibank, its retail bank, and CitiFinancial - but the experiment remained small in scale.)
-Primerica, the unit that sells annuities and retirement funds, and also makes consumer loans, will also be part of the new unit
-Private label Credit cards: The Citi unit that issues cards bearing a retailer's name, rather than Citi's, is in Citi Holdings. This portfolio might be relatively easy to sell, some observers said. JPMorgan Chase & Co. (JPM), for example, might be interested.
Combined, they will hold about $850 billion in assets, and generate about 20% of Citi's earnings. Citi Holdings will also hold the illiquid assets that have created so much pain for Citi due to write-downs.
Pandit said the units in Citi Holdings "are good businesses" and Citi believes "they have considerable value" - and that is why they might be better divested, or, like Smith Barney, combined with another company's business.
Good luck...

Update of January 19, 2009: Let Citigroup fall apart, let it fail without further bailout. For sale: "CitiFinancial, which does real estate lending, personal and auto loans, had 3,799 locations, compared to Citi's 4,057 Citibank branches, as of the third-quarter. Though CitiFinancial does not offer the same range of products as the Citibank branches, it does cross-sell Citi credit cards through most of its locations. " Terminate it - it is rotten.

Update of January 12, 2009: The chickens have come home to roost at Citigroup, with Robert Rubin leaving, and regulators encouraging something of a break-up of the illegally formed financial supermarket, brought low by involvement in predatory lending. Good riddance...

Update of January 5, 2009: Trying to make favoritism appear to be part of a program, the Treasury Department has given named and even post-hoc guidelines for its second bailout of Citigroup. The "Asset Guarantee Program," we're told, might be offered to other bans on a "case-by-case basis." In its required filing with Congress, Treasury pontificates that "the objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings, and retirement security." And we thought it was just to prop up Citigroup. The $20 billion purchase of preferred Citi stock now has the high-sound moniker, "Targeted Investment Program," and Treasury has belated enunciated five principles of the unprincipled program to determine eligibility, beyond just who you know: the extent to which the "destabilization of the institution could threaten the viability of creditors" and whether or not an institution is "sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to the credit markets." That's called, too big to fail. But wasn't Lehman Brothers?

Update of December 29, 2008: So not only did Citigroup lose out to Wells Fargo to buy Wachovia -- it was beaten to Chevy Chase by Capital One. How low can you go?

Update of December 22, 2008: A jingo-ist America might ask, so the U.S. bails out Citigroup for $45 billion and untold more in guarantees, then Citigroup turns around the lends $8 billion to Dubai. So the U.S. is direct lending to Dubai? And what of Citigroup's name on the Mets new baseball field, and on "The Pond" skating extravaganza in New York's Bryant Park? Is this the supposed new rigor of examination of Citigroup?

Update of December 15, 2008: Another week of Citi-sleaze, and only two more settlements: auction rate securities, and Egg over in England.

Update of December 8, 2008: How has Citigroup used its fresh billions in government bail-out funds? On November 30, it was exposed as sponsoring a Congressional junket to the Caribbean. On December 1, it announced it is spending over seven billion Euros to buy the highway business of Spanish construction firm Sacyr Vallehermoso. Meanwhile as reported last week, Robert Rubin who pulled in over $100 million from Citigroup began a counter-offensive, saying none of the collapse was his fault. He had no operational responsibilities, he said. Call him the Stephon Marbury of high finance, motoring down a Spanish highway without a care in the world.

Update of December 1, 2008: Robert Rubin has tried to defend his $115 million in payola from Citigroup since 1999 by minimizing his role, while now saying, "I have told Vikram that I will remain part of this and try to be helpful." So the people who caused the problem just stay on and keep getting paid. Contrary to his claim to be uninvolved, Rubin helped hook up Citigroup's purchase of notorious predatory lender Ameriquest.

Flashback to March 2007, from Deval Patrick, following his $360,000 a year part-time service on the board of directors of the predatory lender Ameriquest / ACC: "As a former board member, I was asked by an officer of ACC Capital to serve as a reference for the company and agreed to do so. I called Robert Rubin, a former colleague from the Clinton administration and an executive at Citigroup, to offer any insight they might want on the character of the current management... I appreciate that I should not have made the call."

A "senior person who has no ax to grind," Rubin calls himself. It's time to face the axe, some say...

Update of November 24, 2008: The choice of Tim Geithner as Treasury Secretary put a protege of Citigroup's Robert Rubin in charge of the economy, just as Citigroup teeters near failure due to its predatory lending. Rubin did nothing to stop Citi's gouging practices, just as Geithner did little as head of the Federal Reserve Bank of New York to regulate and reign in the lenders under his jurisdiction.

Update of November 17, 2008: Global fragment of the predatory lending meltdown -- In Japan, Citigroup's CFJ subsidiary is selling loans it holds to "illegal companies."

Update of November 10, 2008: Citigroup Inc. lost $1.44 billion during the third quarter from packaging credit card debt and selling it as bonds... Even in recruitment, Citigroup stumbles:

"Citigroup has recruited Lehman Brothers Holdings’ former European head of equities technology, Rick Seidenstein, as global head of equities institutional sales and trading technology. Based in London, Seidenstein reports to the U.S. bank’s global co-heads of equities and prime finance technology Tim Clark and Ravi Radhakrishnan. Seidenstein spent six years at Lehman in a variety of roles, including the head global program trading, the head of electronic execution services for Europe, the Middle East and Africa and, most recently, the head of Emea equities and prime services technology. Citigroup said the appointment 'will further help us position our strategy to fully realize the potential of the investments we have made in recent years.' Citigroup has been keen in recent months to establish its credentials as the leading provider of so-called smart order routing systems, trading platforms that enable customers to access the proliferation of alternative trading systems, such as Chi-X, Turquoise, Nasdaq OMX Europe and Bats Trading Europe, as well as the primary exchanges."

Update of November 3, 2008: Great job, Pandit: in the last year, Citigroup shares have lost 65% of their value, and $68 billion in mortgage-related losses later, the company has so many troubled assets that its days as a leader in U.S. finance appear to be over. “Citi no longer matters,” says Bill Smith, head of Smith Asset Management, a shareholder in and longtime critic of the bank. “It's a black hole.” Even after massive write-downs, the bank still has $138 billion of “problem assets." Crain's says that with $25 billion in federal bailout money safely in its coffers, the company will also get another chance to snap up an even weaker rival or two on the cheap.

Update of October 20, 2008: It's telling, in terms of how sloppy the corporate giveaways have been, that neither the Fed nor Treasury thought through how buying warrants in Citigroup would put Citi in the position of reducing book value or recording a loss. Expect the rule changing for the biggest banks to continue...

Update of October 13, 2008: The WSJ transcribes for Citigroup that "Citi will mainly seek to expand overseas, particular in Asia and Eastern Europe, which has long been a major focus of Citi's growth strategy. Retail banking and consumer lending returns there by far outweigh the returns in the U.S., Citi has long argued. Citi has 'exactly the same strategy as before,' the source said." And that strategy includes predatory lending -- now in Asia and Eastern Europe...

Update of October 6, 2008: So is now-spurned Citi now lusting after SunTrust? And if it gets neither, will it fail?

With Wells Fargo's announcement that is it outbidding Citigroup for Wachovia, and would consummate its proposal, without FDIC assistance, by the end of the year the question arises: how could the regulators bypass public notice and comment on a transaction that has no FDIC involvement?

Citigroup's low-ball $2.16 billion supposed deal, announced Monday, had rubberstamp approval with no public notice or comment, including under the Community Reinvestment Act on CitiFinancial's widespread involvement in controversial subprime lending...

Citigroup - Wachovia Approved by Fed and Bush, Public and CRA Excluded, Laws Repealed?

NEW YORK, September 29 -- With Monday morning's announcement that Citigroup, whose subprime write-off helped hearken the current financial crisis, will buy Wachovia at fire sale prices with no public comment, banking law has been turned on its head or repealed. Bank mergers and conversions are supposed to be subject to public notice and comment, unless in emergencies such as failure and FDIC take-over. But last Sunday the Federal Reserve gave immediate approval to applications by Morgan Stanley and Goldman Sachs to convert to bank holding companies.

A week later, Citigroup is shielded from public comment without its target, Wachovia, being taken over by the FDIC. Henceforth regulators can exclude the public for any reason, or no reason at all. And the same predatory lenders who brought about the crisis now stand to benefit from it.

On September 22, Inner City Press asked Federal Reserve chairman Ben Bernanke on what legal basis he has rubber-stamped Goldman and Morgan applications. Bernanke scoffed that legal authority existed, to talk to the Fed's top lawyer, who was in the room. He in turn pointed to a 2 a.m. press release which mentioned emergency and that the transactions would be "consummated immediately." Thus, no court could review the Fed's decision to exclude the public. Any case filed for review would be moot. Click here for that story.

When the Office of the Comptroller of the Currency, a unit of the Treasury Department, later in the week rubber-stamped JPMorgan Chase's acquisition of most of Washington Mutual, at least it could cite to the FDIC's involvement. But on Citigroup - Wachovia, the FDIC has bragged that Wachovia did not fail and was never in receivership. How then can the public be excluded? But the press release states:

"Citigroup Inc. will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina, in a transaction facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President."

So the President approves bank mergers without any public notice or comment. Since the Community Reinvestment Act is only enforced during the public comment period on merger applications, the CRA is effectively being repealed.

Update of September 22, 2008: How did Citigroup slip the bit? Now they're listed as a possible bidder for WaMu...

Update of September 15, 2008: Citigroup said last week that it expects a $450 million quarter-to-date pretax impact on revenue from trading losses and write-downs of Fannie Mae and Freddie Mac securities...

Update of September 8, 2008: Merrill under John Thain has reached down into Citigroup's mortgage operation for James De Mare to run its mortgage trading operations. As reported, De Mare has been with Citigroup for 11 years. He most recently was the firm's global head of mortgage trading, overseeing the trading of all securitized products in the firm's fixed-income currencies and commodities group. Great track record...

Update of September 1, 2008: Citigroup, predatory lending and whistleblowers -- saga continues. Citi last week agreed to pay a $3.5 million penalty for sweeping more than $14 million from customers' credit card accounts into the bank's own funds. Citigroup "knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps," the California Attorney General said in a press release. "When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice." Sounds like CitiFinancial.... The whistleblower was subsequently fired and filed a sealed wrongful dismissal law suit. Citi did not cooperate with the Attorney General's investigation...

How to explain Citigroup changing Bob Rubin's title to Senior Counselor? Here's our guess -- as the company has gone downhill, the finger has focused on Rubin. He doesn't like it -- just as he denied having any role in Citigroup's predatory lending, saying it wasn't under his "aegis" -- and so he changes his title. But under whose aegis is it?

Update of August 25, 2008: In Iowa, the home mortgage division of Citigroup is closing its operations in Des Moines, eliminating 190 positions, it emerged on August 21. CitiMortgage plans to close the site by the end of November. Of these, 146 workers will only be offered counseling, outplacement services and severance "based on position, length of service and other qualifying considerations," spokesman Mark Rodgers said. CitiMortgage laid off 185 Des Moines employees in March and another 100 in January. The company said it was reorganizing the division and working to reduce expenses by $200 million. Citigroup bought Principal Financial Group's home mortgage operations in July 2004, which then had 800 employees. Citi in Iowa employs about 650 workers throughout the state in its credit card operations and about 120 at CitiFinancial loan operations.

Update of August 18, 2008: "If the SEC decides that Citigroup should pay $600 million in connection with Citigroup's representations regarding auction-rate securities, Citigroup may be allowed to deduct this $600 million payment from its taxable income," Sen Charles Grassley has written to the SEC. "To prevent Citigroup from receiving this potential tax windfall at the expense of American taxpayers, the SEC should consider 'grossing-up' the payment by Citigroup to an amount of $923 million." The grossed-up amount would take into account that Citigroup would save $323 million in taxes if it deducted the full payment, based on a 35% tax rate.

Update of August 11, 2008: Per WSJ, "the SEC didn’t want to impose an upfront fine against Citi, say people familiar with the matter, while the states pushed for -- and eventually got -- a $100 million fine. Also, as part of the deal, the SEC wants Citi to use its 'best efforts' to help help institutional investors sell roughly $12 billion of auction-rate securities it sold to retirement plans and institutional investors by the end of 2009, or else face possible sanctions from the commission. (In other words, this is the SEC’s version of a deferred-prosecution agreement.)" Another sleazy deal by Citigroup...

Update of August 4, 2008: Back to the future -- now it looks like Citigroup will be sued for fraud in the marketing and sales of auction-rate securities and for destroying evidence...

Talk about a conflict of interest, and regulatory capture -- last week, the regulators and four big banks issued coordinated press releases. "Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, 'We look forward to being leading issuers as the U.S. covered bond market develops.'" And those they issued the statement with and for are supposed to objectively oversee them...

Update of July 28, 2008: As Pandit (who some now call Pandit the Bandit) through his CFO denies any plans to break up Citigroup, this from the WSJ - "the former manager of a Citigroup Inc. hedge fund that collapsed this year has filed a complaint accusing company executives of causing the fund's demise, according to people familiar with the matter. John Pickett, who ran CSO Partners, a fund specializing in corporate debt, from its 1999 launch until he resigned in December, filed a sealed complaint last month in London's Employment Tribunal. That court handles claims against employers. The dispute, which seeks unspecified damages from Citi for allegedly wrongfully forcing out Mr. Pickett, centers on the hedge-fund manager's bid last summer for a big package of loans. Mr. Pickett, who was based in London, tried to back out, saying that the loan terms had changed, making them less attractive. In the complaint, Mr. Pickett claims top Citigroup executives caved in to the demands of investment banks in the loan deal, ignoring the financial interests of CSO's investors, according to people familiar with the matter. CSO eventually went ahead with the purchase, even though the loans were trading below their face value. Mr. Pickett claims the move saddled CSO with billions of dollars in troubled loans, undermining the hedge fund."

Update of July 21, 2008: From the earnings: " At Citigroup, about 8.5% of its subprime mortgage borrowers, which make up about 16% of the bank's total mortgage portfolio, have fallen at least 90 days behind on their loan payments, and therefore are considered at high risk of defaulting."

Slinking out of Slovakia, " In Slovakia Citibank of the US made several redundancies after its consumer finance division CitiFinancial was liquidated. At the beginning of 2008 the bank said that it plans to cut 55 jobs in Slovakia out of almost 230 jobs. In the near future Citibank Slovakia will operate as a branch of Ireland-based Citibank Europe."

Update of July 14, 2008: Citigroup now says it will sell its German retail banking operation and some of its affiliates to France's Credit Mutuel, in a $7.7 billion deal. In a statement released Friday, Citigroup said the deal is expected to close in the fourth quarter provided regulatory approvals are granted. We'll see.

More intra-corporate revolving doors: Chuck Prince, whose subprime snafus at Citigroup led to his unceremonious departure, has resurfaced on the board of Xerox, whose CEO Anne Mulcahy is on Citigroup's board. Shouldn't she be charged with knowing what Chuck Prince did?

Update of July 7, 2008: Pandit's pitch about a great turn-around just around the corner is falling on deaf ears. Meanwhile, Threat Level quotes the FBI that Citi's servers were hacked, leading to mass withdrawals from ATMs, the reissuance of cards and, to be sure, some truly sleepless nights from the Citi that never sleeps (except when it comes to consumer privacy)... A New Jersey appeals court last week shot down Citi's request to appeal a lower court's ruling allowing Parmalat SpA to submit evidence regarding looting at the Italian dairy company as part of its $2.2 billion lawsuit against the U.S. bank. Jose L. Fuentes, a judge of the Appellate Division of the Superior Court in New Jersey, denied the bank's motion for an emergency appeal: "Having considered the submissions of the parties, motion for leave to appeal is denied." The lawsuit claims Citigroup aided and abetted a breach of fiduciary duties by corrupt Parmalat insiders who stole from the company - by ignoring the red flags raised by the activity of those insiders - and helped conceal the dairy company's off-balance-sheet debt....

Update of June 30, 2008: As desperate Citigroup looks to sell its German operations, probably to Deutsche Bank, its unions have laid down conditions that "management also emphasizes the need of employees in the talks with the bidders," that working conditions shouldn't deteriorate and the current locations be kept. Citibank's German retail operations, Citibank Privatkunden AG & Co. KGaA, employs around 6,500 people in Germany, at Duesseldorf headquarters and a call center in Duisburg. Can you say fire sale? As noted, Citi's stock is at a 10 year low; it has cut its dividend and been forced to raise, so far, $42 billion...

Update of June 23, 2008: Citigroup has said it's buying a brokerage firm Intra S.A. Corretora de Cambio e Valores in Brazil which has about $745 million in client assets --but would not disclose how much it is paying for the firm. Ah, transparency.... On the spin front, Leah Johnson jumped ship earlier this month after about eight years of spinning, replaced by Kate James, who was Standard Chartered Bank's head of public affairs and strategy for the Americas. James will report to Lisa Caputo, Citigroup's chief marketing officer, whom the company has now put in charge of both marketing and communications operations.

Update of June 16, 2008: This week, Inner City Press / Fair Finance Watch filed comments against the Federal Reserve's secret process with banks, in essence a rule-making excluding the public even those the topic, credit derivatives, has come up because of the subprime lending crisis. The financial institutions invited -- and now challenged -- included Citigroup. The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engages in rule-making, it must provide notice to the public, and allow and weigh public comments. Press accounts make clear that the financial instruments and regulatory issues discussed behind closed doors at the FRBNY on June 9 are related to issues of public interest, which in fact are disproportionately impacting low- and moderate- income people and communities of color -- subprime and predatory mortgages. Watch this site.

Update of June 9, 2008: Profiles in spin, in Ad Age, "Lisa Caputo... served as press secretary to Hillary Clinton during Bill Clinton's first term as president. 'Hillary Clinton taught me about grit,' Ms. Caputo says. 'She taught me about work ethic and grace under fire.' Last year, Ms. Caputo tapped those virtues, among others, in leading the strategy to unify Citigroup 's numerous brands into one master brand: Citi. Citigroup previously used Citi as a prefix in many of the company's businesses-such as Citibank, CitiFinancial, CitiMortgage and Citi Smith Barney-but Citi now refers to the company overall. Leveraging the logo's red arc as a symbol of Citi 's capacity to turn financial dreams into realities, 'we've positioned Citi as a partner in helping you achieve financial success in whatever way you define it,' says Ms. Caputo."

Yeah, getting ripped off by CitiFinancial is how many people define success... Let's remember that Citigroup is the only company to twice settled charges of predatory lending with federal authorities...

Update of June 2, 2008: More on rats leaving a sinking ship. After much fanfare in putting him in charge of Citi's mortgages, Bill Beckmann, the president of CitiMortgage, is now leaving Citi at the end of this month "to spend more time with his family." In the memo, Citi's Steve Freiberg says he'll work with Mr. Beckmann, meanwhile, "on a new leadership structure." New leadership is certainly needed, all the way to the top...

Citigroup has been wildly understating its borrowing costs for LIBOR calculations, in order to hide what those in the know think of the company and its prospects...

Update of May 26, 2008: In the UK, after Citigroup infuriated customers by sending out warnings to customers that it would end their agreements in 35 days because they had a "higher than acceptable risk profile," Citi hit another new low, firing employees by conference call. Staff were told to listen in while the business's UK divisional head John Wiggins told them they were fired. Citi under Vikram Pandit: very classy...

Update of May 19, 2008: Broadcasting Citigroup's firm commitment to global predatory lending, the CEO of Citi India Sanjay Nayar said Citi has no plans of exiting its consumer finance business in India. "We have a large portfolio in CitiFinancial which offers finance to low and middle-income consumers. We are not exiting the business but there will be some repositioning, re-segmentation of some consumer base," said Nayar, adding Citigroup had recently infused capital of $250 million into its Indian operations for 2008.

I, too found your website from the Google search, but only after my situation and grown extremely bad. I had a car financed with Arcadia Financial, which was bought out by Citi. I thought things were ok, I am a single mom and have had my problems financially, but always came through. Last year, I had a $530 a month decrease in monthly income. Since my car payments were $518, I asked for help after struggling for several months. I was told, they did not refinance. I would receive letters in the mail stating they would work with you if you had a loss of income. I again phoned and was told I could not do that. I bought this car at the end of 2003 and it was financed for 5 years. At this time, my balance is 12,297. Can you believe this? Furthermore...when I phoned and asked for the payoff on the vehicle, I was told it was $13,320. I told them I was paying the vehicle off and should not have to pay for the remaining time, which God only knows how long that is. Forever it seems. They told me they would receive all the interest and also that I had to pay interest for each day I was late on the payment, even though I had already paid late charges. I informed this lady that this was insane and they were screwing people. She hung up on me. I have been constantly berated, talked to like I was nothing and they act as though I am scum of the earth. I have explained the loss of income and that I was having trouble making the payments as they were. All they could say is, why are you late now? I have spoken with person after person at Citi about this situation and I'm at the end of my rope. If I had another vehicle, they could have this one, because I could buy a NEW car for what they are charging me. Thank you for your insightful website.

Update of May 5, 2008: in a sign of leaving a sinking ship, former Citi-banker Jeff Jaffe was resurfaced as a fellow at Chicago's Center for Financial Services Innovation, which previously nabbed Ellen Seidman from the OTS. Fine fellow that he is, we are hoping for some whistle-blowing... Speaking of Citigroup, from the Washington Post of May 2 we have the story of the owner of the Shark Club of Bethesda, John A. Tsiaoushis, in league with a gaggle of predatory lenders including CitiFinancial. For a house on Pennycress Lane, in January 2005, while Tsiaoushis owed more than $588,000 on the mortgage, he sold the house without repaying it. Court records show he created documents purportedly from the mortgage company, opened a post office box in Beltsville and had the settlement company send checks totaling $586,000 to the "mortgage company's" post office box, which Tsiaoushis then deposited. Using friends and associates, Tsiaoushis helped refinance the house for subsequent buyers. In each case, checks settling the transactions were sent to post office boxes opened by Tsiaoushis, court records show, after he presented phony documents indicating that all liens had been resolved. Court records show that CitiFinancial of Falls Church paid more than $670,000 in a refinancing scam; Accredited Home Lenders of San Diego paid $891,000 to "buy" the house; and Wells Fargo in Alexandria lent $585,000 in a refinancing scheme. First Franklin Financial of San Jose, which made the original, legitimate mortgage on the house, is owed $588,000, court records show."

When sleazy lender First Franklin is the "legitimate" lender in a story, and CitiFinancial and Wells Fargo come in later without any due diligence, you get a picture of the corporate role in the current crisis....

Update of April 28, 2008: From Fortune: "Citi 's board (whose members include Richard Parsons, chairman of Time Warner, parent of Fortune's publisher) has often been accused of being, at best, somnolent. And at this critical juncture in Citi 's history, with the executive suite halved, the board of which Weill was still chairman chose not to name another chief operating officer. As a moment of dereliction, that was a classic." Yep... And this from the ghost-writer of Warren Buffet's annual reports....

From the Fed's Scott Alvarez' April 24 testimony -- "Citigroup recently received a capital infusion from the Kuwait Investment Authority (KIA), the Abu Dhabi Investment Authority (ADIA), and the Government of Singapore Investment Corporation (GIC), one of Singapore's two sovereign investment funds. None of these funds acquired more than 5 percent of Citigroup's total equity... These are all passive investments that have not triggered formal review under U.S. banking law." And is that wise?

Update of April 21, 2008: Citigroup has recently sold - and in some markets closed - retail bank branches "but also said it would expand CitiFinancial, its consumer lending group," the American Banker of April 18 reported, without noting that CitiFinancial is subprime...

Update of April 14, 2008: Institutional Shareholder Services -- hardly a consumer activist group -- urges Citigroup shareholders to vote off the Citi board Alain Belda, CEO of of Alcoa, as well as former Chevron CEO Kenneth Derr, Xerox CEO Anne Mulcahy and Time Warner Inc. Chairman Richard D. Parsons. ISS said it believes Citigroup's compensation committee, which is chaired by Parsons and includes Belda and Derr, "has lacked strong stewardship of compensation practices.'' Yeah, you might say that...

Update of April 7, 2008: In the first study of the just-released 2007 mortgage lending data, Inner City Press / Fair Finance Watch finds that Citigroup in 2007 confined African Americans to higher-cost loans above this rate spread 2.33 times more frequently than whites. Fully 109,511 of Citigroup's 448,542 mortgages in 2007, or 24.41%, were high cost loans over the rate spread.

In its headquarters Metropolitan Statistical Area of New York City, Citigroup was even more disparate, confining African Americans to higher-cost loans above the rate spread 2.61 times more frequently than whites. Citigroup's disparity to Latinos was 1.90.

Citigroup was most disparate in home purchase loans, confining African Americans to higher-cost home purchase loans above the rate spread 3.41 times more frequently than whites. Citigroup's disparity to Latinos was 1.76. Citigroup has acquired Argent, an affiliate of Ameriquest which, like Citigroup, has settled governmental charges of predatory lending.

Update of March 31, 2008: From last week's NYT, consider "Randy and Dawn McLain of Phoenix. The couple decided to sell their home after falling behind on their first mortgage from Chase and a home equity line of credit from CitiFinancial last year, after Randy McLain retired because of a back injury. The couple owed $370,000 in total. After three months, the couple found a buyer willing to pay about $300,000 for their home -- a figure representing an 18 percent decline in the value of their home since January 2007, when they took out their home equity credit line. CitiFinancial, which was owed $95,500, rejected the offer because it would have paid off the first mortgage in full but would have left it with a mere $1,000, after fees and closing costs, on the credit line. The real estate agents who worked on the sale say that deal is still better than the one the lender would get if the home was foreclosed on and sold at an auction in a few months. Mark Rodgers, a spokesman for CitiFinancial, declined to comment on the McLains' situation, citing privacy considerations.

Yeah, right. This is the company that lost millions of consumers' Social Security numbers...

Update of March 24, 2008: The Ohio Civil Rights Commission has ruled there is evidence that Argent Mortgage, which Citigroup has bought and now owns, discriminated against African Americans by targeting them with predatory home loans. The sample case is that of Elizabeth Redrick, a 77-year-old Cleveland resident who was promised by a mortgage broker that her Argent refinance loan would result in lower payments and much-needed cash to pay bills. Redrick's monthly payments on the Argent loan were higher than originally promised and that the new mortgage did not pay off a personal-finance loan as she had hoped. Redrick received only $651 in cash from her refinanced mortgage. Loan documents show that the broker submitted two applications on Redrick's behalf. One application noted that she was white and had a monthly income of $2,630. The other application correctly said that she is black and earns $1,871 a month. The broker who submitted the mortgage to Argent made more than $5,000 from the deal.

"I came today to testify about my husband's credit card. It was CitiFinancial. He had been a customer for at least 10 years, no late payments, no over the limit. Twice last year, we were over the -- not over the limit, but we made the payment late, and only by a matter of one -- it was like an hour past 5 o'clock, so it was considered the next day. And the other one, we were on vacation. By the time we got back, it was maybe four days late. My interest went from 12.99 percent to 31.40 percent. So when I got the bill in the mail, I was happy to see that I had to pay an extra $400 to $500 every month on my payment. And the interest that was being paid on the card was -- we used to pay maybe $205. It was over $600 in interest.

We tried to work with the card company. They said they'd refer it in six months if we had a good standing. I just felt that's very unfair. Nowadays, who can afford to pay an extra $400 or $500? I understand we were late, don't dispute that. I just wish they'd be more fair in the rates that they're choosing, whether -- even though we were a customer for so many years, there's other people out there that just have situations nowadays. I mean, it's hard out there. Just listen to people, taking consideration before you double and triple their payment. It's just crazy to me...I went on the Web site, just jotted this story down. And, you know, my husband always says things just don't get done in government. That's why he's not here; he has a bad attitude.

But, I mean, something's happening now. They contacted me. Things are being done. And from the hearing today, I really don't believe that -- their argument is, "Oh, it's only a small percentage of people that this happens to." So I urge everyone out there with this kind of story to just send it in..."

Update of March 10, 2008: The ACJ notes that in September, Citigroup bought the assets of the mortgage servicing company owned by Ameriquest's parent, ACC Capital Holdings. It also bought the assets of Argent Mortgage. That deal gave Citigroup the servicing rights for the Andronicas' mortgage and $45 billion in other loans... A Citigroup spokeswoman said Friday that the lender was awaiting information from the Andronicas to "determine their eligibility for a modification." Kelly and David Andronica think Citigroup should make things right, especially since the problems with Ameriquest loans were well known when Citigroup decided to buy the Ameriquest servicing company.

Update of March 3, 2008: Now a stock analyst chimes in that, "I do not believe that Mr. Pandit has a strong commitment to this business in the US. He is more oriented to overseas expansion." The same article quotes "Edward B. Kramer, executive vice president for regulatory programs at PCi Corp. in Waltham and a former banking regulator in New York state... whose firm does consulting work for Citi, that 'Sometimes the branch itself doesn't have to be in a low- or moderate-income tract to serve people who live in adjacent and surrounding low- and moderate-income areas.'" But then why don't the regulators act on branch closings in middle income tracts which impact customers in "adjacent and surrounding low- and moderate-income areas"?

Now Citigroup must file reports on its mortgage delinquencies and foreclosures with the Office of the Comptroller of the Currency. Information from October 2007 through February is due by March 31. Better late than never.

Update of February 25, 2008: So Citigroup's Global Transaction Services unit was handed a 10-year contract from the U.S. Department of Defense to provide 1.2 million travel cards to the Army, Navy, Marine Corps, Air Force and about 20 other independent agencies. The new travel cards will activate on Nov. 30-- but how was Citigroup selected? Did the DoD take into account not only Citi's predatory lending, but its new ownership structure? What safeguards are in place? Let's see...

Update of February 18, 2008: At 600 Turner St., Auburn, Maine: CitiFinancial signed a lease for 1,700 square feet at new strip mall. Let the predatory lending begin!

Update of February 11, 2008: While reportedly looking to sell off its subprime in the UK, CitiFinancial is still looking to put down more tentacles in the U.S. and India. In the U.S., the business of Ameriquest's Argent is being continues, and more storefronts are to open. Meanwhile CitiFinancial has its arbitration clause stuck down in a case in North Carolina, where the court found that CitiFi "had initiated 3,700 actions in civil court -- 2,000 collections and 1,700 foreclosures. In that same span, there had been neither a civil action nor an arbitration launched by a borrower," because of obstacles in the arbitration clause, a contract of adhesion. The case is Tillman v. Commercial Credit Loans, Inc. (North Carolina Lawyers Weekly No. 08-06-0106) -- note that Commercial Credit was controlled by Travelers before it bought Citicorp or Associates First Capital Corp...

Update of February 4, 2008: Citigroup last week opened the 2500th storefront of its subprime unit CitiFinancial, which has twice settled governmental charges of predatory lending. It is Citi's growth unit, offering higher priced credit in strip malls nationwide. Few reforms have been implemented on real estate-backed loans, fewer still on Citi's personal loan portfolio. Meanwhile CitiFinancial's CEO Mary McDowell told the American Banker last week, in an article referencing obliquely ICP and this critique, "'We spend a lot of time with community groups to understand what their issues with us were... There is a reason you don't hear about us' from those groups, she said." But time is not all the Citi's spent...

Update of January 28, 2008: In India, Citibank has 39 branches across 27 cities. Meanwhile the subprime Citifinancial has 450 branches pitching unsecured lending and mortgages. CEO Nayar claims the unit has pioneered unsecured lending in India, luring in 2.5 million customers.

Update of January 21, 2008: Chuck Prince, whose predatory frenzy resulted in firing with a $31 million golden parachute, has received an invitation to testify from the House Oversight and Government Reform Committee: "According to press reports, you collected tens of millions of dollars in payments and other compensation upon your departure from Citigroup... You should plan to address how it aligns with the interests of Citigroup's shareholders and whether this level of compensation is justified in light of your company's recent performance and its role in the national mortgage crisis."

Update of January 14, 2008: There's a hole in Citigroup's January 8 memo announcing a consolidated "end-to-end U.S. residential mortgage business" including origination, servicing, and securitization operations, with Bill Beckmann reporting to Carl Levinson and Jamie Forese -- CitiFinancial, Citibank, and Smith Barney would continue to originate mortgages separately. CitiFinancial is a subprime unit, one with most risk, for some reason not included. Meanwhile, the consolidated unit will, according to Citi's Jeff Perlowitz, "be a nonconforming shop." Great...

Update of January 7, 2008: A November 5 lawsuit, which is seeking class-action status, against Citigroup asserts that Citi issued false statements in its November 4 announcement that it would write off $8 billion to $11 billion in the fourth quarter for assets linked to subprime mortgages, losses that spurred the resignation of Chuck Prince. A participant in Citi's retirement plan, of which 32 percent plan is comprised of Citi shares, alleges that the stock is “an imprudent investment” for the program and that risky mismanagement caused the plan to lose well over $1.3 billion in retirement savings. Another shareholder lawsuit followed on November 7, stating Citi officials “recklessly spent billions of dollars of subprime loans leading to losses.” Yep. This is called the chickens coming home to roost...

Update of December 31, 2007: Be aware -- it is CitiFinancial's position that it can access credit reports even of a person who has not applied to it for credit. In Enoch v. Dahle/Meyer Imports, L.L.C., et al., No. 2:05-CV-409 TC (D. Utah 11/16/07, a consumer tried to hold her car dealer, two lenders, and a credit reporting agency liable after she was denied credit. Rosaline Enoch went to Dahle Mazda to buy a vehicle. Enoch chose a car and signed a note for a down payment. Enoch also signed a contract of sale, which stated that the dealership agreed to seek financing for the car loan. Allegedly, the dealership led Enoch to believe that it already had arranged financing. CitiFinancial Auto Corp. denied Enoch credit, and the dealership was unable to arrange other financing. Dahle demanded that Enoch pay for the car or agree to rescind the deal, in which case Dahle would return the money Enoch had paid. Enoch surrendered the car and subsequently sued... The court concluded that when Enoch signed the contract with Dahle, she authorized the dealership to seek credit on her behalf. "Consequently - even though Ms. Enoch did not request credit directly from CitiFinancial - there is no question that Ms. Enoch participated in the request for credit," the court wrote. Be afraid - be very afraid...

Update of December 24, 2007: Citi's real advocacy -- The American Financial Services Association, one of the hardest-nosed subprime trade groups, said Thursday that it has named Elvis Goddard of Citifinancial as the chairman of the advisory board of its mortgage lending division. Goddard oversees more than 550 high-cost CitiFinancial branches across eight states in the South. He began his subprime career there at Aristar Inc., later bought by Washington Mutual Finance Group, then by Citi...

Update of December 17, 2007: With Citigroup giving its CEO and chairman jobs to investment banker, now pundits speculate that the branch bank may be sold, saying Citi's "share in New York is way down from five years ago, when it had nearly 21% market share and 375 branches, because it moved a large amount of deposits from New York City to Nevada." Is that why Citi has felt comfortable doing less and less under the Community Reinvestment Act?

Update of December 10, 2007: Testifying last week in England, Citigroup's CEO for markets and banking for Europe, Middle East and Africa William Mills said Citi manages its seven SIVs at "arms' length" and on commercial terms. But when queried on the bank's responsibility to the SIVs, Mill said: "From a reputational point of view, if we don't step in and support these vehicles, will that somehow hurt our reputation in the market? What the market is trying to establish is, if in fact the liquidity crisis continues, will Citigroup provide the liquidity to fund these vehicles so that they won't have to go into an asset disposal mode, especially in this environment, where people think that would add more fuel to the fire?" Citi apparently cares about its reputation to big-ticket investors -- but less so, when it twice settled predatory lending charges, with the FTC and Federal Reserve...

Update of December 3, 2007: Assets in structured investment vehicles sponsored by Citigroup Inc. fell 20% to $66 billion as of Nov. 30 from $83 billion at the end of September, spokesman Jon Diat said. "We continue to focus on liquidity and reducing leverage," Diat said in an e-mailed statement. Citigroup runs seven SIVs...

Update of November 26, 2007: Goldman Sachs recommended last week that investors sell their stock in Citigroup, saying that Citi faces more write-downs of mortgage-related exposures and may have to cut its dividend to shore up its eroded capital ratios. Citigroup shares had fallen 39% so far this year, after the bank allowed its exposure to mortgage-linked securities to balloon, producing big trading losses and ultimately forcing the resignation of CEO Chuck Prince. According to Goldman's analysts, Citigroup's earnings could be hurt into 2009 by charges related to those exposures and a reluctance to take risks, especially while the bank continues to look for a permanent CEO. "The lack of leadership at this point in Citi's storied history could not have come at a worse time," Goldman wrote.
You call what came before "leadership"?

Update of November 18, 2007: Let's recap: In the third quarter, Citigroup recorded mortgage-related write-downs of $1.8 billion, and now says that it expects to take write-downs of $8 billion to $11 billion in the fourth quarter. Earlier this month, Citigroup disclosed for the first time that it had $43 billion in CDO exposure. This accounted for the bulk of $55 billion in exposure by Citi to subprime-backed securities. Citigroup appears to have written down its CDO holdings by about 20%, compared to write-downs of 30% by Merrill Lynch and Morgan Stanley, Sanford C. Bernstein analysis has it. WSJ: "Investors have fretted about Citigroup's exposure to structured investment vehicles that have recently run into trouble. Analysts say it is unlikely the bank could be forced to take full responsibility for losses within those vehicles." Yeah -- Citi rarely takes responsibility, especially when it comes it predatory lending...

Update of November 12, 2007: It happened. "Given the size of the recent losses in our mortgage-backed securities business, the only honorable course for me to take as chief executive officer is to step down," Chuck Prince said-in-a-statement. Honorable or now, he walks away with an estimated $99 million in vested stock holdings and a pension, according to an analysis by New York-based compensation consultant James Reda. Prince had already pocketed $53.1 million in salary and bonuses over the last four years, Reda said. And of the new chairman? "Since joining Citigroup, Mr. Rubin's performance has vacillated between disappointing to terrible," Richard Bove, an analyst at Punk Ziegel & Co., wrote in a note to investors. Punks...

Update of November 5, 2007: Chuck Prince, who defended Sandy Weill's purchase of Associates First Capital Corporation and lastly engineered Citigroup's takeover of Ameriquest's Argent, is slated to resign, subprime fallout...

From the WSJ last week: "On Aug. 8, Mr. Rubin called Mr. Bernanke. The Citigroup executive said he suspected a lot of people were telling Mr. Bernanke he should have cut rates. Yet Mr. Rubin said he thought the Fed had done the right thing, say people familiar with the call." Questions: is it appropriate for the head of the largest bank's office of the chairman to just dial up the main regulator and shoot the breeze? When that largest bank has massive bets on predatory subprime? What else was said?

Update of October 29, 2007: Citigroup has reported $6.5 billion in credit-related losses, writedowns and extra costs, on its $2.4 trillion in assets... Meanwhile, it's reported that Hungary's Office of Economic Competition (GVH) has fined Citigroup HUF 12 million, saying it misled its customers in advertisements regarding the interest-free usage of credit cards. Citigroup failed to note in its ads that the interest- free usage was only valid when the cards were used for purchases but not for cash withdrawals. The ads also failed to inform customers that the entire debt had to be paid by the given deadline for interest-free usage...

Update of October 22, 2007: What is the purpose of the Master Liquidity Enhancement Conduit being set up by Citigroup, Bank of America, JPM Chase and a few other banks? Not to help consumers, that's for sure. Rather, it's a way to cook their own books, and avoid reporting losses. That non-banks like PIMCO are not participating, despite the U.S. Treasury Department's Paulson's closed-door claims to the contrary to Italian central banker Mario Draghi, is telling. This is all about banks helping themselves. And taking advantage of each other: Inner City Press has learned that JPM Chase's Jaime Dimon has called the conduit an opportunity to make money from his old nemesis Citigroup. "Make it worthwhile," Dimon told Paulson. "Gouge them," Dimon in essence ordered his staff. Just as these banks said of consumers...

Update of October 15, 2007: Citigroup, using the Treasury Department to arrange a bailout, "has nearly $100 billion in seven affiliated structured investment vehicles, or SIVs. Globally, SIVs had $400 billion in assets as of Aug. 28, according to Moody's." That is to say, Citigroup has fully 25% of this market...

Update of October 8, 2007: October's Mortgage Servicing News reports that "Citigroup has acquired the $45 billion subprime servicing portfolio of Ameriquest Mortgage, a transaction that will help it challenge Countrywide Financial Corp. for the No. 1 spot among B&C servicers... Citigroup also purchased Argent Mortgage, a nonprime wholesale lender that is a sister company to Ameriquest... By purchasing the Ameriquest receivables, Citigroup will grow its subprime servicing portfolio to about $110 billion. At the end of June, CFC serviced $125.6 billion in subprime, ranking first in that niche... 'Exercising our option to acquire the assets from ACH's wholesale origination and servicing business allows Citi to secure valuable and scalable platforms in a market undergoing significant change,' said Jeffrey Perlowitz, head of global securitized markets for Citi's fixed income, currencies and commodities division, where the assets will reside."

But why would Argent's origination capacity "reside" in Citigroup's investment bank? We'll have more on this. For now, south of the border we note that in the 12 months to June 2007, Citigroup in Mexico opened 207 retail bank and consumer finance / Citifinancial branches, spreading predatory lending without standards...

Update of October 1, 2007: The Detroit News of Sept. 28 lists Citigroup as one of top three lenders for cosmetic surgery -- Citi Health Card: www.citibank.com/us/cards/cardserv/healthcrd/ -- How do you think they foreclose? Someone should ask Chuck Prince, Robert Rubin et al. -- is this the democratization of credit? Or is it predatory lending?

Or how about this, from USAT -- Citigroup is issuing 3.5 million credit cards to department store customers who didn't request them... This month, Citi is sending general-purpose MasterCards to Macy's customers with credit card accounts that have been inactive for two to four years. Citi bought those credit card accounts last year....

And this just as the industry is said to be reconsidering its predatory lending practices, the largest, Citigroup, sends out unsolicited credit cards...

Update of September 24, 2007: A Citigroup employee has leaked thousands of consumers' Social Security numbers and mortgage information over Lime Wire... Meanwhile, Geovic Mining Corp. announced that its 60%-owned subsidiary, Geovic Cameroon, PLC, has named Citigroup as its exclusive financial advisor for the development and construction of its Nkamouna cobalt-nickel project in Cameroon. Ah, resource exploitation...

Please protect my anonymity, as I will be subjected to retaliation if it becomes known that I have communicated with you. Thank you in advance.

Last year, Citi convinced Federal and state regulators to allow it to merge its non-prime lending unit, CitiFinancial Mortgage, into CitiMortgage, Inc., its ostensibly prime lending unit. The reasons given for the merger were the usual: gaining economies of scale and presenting a single face to the marketplace. Along with the approvals for that merger, Citi received relief from many of the restrictions designed to prevent predatory lending, which were conditions of its acquisition of Associates First Capital in 2000 and subsequent settlements with regulators. Due to the tight controls it operated under, CitiFinancial Mortgage was only participating in an estimated 40% of the sub-prime mortgage market - for example, "stated income loans" were only a minuscule percentage of its volume, while other lenders were seeing 60% and more of their volume in "stated income loans". "Stated income loans", especially to people living on fixed income, have a higher propensity to be predatory, since the borrower's ability to repay is not determined.

CitiFinancial Mortgage also examined each loan it originated, or purchased in the secondary market, for real benefits to the borrower, going well beyond the "tangible benefits tests" touted to regulators and consumer protection activists by not only Citi but by many other lenders, as well. These "tangible benefits tests in fact give credit for largely illusory benefits. Carefully scrutinizing applications for real benefits is a practice which Citi's prime lending unit does not follow. Regardless of the reasons for the merger, by burying its sub-prime unit inside its prime unit, Citi has opened up the business to originate and purchase loans that formerly would not have met CitiFinancial Mortgage's standards for benefit to the borrower, or restrictions on predatory lending, and has made it more difficult for regulators and consumer protection activists to see what is happening with sub-prime lending at Citi.

Yesterday, hot on the heels of the announcement that Citi would acquire what is left of former number one sub-prime lender Ameriquest, Citi executives Al Tappe, Fred Bader, and Daniel Wu announced the that mortgage underwriters will no longer report to the Credit Risk Management department, but instead report to the Operations department. This "realignment" was billed as a way to become more efficient and more customer friendly. Such a move is puzzling during a time when mortgage default rates are rising across the entire industry, and, industry-wide, foreclosures are increasing at alarming rates. However, sources within Citi revealed a possible explanation: despite the 2006 merger of CitiFinancial Mortgage into CitiMortgage, Credit Risk Management has continued to resist the pressure from Citi executive management to relax controls on customer qualifications and predatory lending. By moving underwriters to Operations, Credit Risk Management will no longer be performing: daily supervision of underwriters, conducting underwriter performance evaluations, determining underwriter merit increases, and will no longer be in a position to influence their day-to-day decisions. So resistance will be reduced or eliminated to the pressure to approve loans without adequate assurance that the loan benefits the customer and the customer has the ability to repay.

It is important to note that the CitiFinancial branch network of consumer finance offices, which also makes mortgage loans, operates completely independent of the centralized CitiMortgage business, and isn't affected by either the Ameriquest acquisition or this realignment of underwriting within CitiMortgage.

Developing... Meanwhile, Citigroup's Mexican banking arm Banamex and a group of Mexican investors said Wednesday they plan to launch a $150.7 million counter offer for airline Consorcio Aeromexico SA (AMEXICO.MX), which is currently the target of a takeover bid by two local businessmen. Banamex said the group has requested authorization from the National Banking and Securities Commission and the Federal Competition Commission.

What about the U.S. Federal Reserve, putatively Citigroup's comprehensive supervisor? Citigroup can own airlines outside of the U.S.?

Update of September 9, 2007: Another Citigroup connection to the depths of subprime -- its "mortgage warehouse lending unit has stopped accepting new customers, according to a person familiar with the matter. The unit, First Collateral Services Inc., offers mortgage companies credit lines of up to $250 million, which allow the firms to fund their purchases and refinancings of mortgages. Amid this year's mortgage meltdown, some warehouse lenders have pulled credit lines from existing customers, essentially pushing them out of business. As of March 31, First Collateral was the nation's No. 5 warehouse lender, with $4 billion in outstanding commitments." First Collateral, based in Concord, Calif., is continuing to finance its existing customers" -- and why haven't the identities these Citi-enabled lenders been disclosed?

Update September 3, 2007: With Subprime Hot Air in DC, Cold-Blooded Citigroup Buys Ameriquest, Byline: Matthew R. Lee of Inner City Press

As President George W. Bush and Federal Reserve chairman Ben Bernanke Friday wrung their hands in Washington about the subprime mortgage meltdown, New York-based Citigroup announced it was buying a chunk of admitted predatory lender Ameriquest. Citigroup is a meta-predator, taking advantage of the foreclosure boom to scoop up one of the most abusive lenders at a temporarily reduced price. The head of Citigroup's "global securitized markets" unit, Jeffrey Perlowitz, said the takeover "allows Citigroup to secure valuable and scalable platforms in a market undergoing significant change." Some thought predatory lending was a market being discredited and shrinking. To Citigroup, it's just change that can be scaled up.

The founder of Ameriquest, Roland Arnall, who has made billions from predatory lending, was nominated by President Bush as Ambassador to the Netherlands. While a few U.S. Senators delayed his confirmation until Ameriquest finalized a settlement with state attorneys general, now Arnall will profit again, selling the remainder of the company to Citigroup. The losers in the deal are the borrowers from whom Citigroup will even more ruthlessly squeeze payments on loans that were misleading and abusive from the start, and future borrowers whom Citigroup will target with the ex-Ameriquest "scalable platform."

Citigroup's own existing platform has made it the only lender to have twice settled predatory lending charges with Federal agencies, for $240 million with the Federal Trade Commission, and another $70 million in 2004 with the Federal Reserve. Since then Citigroup's high-cost lending has gotten even more racial disparate.

2006 was the third year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. Citigroup in 2006, in its headquarters Metropolitan Statistical Area of New York City, confined African Americans to higher-cost loans above this rate spread 4.41 times more frequently than whites, according to Fair Finance Watch. Citi's disparity to Latinos was 2.38. Meanwhile Citigroup is now buying a unit of Ameriquest, 91.65% of whose loans in 2006 were subprime.

Citigroup loves subprime, and has no scruples in this field. Its corporate DNA goes back to a Baltimore-based predatory lender called Commercial Credit, which Sandy Weill and Charles "Chuck" Prince took over in the 1980s. After their company, by then called Travelers, acquired Citicorp in 1998, the next big deal was to scale up subprime lending, by taking over Associates First Capital Corporation, which was being sued for fraud all over the country.

Now Citigroup buys Ameriquest, another well-known predatory. Citigroup's subprime regrets, if they exist, include losing out on Household International, which settled predatory lending charges for $486 million, to HSBC in 2002. Now Citigroup is back in the game, and big deal. Borrowers, be afraid, be very afraid. Even the downturn, Citigroup just re-loads for the next hunting season...

At Citigroup's annual shareholders' meeting on April 17, 2007, Chuck Prince stood alone on the stage of Carnegie Hall, as Sandy Weill used to do, and took questions. Inner City Press asked about Citigroup's 2006 lending record -- confining African Americans in New York to higher cost loans 4.4 times more frequently than whites -- and about Citigroup's then just announced proposal for "propping up and taking an option in Argent," an affiliate of Ameriquest.

"Good question," Prince began. Argent "is a company that has restructured itself. This is a company that has settled with regulators." He said it is a situation of "good bank, bad bank" and claimed that Citigroup is only thinking of buying the good part.

But it was Ameriquest that announced reforms, none of which have been implemented at Argent. Prince cut in. "We're not going to buy anything unless it's cleaned up." So in the turbulent five months since, have Ameriquest and Argent really been cleaned up? Or have prices hit bottom, leading Citigroup to pounce? Prince said, "we've had reputation issues in the distant past, we're not going down that road." And now, while other wring their hands to come off as concerned, Citigroup is rushing headlong with Ameriquest further down the road of predatory lending.

Update of August 27, 2007: Citigroup snuck into South Korea in 2004 via KorAm. Now HSBC faces hurdles, which Citi should have faced...

Update of August 20, 2007: From the august (15) Argus Leader in South Dakota:

The court of public opinion already appears polarized on what critics call predatory lending practices - companies charging exorbitant interest rates and penalty fees. "'It's not illegal, but it's very unethical,' said Richard Cook, a former federal government analyst and author who lives in College Park, Md. 'It's legalized loan-sharking. It was one of the specialties of the Mafia. But that's one organized crime doesn't have to do now because it's legalized.' Sioux Falls Mayor Dave Munson, who worked 18 years for Citibank, calls that criticism unfair." So, from Citibank to mayor in the city Citi ran to, to export high rate, which are called "unethical" by an ex-Fed consultant...

From Deal Journal: " No one outside Citigroup knows just how much the meltdown in global credit markets has cost the banking giant, but that hasn’t stopped analysts from guessing. Sanford Bernstein estimates Citi could take a $2 billion to $3 billion hit to its third-quarter earnings from the meltdown in the subprime mortgage market and the steep decline in leveraged-buyout-related loans and bonds. It could post losses of $1.2 billion to $1.5 billion on buyout loans loans and $500 million to $1 billion on subprime mortgages in the period, according to this writeup of the analysis from Bloomberg. No one knows the extent that Citigroup may have hedged its exposure to the risky debt, so the final tally of the damage won’t become clear until Citi reports its results."

Update of August 13, 2007: Citigroup last week announced its acquisition of Waco, Texas-based Big Red -- a soda company. Citi then brought in a new manager from Red Bull. Meanwhile, Citigroup is said to be hunting for SunTrust...

Update of August 6, 2007: Citigroup says it is not considering bailing out of a deal to finance the acquisition of energy provider TXU Corp., despite reports to the contrary. What was that, about Citigroup's environmental standards?

Update of July 30, 2007: Citigroup on July 24 was fined $50 million by the New York Stock Exchange's regulatory arm for using deceptive market-timing practices on behalf of hedge funds. The market-timing was reportedly widespread, involving more than 150 financial consultants in 60 branches in about 250,000 marketing-timing exchanges on behalf of more than 1,100 customers...

Update of July 23, 2007: With all the rah-rah about Citigroup's earnings, its subprime lending was hardly mentioned... Meanwhile, it bought a take in Chile, to expand that very lending...

Update of July 16, 2007: Citigroup, sued last week in the U.S. for racial discrimination in mortgage lending, claims it has industry-leading practices. At a higher level, from Citi's point of view, its CEO says the company wants to list on the Tokyo stock exchange "as soon as possible"...

Update of July 9, 2007: From North Carolina, Citi's live checks: "a 78-year-old resident of Carolina Spring Apartments received a notice in the mail... appeared to be a real check from CitiFinancial Auto Corporation in Irving, Texas, a company that lends money for car loans over the Internet. Rob Julavits, spokesman for CitiFinancial Auto, saw a copy of the check that the Carolina Spring resident received, and said it was a fake. 'It is not a legitimate CitiFinancial Auto check,' he said. 'We are looking into the matter.'" Whether the check was authentic or not does not answer whether CitiFinancial continuing to send live checks to senior citizens is legitimate...

Also this week, an ex-Fed regulator who monetize his expertise and access at Citigroup -- "If it's now 2007 and the control failure occurred in 2005, 2004 ... is there going to be any value to law enforcement, any value to the government in finding things that happened two or three years ago and reporting it now?" The speaker of these words was identified by the American Banker newspaper as "Richard Small... a former top anti-laundering official at Citigroup Inc. and the Federal Reserve Board, where he was a deputy associate director in the division of banking supervision."

Update of July 2, 2007: Shares in Banco de Chile SA jumped on Friday after the company said its parent, Quinenco SA (QUINENCO.SN), had resumed negotiations with Citigroup. Late Thursday, Banco de Chile said that Quinenco, an investment holding company, had "reinitiated conversations with Citigroup to carry out a strategic association of its financial operations in Chile." Predatory lending descends on Santiago...

Update of June 18, 2007: Citigroup will have to go on trial for market rigging related to Parmalat SpA's collapse in 2003...

Update of June 11, 2007: Citigroup complains that in India it can only set up branches in Akola and Nanded in Maharashtra and Kurnool in Andhra Pradesh, and not in the metros or the big cities where it wants to expand its presence much faster. India had decided to block proposals for fresh licenses from American banks since the US has been sitting on applications submitted by State Bank of India, Bank of Baroda and ICICI Bank for many years. Live by the sword, die by the sword... US Trade Representative Susan Schwab promised that she would help the treasury department, the Federal Reserve and the Indian banks sit across the table and discuss the issue. Fed politics... Reportedly, the commerce ministry as well as RBI were against granting any concessions to US banks but it was the finance ministry which suggested that a different strategy could be tried and then leave it to the US to act. So the Fed operates for Citigroup, again...

Date:6/7/2007 4:04:09 PM Eastern Standard Time
Hi Matthew! It's been a very long time!

I am the "Long Time District Manager" who had written to you w/some information on Citifinancial's credit insurance sales practices, sales finance account solicitation practices, Customer Appreciation Days activities, incentive payout information, etc.... I worked for Citifinancial as a Regional Trainer for about three years, as well District Manager for about four years. My total tenure w/them was 14 1/2 years - add in the 5 years that I spent at The Associates, and it was close to 20 years. I ceased communication with you because I would find myself getting sick at the thought of contributing this information only to remind myself of how utterly deplorable this organization truly is, and yet to know that Citi would never realize any repercussions beyond the millions of dollars in fines and penalties that they so easily afford to make the issues go away.

Well today I had to deal w/Citi regarding my Pension. I left the organization in May 2003 after spending 14 years there. Remember, prior to working for Citi, I spent 5 yrs w/The Associates Financial Services. (Yes, what an idiot in professional compromise!) Prior to leaving in 5/03, I exercised what options that I could, and confirmed my pension status. I was informed at that time - verbally and in writing - that my tenure at The Associates was grandfathered into my tenure at Citi. I was given statistics regarding my pension income based on my monthly payments at 55 yrs of age (5/2015), and at 65 years of age. Imagine how relieved I was to find that my 190% commitment to this God Awful organization at least left me with a pension plan worth $932 per month if I retired at 55, or $1660 per month if I retired at 65. It truly made me stomach my existence there with a little less of a vomitacious gag.

Well, last year at this time I ordered the same bit of information in order to share it w/a financial person much more savvy at this business than I. I never got around to sharing that information w/him and in the meanwhile I had the info. So today requested said info again. Guess What? Now Citigroup tells me that I was not fully vested at The Associates nor at Citi, and my pension value is now $204 per month at 55, and $463 at 65! I am beside myself! How can this possibly happen?
Here is the company that tells their employees how important their personal wealth is to them. Remember, Matthew, not only was I a DM for 4 years, I was a Regional Trainer for 3 years. I heard and beleived their stated employee and corporate goals for as long as I was there. (Good ol' K.C. Mead w/all his arrogant evangelical swagger!) You can only imagine how livid I am.

Matthew, I was a very hard working, dedicated, successful employee for that organization for years. I had a very good reputation with them up until my last 3 or 4 years there. I just got sick of how they treated their people and made their outlandish demands through their DMs, and finally started pushing back. At the same time that I was falling out of favor w/them, I was diagnosed w/lupus. After I took a 1 1/2 disability leave from there due to the effects of lupus, I really fell out of favor with them. ( I am sure that I shared this with you once before, and I don't want to sound pathetic by repeating myself, but.....After my return to the job, I had a very chastising visit made to my area by Managing Director, Donna Delude (yes, this is the same manager whose style resulted in a suicide of one of her Distirct Managers in the mid-1990s) and Region Manger, Jan Showalter. During that visit, Delude didn't spare the opportunity to suggest that my LOA may have been bogus by commenting on how "...buffed [my] arms...." were. You know, just hangin' out at the local gym, Donna. Admittedly, I probably could have pushed back with a bit more finesse. But I just didn't. I was immediately taken off of anyone's short list for promos, etc. That was fine, I had resigned myself to how things were there and how I was to blame for continuing to allow and accept their treatment. It was just weeks thereafter that I quit. However, my battles with them obviously will continue - at least for awhile! Off to the AG!

Update of June 4, 2007: Who, you ask, is the second biggest contributors to Dodd for President 2008, as the candidate continues saying that no new laws to counter predatory lending are needed? It's Citigroup..

SAC Capital Advisors $207,300
Citigroup Inc $139,950 -- Citifinancial, settled predatory lending charges....

Just another Citigroup deal, which last week announced it has made a minority investment in the BATS ECN, a fast-growing market center offering trading in U.S. equity securities. "We are pleased to invest in BATS Trading, which complements our in-house electronic execution capabilities as well as our ongoing strategic and financial investments in this space," said James Pak, Head of Market Structure Investments at Citi.

Update of May 28, 2007: A leaked Citigroup memo by Steve Freiberg says that Ray Quinlan has decided to retire as president of retail distribution in the North American division of Citigroup's consumer-banking unit. Peter Knitzer will temporarily take charge of New York-based financial services company's operations in North America. The subprime Citifinancial unit will report directly to Freiberg. Citigroup also named Ed Eger head of international credit cards. He will report to Ajay Banga, Freiberg's fellow co-chairman in the global consumer group. Predators all...

Update of May 21, 2007: From a National Mortgage News report last week, 2006 subprime mortgage volume and status of " CitiFinancial (e) $23,500 Parent stopped reporting B&C vol in 06." How transparent... And how 'bout this? Citigroup has now purchased a 10% stake in RRR, formerly ZAO Centrosol, a railway car leasing company in Russia...

Update of May 14, 2007: Last Tuesday Citigroup made a greenwash announcement in the FT's pink pages. On Wednesday, under the headline "Citi's Green Push Underwhelms Environmentalists," the WSJ walked through the pledge, then quoted one of group's Citigroup in its annual reports and elsewhere characterizes as its partner... From Gazeta in Brazil: "About the possibility of new purchases, Gustavo Marin, the 49-year-old Uruguayan who for seven years has been president of Citi in Brazil, brushed them aside with an 'I don't know' yesterday during an exclusive interview with this publication. 'But our aim is not to be the biggest bank in Brazil, just the best,' he declared. Marin also avoided commenting on the biggest bank merger deal underway, the purchase of the Dutch bank ABN Amro - Citigroup is legally blocked from speaking on the case, since it is an advisor to one of the candidates, the British Barclays."

Update of May 7, 2007: CitiFinancial made the fifth-most subprime loans through the correspondent channel in 2006... Citi's new target, Argent / Ameriquest is up to its old tricks, this time in Washington State. Just as Ameriquest and Argent sued in Texas to block the release to Inner City Press of predatory lending-related document requested under Freedom of Information laws, now Ameriquest and Argent are doing the same out West. And this is the company that Citigroup has propped up and wants to buy...

Update of April 30, 2007: It was reported last week that CitiFinancial's subprime mortgage lending grew 15% from 2005 ($20.5 billion) to 2006 ($23.5 billion). And if they buy Argent...

Citigroup analysts said GE should spin off NBC Universal, GE Money and the real estate division. "GE's size and complexity is working against investor interest in the stock and has contributed to further valuation erosion," the Citi analysts wrote. Talk about the pot calling the kettle black...

Update of April 23, 2007 --At Citigroup, Prince Eyes Predatory Argent, Standing Where Sandy Weill Once Stood

At Citigroup's annual shareholders' meeting on April 17, Chuck Prince stood alone on the stage of Carnegie Hall, as Sandy Weill used to do. Prince propped up his presentation with PowerPoint slides and two videos. The first was of Citigroup's volunteer day in 100 countries, from Guam to Pakistan. The second was of the new "Citi" brand, which Prince described as "representing everything our company stands for."

Inner City Press asked how these state principles are consistent with Citigroup's 2006 lending record -- confining African Americans in New York to higher cost loans 4.4 times more frequently than whites -- and with "propping up and taking an option in Argent," an affiliate of admitted predatory lender Ameriquest.

But it was Ameriquest that announced reforms, none of which have been implemented at Argent. Prince cut in. "We're not going to buy anything unless it's cleaned up." Prince and Citigroup appear to be in denial. Prince said, "we've had reputation issues in the distant past, we're not going down that road." We'll see.

The question arose during discussion of those re-nominated to Citigroup's board of directors, including former Treasury Secretary Robert Rubin. During another Citigroup subprime purchase in the past, Inner City Press asked Mr. Rubin to comment on the fair lending record of the target, Washington Mutual's finance company. "That's not really under my aegis," Mr. Rubin answered.

Among the shareholder-speakers on Tuesday, much invective was directed at Robert Rubin, for being primarily concerned with his own compensation. In 2006 Rubin's compensation was over $15 million; Prince's was $24 million. Rubin would qualify for more if terminated, which his employment agreement defines as including any "diminution of Mr. Rubin's position." Nice work if you can get it.

Citigroup will be participating Wednesday in Washington in a mortgage "summit" convened by Sen. Chris Dodd -- a summit that was closed to the press, although a press release about it was sent out. Citi has been a good friend (read, donor) to Sen. Dodd, and at the summit, Citi's counter-parties would largely consist of groups that it has funded. Afterwards, Dodd announced that he sees legislation as unnecessary. On Tuesday in Carnegie Hall, Prince showed a slide of laudatory quotes from Sen. Dodd and Rep.'s Bachus and Frank. It's nice to have friends. It might allow you to buy another predator.

Other board members also tasted fire. Kenneth T. Derr, listed in the proxy statement as the long retired chairman of Chevron Oil, was fingered as more recently involved in the bankrupt Calpine Corp. It was pointed out how much better AT&T did after Michael Armstrong left it. Andrew Liveris of Dow Chemical has faced shareholders' action and protests on environmental grounds. The U.S. CIA's John M. Deutsch would, the proxy says, "retire from Schlumbeger Limited's Board of Directors on April 11, 2007." Chuck Prince was asked why, instead of moonlighting on Johnson & Johnson's board, he doesn't "stay home" and focus on Citigroup. Prince turned that into a joke, as he did two references to Mad Money's predication that Citi's shares would rise five dollars if Prince quit. "I guess I should watch more TV," Prince deadpanned.

Prince propounded his business model, to open branches, to build consumer lending. He showed a photograph of a branch surrounded by well-water lawns. "That," he said, "is in Bangalore, India." He added that Citi's 1200 new branches in 2006 constitutes the fastest branching "in recorded history." And before history was recorded, how many branches were being opened?

Citigroup has and opens more subprime finance offices than prime-lending bank branches. Citi stands for subprime, a model it takes global. "We're the only ones who can do it," Citigroup-ers said on film about their 100 countries reach. That's the problem....

Update of April 16, 2007: Last year, the Office of the Comptroller of the Currency sued in New York to assert that only it had jurisdiction over the national banks owned by Citigroup. New York's attorney general ended up acting on lending disparities only at Countrywide Financial, which had yet to shift its lending under the umbrella of Federal law. Now from the just-released 2006 HMDA data, for purposes of comparison, Countrywide in 2006 in New York State confined African Americans to higher-cost loans above this rate spread 1.7 times more frequently than whites. Citigroup was more disparate than Countrywide, while denying 35.5% applications of African Americans, and 33% of applications from Latinos, versus only 21.5% of application from whites.

Meanwhile, Citigroup last week trying to save Chuck Prince's job announced 17,000 job cuts, including 1,600 in New York....

Update of April 9, 2007: In a study of the just-obtained 2006 mortgage lending data, ICP & Fair Finance Watch have identified disparities by race and ethnicity in the higher-cost lending of some of the nation's largest banks. 2006 is the third year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. Among other findings, Citigroup in 2006, in its headquarters Metropolitan Statistical Area of New York City, confined African Americans to higher-cost loans above this rate spread 4.41 times more frequently than whites, according to Fair Finance Watch. Citi's disparity to Latinos was 2.38. Meanwhile Citigroup has propped up and taken an option to buy Argent Mortgage, 91.65% of whose loans in 2006 were subprime. Citigroup was most disparate in the lowest-income borough its headquarters city. Citigroup in 2006 confined borrowers in Bronx County to higher cost loans 19.6 times more frequently than borrowers in Manhattan. The disparity between Manhattan and Brooklyn at Citigroup in 2006 was 14.77. Citigroup was disparate in Metropolitan Statistical Areas all over the country in 2006. In Los Angeles in 2006, Citigroup confined African Americans to higher cost rate spread loans 1.70 times more frequently than whites; its disparity for Latinos was worse, at 1.90. Citigroup's African American to white disparity in the Chicago MSA in 2006 was 2.44. Nationwide and Citigroup in 2006, 59.24% of African American borrowers were confined to higher cost loans over the rate spread, versus only 31.62% of whites. In response, Citigroup gave a quote-by-rote to Reuters. Banks Prone to Sell Minorities Pricy Loans," Reuters / Washington Post

Update of April 2, 2007: It's been reported that Citigroup will lay off 15,000, and more 14,000 jobs from higher-cost areas like New York City, Hong Kong and London to places like India, Cincinnati and Buffalo. Of this last, Citi told The Buffalo News that some of the plans to move jobs to lower-cost markets were under way already and are separate from the cost-cutting plan being developed by new COO Robert Druskin...

Update of March 26, 2007: To the Dodd hearing last week, the Federal Reserve sent regulator Roger T. Cole, who finally acknowledged that "we could have done more sooner," while making much of the less than a handful of actions the Fed has taken, including its $70 million fine of Citigroup in 2004. But again, why was Citigroup not invited by Senator Dodd?

Update of March 19, 2007: Key line from the L.A. Times' story on the mass layoffs at ACC / Argent / Ameriquest: " By drastically cutting costs, the company could be making itself a more viable candidate for a sale." Our take? This way Citigroup gets the layoffs done before it acquires the company...

From March 14 WSJ: "Citigroup Inc. Chairman and Chief Executive Charles Prince got total pay for 2006 valued at $26 million during a year when profit at the giant bank fell more than 12%." Then Mad Money named Prince the Number One on the Wall of Shame, worth upon exit $9 per share...

Update of March 12, 2007: From Deval Patrick, following his $360,000 a year part-time service on the board of directors of the predatory lender Ameriquest / ACC: "As a former board member, I was asked by an officer of ACC Capital to serve as a reference for the company and agreed to do so. I called Robert Rubin, a former colleague from the Clinton administration and an executive at Citigroup, to offer any insight they might want on the character of the current management... I appreciate that I should not have made the call."