The Citigroup Watch

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Updated July 26, 2010

      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.

       Inner City Press / Community on the Move's (ICP's) initial focus on Citibank was on its branch closings, and disparate mortgage lending.  ICP filed an extensive opposition to the Citicorp - Travelers merger application (click here to view).  ICP continued to watchdog and document Citigroup's record, in connection with Associates First Capital, European American Bank, Banamex, Golden State Bancorp.and the Sears card portfolio.  Click here for ICP's CitiWatch Archive 2000-01      ICP has published a  book about the Citi-relevant topics of predatory lending, and corporate fraud - click here for sample chapters, here for a map, here for fast ordering and delivery, and here for other ordering information. The Washington Post of March 15, 2004, calls Predatory Bender: America in the Aughts "the first novel about predatory lending;" the London Times of April 15, 2004, "A Novel Approach," said it "has a cast of colorful characters," including one Vyle.  The Pittsburgh City Paper says the 100-page afterword makes the "indispensable point that predatory lending is now being aggressively exported to the rest of the globe." Click here for that review; click here to Search This Site   See also, "City Lit: Roman a Klepto [Review of 'Predatory Bender']," by Matt Pacenza, City Limits, Sept.-Oct. 2004. In this space, we are running short weekly updates on Citigroup.  For or with more information, contact us.

Update of July 26, 2010: Through the revolving door, in a move that should be illegal, from regulating Citigroup to getting paid to work for them: Citigroup last week bragged “it has hired Irene Fang, a long-time veteran of the U.S. Treasury's bank regulatory agency, as the New York bank's corporate fair lending director. Fang most recently served as a division head in the Economics Department of the Office of the Comptroller of the Currency. The Economics Department contributes to the fair lending reviews that the OCC conducts in banks of all sizes, Citigroup said in a statement. Fang, who has a doctoral degree in economics, will report to Lloyd Brown, Citi's director of community reinvestment, Citi said.”

Isn't it a conflict of interest, to be in charge of reviewing Citigroup, then getting rewarded with a job at the company?

And on the conference call, there was no answer to an analyst's request to meet with Pandit or his bandits...

We think that should read January 2009, not 1999... And there are other CRA issues with this switch, watch this site.

 Update of May 24, 2010: Citi costs the public -- Citigroup received a $45 billion investment under Treasury's Troubled Asset Relief Program. The bank repaid $20 billion and converted, with Treasury's approval, the remaining $25 billion to common stock giving taxpayers 27% of the New York bank. Treasury hired Morgan Stanley and gave it "discretionary authority" to sell the Citi shares at market prices, according to a prospectus filed in April. Selling the shares at market prices is in contrast to a follow-on offering of shares in which Treasury could have sold substantial blocks at once. That process gives the seller price certainty but often depresses the share price because of a surge in supply. Selling at the market, as Treasury has chosen to do, buffers the shares from a sudden change in volume. However, the recent 21% plunge in Citi's value will probably diminish returns for Treasury and raises the possibility some of the shares could be sold at a loss.

Update of May 17, 2010: Too little, too late: After demanding last year that Citi fill its board with more financially savvy directors and improve its risk management, Fed officials in Washington pressed the New York Fed to follow up with tough oversight, people familiar with the matter said.

"The supervision program for Citigroup has been less-than-effective," the Fed board said in a draft of a review of the New York Fed's performance last year, according to documents released by the bipartisan Financial Crisis Inquiry Commission. The final review said Mr. Dudley's staff "did not take timely and appropriate action" to follow up on the Fed's demands in a memo of understanding with a big bank. A Citi representative declined to comment. Typical...

Update of May 10, 2010: Citigroup said a one-notch downgrade of its long-term debt and short-term commercial paper rating would likely mean the bank has to replace $10.8 billion in commercial paper, $2.5 billion in tender option bonds, and $1.1 billion in margin requirements. However, the bank said it has $82.3 billion in liquidity resources it could use as a contingency for such a downgrade, Citi said in its first-quarter earnings filing with the Securities and Exchange Commission. Congress is debating a financial reform bill that might end the concept of "too-big-to-fail," defining banks that would pose too big a systemic risk to the financial industry and the economy to be allowed to fail. If enacted, such legislation would result in rating downgrades, bond-rating agencies warned they might downgrade big banks.

Update of April 26, 2010: FOIA, and Citigroup's cheapskatery, in the news: Citigroup Inc.'s unsuccessful bid for the teetering banking operations of Washington Mutual Inc. proposed that the U.S. government absorb a majority of the thrift's loan losses and limited Citigroup's financial exposure to $10 billion, according to a document released by regulators. Terms of the offer by the New York bank previously were kept secret by the Federal Deposit Insurance Corp., which sold the failed banking units to J.P. Morgan Chase & Co. for $1.88 billion in September 2008. The document was disclosed following a Freedom of Information Act request...

Update of April 19, 2010: Large loans from Citigroup helped to feed "the buildup of risk" in Iceland's banking system, which collapsed spectacularly in 2008, a comprehensive report from a parliamentary commission concluded.

According to the report, Kjalar hf, an investment company controlled by Ólafur Ólafsson, borrowed from Citigroup's Citibank unit in 2007, using as collateral shares in Iceland's Kaupthing Bank held by a Kjalar subsidiary, Egla Invest. Mr. Ólafsson was a big Kaupthing shareholder.In January 2008, with Kaupthing's share price falling, Citibank made a margin call. So Kjalar turned to Kaupthing. Kaupthing granted a €120 million loan. In March, after Iceland's currency weakened, Kjalar borrowed more. The next month, Glitnir also made a loan to Kjalar.

Update of April 12, 2010: In the first study of the just-released 2009 mortgage lending data, Inner City Press / Fair Finance Watch has found that Citigroup confined African Americans to higher-cost loans above the Federal defined subprime rate spread 2.25 times more frequently than whites. Citigroup confined Latinos to higher-cost loans above the rate spread 1.72 times more frequently than whites, the data show. 2009 is the sixth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread. Further studies will follow.

Update of April 5, 2010: This week the Angelides Commission will hear from Alan Greenspan, Robert Rubin and Chuck Prince. This goes back to the Citicorp - Travelers merger, about which Inner City Press was asked this week:

When Travelers met and swallowed Citicorp in 1998, the Federal Reserve didn't just approve an illegal merger -- it illegally pre-approved an illegal merger. Sandy Weill and John Reed and their lawyers got the green light from the Alan Greenspan Fed before even announcing the merger. The group I worked and work with, Inner City Press/Fair Finance Watch, demanded all records of the meetings, but got only two cryptic letters, talking about the marriage of "Red" and "Blue." The Fed approved, and predatory lending took off. And now in the aftermath, even the Chris Dodd bill would house consumer protection inside the same Federal Reserve, a huge mistake. Red and Blue indeed...

Update of March 29, 2010: From the WSJ, we annotate in italics: "CitiFinancial, a consumer lender, has a business model that is similar to CIT Group Inc., which suffered as wholesale funding dried up and sought bankruptcy-court protection last year, exiting in December. CitiFinancial used to be known as Commercial Credit Corp. and was the cornerstone of the empire Sanford Weill built into Travelers Group before merging with Citicorp in 1998 to form Citigroup. As a stand-alone firm, CitiFinancial could have trouble getting access to cheap credit, some analysts said."

It's also a widely known predatory lender. Could that have something to do with the difficulty in selling it?

"Another business up for sale: a credit-card portfolio with an estimated $40 billion in receivables and private-label cards pitched through retailers like Sears Holdings Corp."

And that business repeatedly calls people, even those on the Do Not Call list, just as CitiFinancial does...

Update of March 22, 2010: More and more complains are pouring in about Citigroup, Citifinancial and Citi card services making repeated and abusive telephone calls. One complainants says she took out a personal loan from CitiFinancial, and since then has been mis-charged late fees that they refuse to explain, only call about. Citi does Radio Shack's private label calls, and has a robo-caller calling its customers. This is the new Citi?

Update of March 15, 2010: Citigroup helped cause the collapse of Lehman Brothers Holding Inc. by demanding more collateral and changing guarantee agreements, the bankruptcy examiner said last week. “The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool,” said Anton Valukas, the U.S. Trustee-appointed examiner, in a 2,200-page report filed in Manhattan federal court. “Lehman’s available liquidity is central to the question of why Lehman failed.”

Update of March 8, 2010: Another abusive clause cited by Citi for immunity, impunity: Citigroup argued in a hearing in Manhattan Thursday that the lawsuit Terra Firma Capital Partners has filed against it, claiming the bank made false statements when it sold EMI Group Ltd. to Terra Firma in 2007, should be moved to London. Appearing before U.S. District Judge Jed S. Rakoff in Manhattan, Citigroup lawyer Jay Cohen argued that an agreement signed between Terra Firma and EMI in 2007 included a right to have any proceedings arriving out of that agreement carried out in London and that Citigroup was allowed by other provisions to enforce that right...Terra Firma countered that Citigroup wasn't legally entitled to enforce the clause...

Update of March 1, 2010: With Citigroup moving to put Ernesto Zedillo on its board of directors, questions are re-emerging about Zedillo's actions on the 1997 massacre at Acteal in Chiapas...

Update of February 22 -- Ten days after the release by the U.S. Senate of a reporting on evasion by the son of Equatorial Guinea's President for Life Teodoro Nguema Obiang Mangue of anti-money laundering controls by and at Citigroup and others, the Obiang regime fired back, calling the report racist and citing in its defense the election of Barack Obama. Inner City Press is putting the Obiangs' memo online, here. InnerCityPress.com article here.

Update of February 15, 2010: Citigroup's Banamex says it expects to take market share from rival banks in 2010 after posting 27% loan growth last year during the country's worst recession since the 1995 peso crisis. "We have been growing a lot faster than GDP and the banking industry... We want to continue to grow more than the sector and continue to take market share," said Luis Miguel Rodriguez, Banamex's director of financial analysis and planning. The bank's total loans rose 27% to 350.1 billion pesos ($27 billion) at the end of 2009, led by growth in mortgages -- how many are predatory?

Update of February 8, 2010: Missing from New.Citi.com are admission like, "Yes CitiFinancial trained its employees to hard sell unnecessary credit insurance, even on items like fishing rods which weren't collateral for loans. But what of it? We've produced a new video! We're here for you!"

Update of February 1, 2010: Citigroup jacked up its stake in the controlling shareholder of Banco de Chile, acquiring an additional 8.52% in LQ Inversiones Financieras for $511 million. Banco de Chile, the Andean nation's second largest bank, is controlled by the local Luksic family, which also controls U.K.-listed copper miner Antofagasta PLC (ANTO.LN) and U.S.-listed beverage company Compania Cervecerias Unidas SA (CCU), among other assets. In a 2007 deal Citigroup Inc. took a 10.44% stake in Banco de Chile, through LQ, and the Chilean bank acquired Citibank's local assets. Under the terms of the Banco de Chile-Citigroup deal, the Chilean bank took over all of Citibank's local clientele, while the U.S. bank retained control of Banco de Chile's operations on U.S. soil.

And where are Citigroup's home country regulators?

Update of January 25, 2010: As the financial crisis commission claims to be zeroing in on Citigroup, so far interviewed were Lloyd Blankfein, CEO of Goldman, Brian Moynihan, CEO of Bank of America, James Dimon, CEO of J.P. Morgan, and John Mack, chairman of Morgan Stanley. Who will appear for Citi? And where will it all end?

Update of January 18, 2010 - See Inner City Press' "As Obama's Bank Fees Under-Target Citigroup and AIG, Geithner Questioned" here

Update of January 11, 2010: Too little, too late, Citigroup's ex-spook director John M. Deutch last week intoned that "directors that served on Citi's board during this financial crisis should rotate off in an orderly fashion." Mr. Deutch was among the deadwood directors targeted last year by Citigroup shareholders who contended that the directors should be removed. Also needing replacement are former AT&T Corp. Chief Executive Michael Armstrong, Alcoa Inc. Chairman Alain Belda, Dow Chemical Co. CEO Andrew Liveris, Xerox Corp. Chairman Anne Mulcahy, Rockefeller Foundation President Judith Rodin and Robert L. Ryan, retired finance chief of Medtronic.

Update of January 4, 2010: In India, despite public statements that Citigroup and CitiFinancial would be getting out of their subprime lending, now Citi has decided to continue: "Shriram Transport Finance Company (STFC), which has acquired the assets of GE Transportation Financial Services, a part of GE Capital, is looking aggressively for more such acquisitions, R Sridhar, managing director, said. Sridhar added that talks of acquiring assets of Citi Financial have not fructified. 'We have been negotiating with Citi Financial for a while now, but the company is not up for sale anymore as they want to enter the market again.'"

So Citi's predatory lending will continue...

Update of December 21, 2009: An arbitration claim by the Abu Dhabi Investment Authority against Citigroup, seeking to rescind an agreement to invest a total of $7.5 billion in the U.S. lender or damages of over $4 billion has been filed, alleging that there were "fraudulent misrepresentations" in the investment agreement. Sort of like CitiFinancial's "fraudulent misrepresentations" to its lower income borrowers...

Update of December 14, 2009: Revealed by the WSJ: "More than $2 billion allegedly held on behalf of Iran in Citigroup Inc. accounts were secretly ordered frozen last year by a federal court in Manhattan, in what appears to be the biggest seizure of Iranian assets abroad since the 1979 Islamic revolution. The legal order, executed 18 months ago by the U.S. District Court for the Southern District of New York, is under seal and hasn't been made public." Call it Citi's secret sleaze...

Update of December 7, 2009: The Kuwait Investment Authority's exit from Citigroup comes as another Gulf sovereign wealth fund, the Abu Dhabi Investment Authority, may have to overpay on about $7.5 billion worth of the Citi's shares it's committed to buy at $31.83 a piece in a deal struck two years ago. The UAE-based investment fund, also known as ADIA, committed in November 2007 to pump billions into Citi in return for an 11% dividend up to March next year when it has to start buying the bank's common stock.

Update of November 23, 2009: Citigroup, which used to have five retail banking locations in London, has written to account holders alerting them to the closure of its Monument branch on November 27. It’s the one just east of the monument to the Great Fire of London, the tallest isolated stone tower in the world. Users are being directed to the St. Paul’s branch, which is about a mile west. That’s a 15-minute walkaway. Accounting for the closure, a spokeswoman said: “The St Paul’s branch has better facilities and is located on a bigger site.” They've done this in the USA too...

Update of November 9, 2009: Primerica, a consumer complaint challenged business even by Citigroup's standards, is slated to be spun off via an initial public offering. Like CitiFinancial, Primerica targets "lower end consumers," as the WSJ diplomatically puts it. Many of those recruited to pay to work for it also complain, including to the Federal Trade Commission, from which Inner City Press receipt a slew of complaints under the Freedom of Information Act. Now the spin off. But Citi's predatory heart continues to beat...

Update of November 2, 2009: One TARP-er hypes the stock of another, per WSJ: The recent selloff in BofA shares creates a good chance to buy into the bank, say Citigroup analysts. Bank of America shares are down some 17% from their most recent closing peak of $18.59 hit on Oct. 14. "Given the ongoing CEO search, fear of a capital raise only adds to the uncertainty hitting the stock, which creates a very attractive entry point."

Update of October 26, 2009: Citigroup canceled a planned $4.5 million renovation of its main office in Brazil that included an area for entertaining clients and a landscaped terrace called a "suspended garden." Can you say, Babylon?

"We need it to compete," a senior executive told the WSJ about about the project last week, describing it as an important way to impress banking clients and use Citigroup's real estate more efficiently. But on Tuesday afternoon, a person familiar with the situation said the renovation had been reviewed by senior executives, who decided to shelve the project. The reversal underscores the sensitivity inside Citigroup about its spending habits, since the bank has gotten $45 billion from the U.S. government, a 34%-owner of the company's common stock.

Update of October 19, 2009: From the WSJ, "While it might not be surprising that Citi is trailing strong companies, such as JP Morgan and Goldman Sachs, the bank also stacks up poorly against Bank of America, the other major financial institution that remains on government support." Yep.

Update of October 12, 2009: Citifinancial continues with its sleaze. From last week's Charlotte Observer:

"Donna and Ronnie Fruia learned firsthand how difficult it can be to get help modifying a mortgage. The couple from Troutman were in the midst of a series of health crises, and three members of the family - the couple's son, Donna's mother and Ronnie - were in the hospital. That's when Donna got a call that somebody from her mortgage company, CitiFinancial, had shown up in her husband's hospital room, where he was recovering from a stroke. 'At the time, I couldn't even really talk that good," Ronnie said. "But he wanted me to sign a bunch of papers.' The Iredell County couple had been trying to get a mortgage modification from CitiFinancial. The company, however, was pushing them to accept a modification that wouldn't have cut their interest rate, they said. Only after the episode in the hospital room and the involvement of state regulators did CitiFinancial cut the mortgage's interest rate from 11.5 percent to 5 percent, lowering their monthly payment from $985 to $602. The process took from the start of the year until July."

So what are the regulators going to do? Tim Geithner called Citigroup's chairman 17 times in the first half of this yet...

Update of October 5, 2009: Reports that Citigroup is planning to cut back its retail banking presence to six cities -- New York, Washington, Miami, Chicago, San Francisco and Los Angeles -- and ditch branches in Texas, Boston and Philadelphia has some community activists asking how Citi would comply with the Community Reinvestment Act if it makes these cut backs. But Citi with its Citibank has the worst customer service ratings, while its Citifinancial has long engaged in predatory lending. So others thing cutting Citi back is a step in the right direction. If they collect deposits beyond these six cities, they should have a CRA duty there. But subprime loans, even personal loans, is not the way to comply with CRA. Watch this site.

Update of September 28, 2009 -- As Citigroup moves to ditch its Portugal credit card business to Barclays -- Pandit deemed it "non core" -- it becomes clearer that Citi's focus is in emerging markets, where it can still get away from unfettered predatory lending.

Update of September 21, 2009: Citi and HSBC: HSBC, whose Household International unit told borrowers how to doctor their applications for subprime loans, has now sued New York businessman and prominent Democrat fund-raiser Hassan Nemazee, alleging he fraudulently obtained a $100 million loan from the bank and used the bulk of the money to repay a separate loan he falsely obtained from Citigroup. The funds were used to repay a loan from Citigroup's Citibank unit, according to the lawsuit. The HSBC loan remains outstanding, according to the complaint. Prosecutors have said he used fake documents to borrow money to repay the loan from Citibank on Aug. 24.

The government has said Nemazee obtained a line of credit to repay Citibank by using the same type of fake documents - fake account statements and forged signatures - that he used to fraudulently obtain the Citibank loan.

Update of September 14, 2009: Another country in which Citi is going to keep doing subprime and predatory lending is India. “We have a comprehensive revival plan for CitiFinancial, in terms of moving the asset base to more stable sectors,” Citibank’s chief financial officer (CFO), Abhijit Sen, told reporters. "The Citi group is unlikely to sell CitiFinancial"....CitiFinancial India offers personal loans, home loans, home finance and loans against property.

Update of September 7, 2009: Despite all the talk about Citigroup moving away from subprime and predatory lending, even in Indonesia its high-cost unit CitiFinancial continues to grow, having just "opened two new branches in Makassar and Palembang. Djamin Nainggolan, consumer finance business head at Citi Indonesia, said: "The expansion of CitiFinancial to Makassar and Palembang reinforces our commitment to growth and development in Indonesia. Within four years, we have grown from 16 branches to a 69-outlet network." Predatory lending in Indonesia...

Update of August 31, 2009: Failure to supervise? The Financial Industry Regulatory Authority barred Citigroup employee Tamara Lanz Moon from the securities industry for allegedly taking more than $850,000 from at least 22 especially vulnerable customers, including $55,000 belonging to an American diplomat working overseas...

Update of August 24, 2009: Parts of a confidential agreement reveal that U.S. regulators directly pushed Citigroup Inc. to replace then-CFO Edward “Ned” Kelly, which is in sharp contrast to CEO Vikram Pandit’s earlier statement, per SNL. According to the document, the New York-based bank had agreed to review whether Kelly could be “more effectively utilised” by giving him other responsibilities and if so, to replace him. Citing people close to the matter, SNL reported that Kelly resigned from his post on learning about the agreement, which allowed the bailed-out bank to make Kelly the vice chairman and promote then- Controller and Chief Accounting Officer John Gerspach to CFO.

August 3, 2009

Predatory Lending Persists, Despite Rosy Views from DC, Citi's Dark Side in Knoxville

By Matthew R. Lee

SOUTH BRONX, August 1 -- In Washington and New York, there is talk of an uptick in the national housing market and a curtailment of controversial subprime lending by such wounded giants as Citigroup. On July 31, Inner City Press asked the International Monetary Fund about the regulation of subprime lending in the United States, yielding a rosy answer about consumer protection.

   But a mortgage broker in Knoxville, Tennessee long known to Inner City Press tells a different story on both fronts. He has in the past been sued for whistleblowing about Citigroup, and so will remain nameless in this article. But he knows Citigroup's subprime business well, having worked for and then against its consumer finance subsidiary CitiFinancial.

    Reflecting the collapse of the housing market, he compares 2006, when he closed over 100 home purchase loans, with the year to date 2009, in which he has closed only six such loans.

   His income from fees has plummeted, and he faces a car repossession by Wells Fargo (which he calls Hells Fargo). Still he laments others' problems more than his own, describing to Inner City Press a sample CitiFinancial loan in Knoxville.

"They raked her at twelve and a half percent," he said, referring to a 63 year old African American woman who was also charged $7,000 in fees. "This is after they took TARP bailout funds, they won't show any flexibility and she's about to lose her house."

Update of July 27, 2009: "Robert Joss is leaving the board of directors at Wells Fargo to join the board of Citigroup" - WTF? Who is it, that offered him the Citigroup position? How isn't it a conflict of interest, given Citigroup's and Wells' fight for Wachovia? What about the other conflicts of interest on the Citigroup board?

Update of July 20, 2009: After the financial meltdown exposed the Federal Reserve's inattention to predatory lending and credit default swaps, one would expect the Fed to hold off further loosening the rules on CDS. But you'd be wrong. Last week the Fed granted an exemption to CDS dealer ICE Trust, owned by crisis loser Citigroup, among others, giving them an easier 20 percent capital treatment rather than the 100 percent applicable to uninsured banks like ICE Trust.

   Bloomberg News, notably, spun the story the other way, claiming that "the Federal Reserve determined that ICE Trust is as risky as any insured bank, according to a letter posted July 14 on the regulator’s Web site. The Fed is requiring that bank members of ICE Trust, such as Goldman Sachs and New York-based Citigroup Inc., set aside the same amount of capital as parties trading as federally-backed lenders."
 
  But this is a story yet again of the Fed making it easy for the dealer community-- the dealers sought 0% so at least the Fed is imposing 20%. Those who don't learn from the past are condemned to repeat it...

Update of July 13, 2009: On the West Coast, Citigroup is refusing to help Californians in their time of need, announcing it will not accept the State's IOUs. As noted by the Associated Press, "clearly, the federal government has leverage over these institutions," said [Inner City Press / Fair Finance Watch]. Hundreds of banks have received aid from the government as part of its $700 billion rescue plan last fall."

Update of July 6, 2009: Citigroup, with $45 billion in bailout funds, one third publicly owned, has jacked up credit card rates more sharply than other banks, the FT reports. It has also raised salaries by 50%....

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."

Yeah...

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

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

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.

    This led to advocacy by the Fair Finance Watch that Geithner's meetings were in fact rule making that excluded the public in violation of the Administrative Procedure Act, and by Inner City Press, as media, to get the meetings opened to journalists and the public.

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.

March 16, 2009

In DC, Officials Defend Bailouts of Citigroup

Byline: Matthew Russell Lee of Inner City Press

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."

  It's a little late, for Citigroup to "establish its credentials"...

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.

But see Inner City Press' interview with Joseph Stiglitz, in this week's CRA Report, www.innercitypress.org/crreport.html

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?

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

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.

   Yes, that's the predatory lending...

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.

  This should have been done on Citigroup's two predatory lending settlements...

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."

  Ah, Citigroup...

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.

Update of May 12, 2008: This week, from the mailbag --

Re: Your Website

Date: 5/1/2008 4:27:46 P.M. Eastern Daylight Time

From: [Name withheld in this format]

To: webstaff@innercitypress.org

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.

  And Citigroup bought Argent...

Update of March 17, 2008: From testimony on Capitol Hill on March 13 --

"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..."

  Yep.

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...

Update of September 17, 2007: From the mailbag--

Subj: CitiMortgage Realignment May Reduce Oversight for Predatory Lending 

From: [Name withheld - anonymity granted]

To: Matthew Lee [at] innercitypress.org

Date: 9/5/2007 10:36:15 AM Eastern Standard Time

Dear Mr. Lee,

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."

          And even then...

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...

From the mailbag, a correspondent we're glad to hear from again --

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..

CHRISTOPHER J. DODD (D)
Top Contributors

 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.

            "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."  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."

   And they said that Citigroup's subprime lending is not under Robert Rubin's "aegis"...

            CitiFinancial is a named defendant in a class action lawsuit for violating the Fair Credit Reporting Act by buy people's credit histories to target them with high-cost loans...

  And now Citi wants a bank in Taiwan, and Nikko Cordial in Japan? From the mailbag:

Update of March 5, 2007:  Citigroup is the bottom feeder of the subprime lending world. Its 2000 acquisition of Associates First Capital, a lender which had just been profiled on nationwide television as a predator, is now echoed in 2007 with the propping up of Ameriquest, fresh from settling charges of abusive lending with state attorneys general. In between, Citigroup had to settle predatory lending cases with the Federal Trade Commission and the Federal Reserve Board. Those who blamed Citi's lack of standards on Sandy Weill must now acknowledge that Chuck Prince shares Sandy's predatory predilections.

"ACC Capital also said it has secured fresh working capital from Citigroup's Markets and Banking Division and from ACC's majority shareholder, who is Roland E. Arnall, the U.S. ambassador to the Netherlands." But wasn't Arnall supposed to be out of business with Ameriquest while serving as (bought) Ambassador?

Update of February 26, 2007: Ex-journalist now defends CitiFinancial's fraudulent 21% loans. From the Milwaukee Journal-Sentinel of Feb. 24:

For 37-year-old Christopher Wiberg, being a friend means helping out, no questions asked. So when a friendly woman persuaded him last fall to take out a high-interest loan at CitiFinancial on her behalf -- and promised she would pay him back -- Wiberg believed her. But she wasn't really his friend. And she never paid him back. She disappeared. Wiberg is diagnosed with mild mental retardation. He has no bank accounts, no credit card and an annual income of $15,800. Yet he got stuck with a bill of $8,117.  After a call from a Journal Sentinel reporter Thursday, Citibank corporate spokesman Rob Julavits said Friday that Wiberg's loans had been forgiven... In Wiberg's case, he said he was working at a Pick 'n Save on Milwaukee's northwest side last fall when he met this woman. They exchanged phone numbers. The Journal Sentinel is not naming her because no criminal charges have been filed and she could not be reached. The woman persuaded Wiberg to go with her on Oct. 9 to CitiFinancial at 7600 W. Capitol Drive. They sat together and filled out a loan application. Hers was denied. His was approved. His credit history: a paid membership at Bally's Total Fitness and regular payments of his We Energies bill. The woman promised Wiberg she would make the payments if he took out the loan. "She just seemed so dang nice," Wiberg said. Wiberg said he told the loan officer that he was developmentally disabled before he signed and initialed on the dotted lines. Wiberg got a check for $3,500, cashed it, and gave the money to the woman. Later that month, he withdrew another $1,500. After two months of phone calls from CitiFinancial demanding payment, Wiberg finally told his sister, who told his mother. Julavits wouldn't comment on the specifics of Wiberg's case, citing privacy issues. "The loan was appropriate and it met all of our underwriting guidelines, but given the circumstances we decided to forgive the loan," Julavits said. Loan documents show that Wiberg was paying 21% interest.

From the department of chickens-come-home-to-roost, on Feb. 23 Citigroup acknowledged that  the Securities and Exchange Commission is probing its treatment of tax issues related to its $26.7 billion acquisition of Associates First Capital in 2000. The investigation focuses on the treatment of certain ''tax reserves and releases'' from 2000 to 2004, the bank said Friday in its annual financial filing. The S.E.C. has subpoenaed witness testimony and certain information related to accounting and internal controls for the years 1997 to 2004, Citigroup said. The company said it is cooperating with the investigation. A Citigroup spokeswoman declined to comment. The bank completed its acquisition of Associates First, the biggest American consumer finance company at the time, in November 2000. Click here for our coverage of that deal.

Update of February 19, 2007:  So Chuck Prince last week went hat in hand into the desert, to the camp of Prince Alwaleed bin Talal. Those who travel to the camp invariably ask favors. As to what Chuck's was, the coming time will tell.

Update of February 12, 2007:  From the mailbag:

Subject: Attn:  Matthew Lee, Executive Director (or appropriate staff)

From: [Name withheld in this format]

To: Inner City Press

  Hello and thank you for the information you have posted on your CitiWatch web site.  I have been getting these fabulous offers of $4,000 - $5,000 'fresh start' loans from these goons which baffled me because my credit score is pretty abysmal right now ($300 credit limit now on my Visa!  Woo-hoo!) and I thought that anybody who wants to loan that much money to a struggling single mother and full-time student must be crazy.  Out of curiosity however I googled them and that's how I found your site.  Thank goodness I did not succumb to temptation before reading about their nasty behavior.

AND

Subject: Citi

From: [Name withheld in this format]

To: Inner City Press

Sent: Sat, 10 Feb 2007 1:45 PM

  Thank you for all you do to expose Citi for what they are: Predators!  I filed bankruptcy less than two years ago. I was foolish with credit, and my situation only got worse when interest rates went to loan shark numbers. I plodded along for years sending minimum payments or whatever I could, but could never get ahead. With such high interest, it wasn't long before I was getting over the limit fees, even when I wasn't buying anything!

 I actually paid the original amount on all the CC cards I had plus a great deal of interest, but it was never enough. I was being held hostage by these companies. There may not be debtors prisons in the USA, but these companies have a prison without walls!

 Citibank sold my debt which at that point was all interest and fees to a collection agency which scared me so bad I agreed to monthly payments. After many months sending them a total of $1700.00 I found out they were charging me interest on top of what Citi had already charged me. They had kept me in the dark and all those months I was believing I was reducing the Citibank amount. My debt was actually increasing!  I was in such despair, it was shortly after that I filed bankruptcy. My only regret is not filing sooner. I was eligible since my business was failing.

   It is not surprising that I get many offers for credit since filing bankruptcy. Capital One was sending me offers almost from the day I filed. I read an article by one of their vice presidents which said the newly bankrupt were itching to get their mitts on plastic and would pay high interest to get it. I think Capital One is the one who is itching to get their mitts on anyone's money, no matter what. Washington Mutual has also flooded my mailbox with offers along with Orchard, First Premier, Aspire, and many others.

 Today I received an offer of credit from CitiFinancial.  I haven't read your book yet, but I plan to. Thank you for reading my note.

  No, thank you. Keep those cards and letters (well, emails) coming.

Update of February 5, 2007:    If last week's media speculation, that Citigroup's in line to buy the damaged predatory Ameriquest, is true, it will again reveal rifts in the community and consumer advocacy movements. Citigroup has bought many friends, from the time of its Associates First Capital Corp. purchase during which now-CEO Chuck Prince flew around the country telling groups they could send their complaints to his "personal fax number" (which some just call a garbage can). Even now, Citi-shills are singing, "But wouldn't it be better, if Citi ran the show?" Well, no. Ameriquest is near death, due to predatory lending. Just as HSBC's (14) billions re-inflated Household to harm more and more consumers, so too would Citigroup's opportunism reinvigorate the Ameriquest network of sleaze.  That said, in fairness to some of Citigroup's defenders, it may be that the company saw it made sense to help the few consumers that these advocates referred. But what percentage of Citi's victims have been helped? Very few.

 From sleazy to cheesy -- last week Kraft announced that Ajay Banga was been put on its board of directors. But didn't Citigroup speak out against board overlaps and overextension? From subprime loans to mac-n-cheese: some synergy. And on the Egg front, last week Banga said-in-a-statement that "Egg is an excellent strategic fit with our business and we are excited to have the opportunity through this acquisition to broaden our international Consumer banking business, and make our products and services available to more people around the world. We also will be able to learn from Egg's successful direct banking platform to enhance our global offerings."

Update of January 29, 2007:  So Citigroup cut Todd Thompson loose. He flew the Money Honey around, paid shareholders' fund so get himself on cable TV and otherwise abused his power. But so too do many of those remaining.

  Meanwhile Willumstad and Magner have re-emerged, to run a fund, Brysam Global Partners, focused on "consumer opportunities in emerging markets." Predatory lending, anyone?  And how will the mortgage lending capacity for ABN-Amro be used by Citigroup?

Update of January 22, 2007: From the NY Times' E.Dash: "Most of the operating businesses are expected to adopt the 'Citi' prefix, but each will use a different color arc to maintain a distinct look. Citi's corporate and investment bank will feature a black arc; its wealth management division will use a red arc, and its consumer businesses, a blue arc. Banamex, its Mexican retail bank, and Smith Barney are expected to retain the old names... The company hired Landor Associates, a brand-consulting firm owned by the WPP Group, and put Ajay Banga, a co-head of its consumer businesses, who helped build PepsiCo's Pizza Hut and KFC franchises in India, in charge of the review."

            We'd say CitiFinancial needs its own color. And on Ajay Banga, it's not just chicken anymore...

Update of January 14, 2007:  Charging 20% interest on consumer loans is not enough for Citigroup. That is the message from last week's announcement that CitiFinancial will close 80% of its business in Japan, now that the country is moving to limit the maximum interest rate from 29% down to 20%.  This will involve Citi's "closing of approximately 270 branches and 100 automated loan machines" in Japan. It is also reported from Ireland that CitiFinancial, identified in an hour-long television expose as the highest-cost lender in that country, and still imposing single premium credit insurance on mortgage loans there, may cut operations in that country as well. Some Citi-defenders blame all this on winds of populism. First, the spread of consumer protection was and is entirely foreseeable. Second, CitiFinancial by not even taking the minimal steps of not being the highest cost lender, and not so blatantly engaging in predatory lending, plays into this dynamic. These markets are better off without CitiFinancial, they clearly have determined. Five point ethics plan, indeed...

Update of January 8, 2007: Chilean intrigue. Chile's antitrust office is reviewing a planned strategic association between Citigroup and Banco de Chile, the office, or FNE, said Jan. 4.  As late as last week, Chile's banking superintendent said he hadn't received fresh information on the deal, which the companies have said involves their assets in Chile. The local Luksic family's investment holding that controls Banco de Chile, has confirmed the negotiations. Banco de Chile is Chile's No. 2 bank, with a 17.8% share of the lending market. Citibank's local unit has a 2% market share, but owns 40% of pension fund administrator Habitat...

Update of January 1, 2007: In Ireland, even the lending industry is calling for a face-savings clean-up, noting that in 2005 only two licensed moneylenders were inspected by regulators. The scrutiny follows a recent 'Prime Time Investigates' program on RTE which showed how moneylenders charge up to 188 percent in interest. And if, like CitiFinancial, they are headquarters elsewhere, they escape regulation - for now...

   In the U.S., Citi's revolving door keeps spinning. Mary Louise Preis, the Maryland financial regulator whom CitiFinancial hired directly from that job (in which she regulated CitiFinancial) now brags she's been named a director of Business Volunteers Unlimited Maryland. Nice business if you can get it...

Update of December 25, 2006:  From a generally pro-Citigroup analysis last week, this: "What has been ailing Citigroup, Bove says, is the legacy of former CEO Sandy Weill and 'a board that I would not want to flatter by describing as third-rate.'"

Update of December 18, 2006:  In further export of predatory lending, Citigroup announced on Dec. 13 a proposal to acquire Grupo Cuscatlan, with operations in El Salvador, Guatemala, Costa Rica, Honduras and Panama, for $1.51 billion. Citigroup bragged that "this transaction will further expand Citigroup's corporate and retail operations in the region and complement its pending acquisition of Grupo Financiero Uno, the largest credit card issuer in Central America." So now there'll be CitiFinancial predatory lending all along the Pan-American highway...

Update of December 11, 2006: on December 8, shares in Citigroup rose 2.3 percent on speculation that Chuck Prince might be replaced as well as talk that Citigroup might be broken up...

Update of December 4, 2006: A scandal is growing in Ireland, leading to the introduction of legislation to close off a loophole in Irish law that allows subprime financial service companies to operate without being regulated by the Irish the Consumer Protection Code. Unregulated firms can avoid supervision for solvency purposes and are not subject to 'conduct of business' checks by the regulator. Among the companies named as not regulated is Citigroup's CitiFinancial, which makes "personal loans at rates as high as 26 percent, according to a recent survey from the Financial Regulator." 

Here's a New York story that has it all, at least from our point of view. Last week police found that "a Citigroup executive turned his fancy 38th-floor penthouse apartment overlooking the United Nations into a crystal meth lab... [Named] was Michael Knibb, a vice president for information technology for Citigroup. He was tracked ordering 100 grams of meth's component chemical, court papers allege. When the feds checked his penthouse on E. 39th St., they discovered beakers, solvents and heating elements in his living room and bedroom." And no sale scripts for predatory loans?

Update of November 27, 2006: In the hoopla about Federal Reserve chairman Bernanke agreeing to ride shotgun with Hank Paulson on his trip to pressure Beijing, something missed was the Federal Reserve's duty to scrutinize the China moves of U.S.-based holding companies like Citigroup.  Citi buying into Guangdong will have no comment period. The Fed will issue no order describing what it considered. Citi may give notice along after the fact. Will Ben Bernanke ask? We'll see.

Update of November 20, 2006:  So far in the 4th quarter of 2006, Citigroup has announced deals in Turkey, Central America and now China. As DJNS notes, Citigroup "has been pouring money into building its international consumer business, with $530 million slated for this year, compared with $150 million for the U.S. franchise."  That is what we mean, about Citi's conscious export of its predatory lending. An example is in India, where CitiFinancial is raising money to expand through non-convertible debentures and short-term debt, raising a total of Rs 5,876 crore. According to a report by rating agency Cresil, "CitiFinancial is engaged in retail financing, primarily to finance the sub-prime segment of retail borrowers in personal and consumer durable loans and home mortgage segments"....

  Friday's American Banker reports based on a Citigroup PR release that "Steve Freiberg and Ajay Banga, the co-chairmen and co-CEOs of Citi's global consumer group, are expected to participate" in a volunteer day.  "Though Mr. Prince's whereabouts this week are widely known, the spokesman would not say where the other executives would be Saturday, because of security concerns." How self-important...

Update of November 13, 2006: This week consider two recent Citigroup press releases, one touting its growth in mortgages by mixing in subprime, the other pressuring Congress to allow it to do more business in Russia. On Nov. 6 Citigroup bragged that "in the third quarter of 2006, Citi originated $49 billion in mortgage loans, in the face of a continued industry decline. Year-to-date, Citi's mortgage originations exceed $100 billion. Last year, Citigroup combined its mortgage businesses to better serve its clients across the full spectrum of products. 'We believe that our mortgage products serve as a key building block to deepen relationships with our customers,' said Steve Freiberg, CEO of Citigroup's Global Consumer Group, North America."

  Yeah -- once a person is drawn in though a CitiFinancial loan, Citi can keep the profits flowing through a thousand cuts and flips....

On Nov 10 Citigroup "welcome[d] today's announcement that the United States and Russia have agreed in principle to a bilateral market access agreement. Citigroup has had a presence in Russia since 1993, when it became one of the first banks with foreign capital to enter the local market. In 2002 Citigroup expanded its business from Corporate and Investment Banking to also include Consumer Banking [read, CitiFinancial.] 'We applaud the efforts and perseverance of President Bush, President Putin, and the U.S. and Russian negotiators,' said Nicholas E. Calio,
Senior Vice President, Global Government Affairs of Citigroup. 'Congress must grant Russia Permanent Normal Trade Relations (PNTR) status before the two countries can put their WTO agreement into effect. Granting PNTR to Russia will allow Citigroup and other U.S. companies to enjoy the full benefits of Russia's new market openings. We look forward to working toward passage of PNTR,' Calio said."

            Given the ease of money laundering, we're *sure* Citigroup looks forward to it...

Update of November 6, 2006: Citigroup, which was blocked for more than a year from making any big U.S. acquisitions, now seeks to buy the largest credit card issuer in Central America, Grupo Financiero Uno, which has 1.1 card customers and over 100 branches throughout Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama. The proposal will require at least some regulatory review in each of these countries. In the United States, while Citigroup will file a "notice," it appears there will be no public notice or comment period. In announcing the deal, Citigroup bragged of its " more than 1,600 retail bank branches and 500 consumer finance branches in Mexico and Latin America."

            The consumer finance offices are CitiFinancial, which in 2004 settled predatory lending charges with the U.S. Federal Reserve Board.

            It was also reported last week that Citigroup has won the right to buy a stake in China's Guangdong Development Bank after a competition with French bank Societe Generale and China's second largest insurer Ping An Group. Citigroup and GDB are expected to sign an agreement to finalize the acquisition, which has been approved by the China Banking Regulatory Commission. On December 28, Citigroup submitted an offer of 24.1 billion yuan (US$3.01 US), while Societe Generale bid 23.5 billion yuan and and Ping An 22.6 billion yuan for an 85-percent stake in GDB. But they had to revise their bids after banking rules issued in May imposed the foreign ownership restrictions. Citigroup, "together with its wholly-owned subsidiary Associates First Capital," would secure a share of no more than 25 percent in GDB.

  Who knew that Citigroup continued with the brand and corporate identity of Associates First Capital, sued for predatory lending by the Federal Trade Commission...

Update of October 30, 2006: From last week's Philly News: "Weill said Citigroup had improved its lending practices after criticism by regulators and consumer advocates. And, after all, he asks, didn't Bangladesh's Grameen Bank win a Nobel Peace Prize for lending money to poor people -- albeit at lower rates of interest?" So now CitiFinancial drapes itself in the flag in micro-finance...

Citigroup has "opened 574 bank and consumer-finance branches so far this year, mostly in faster-growing places like India" -- and mostly subprime finance offices, not bank branches...

Update of October 23, 2006:  In Japan, consumer finance companies are allowed to charge annual rates of up to 29.2 per cent. Now, the government plans to reduce that rate to 20 per cent. CitiFinancial has lobbied against the lowering of the country's  interest rate cap, saying it would lead to a credit crunch and force weak borrowers to use loan sharks.  Not unlike Citi's lobbying against anti-predatory lending laws in the U.S....

 Meanwhile Chuck Prince last week said that "buying a big bank in western Europe is not on my agenda." He added that a big acquisition in the U.S. would "re-weight us very significantly to the US - which is not what I want to do." And so, Turkey -- on Tuesday, Citigroup agreed a $3.1 billion deal to buy 20 per cent of Akbank, Turkey's largest privately owned bank. Prince said it was "a great deal and a perfect example of what we want to do more of." We'll see.

Update of October 16, 2006: From the New York Banking Department's Weekly Bulletin:

"September 27, 2006 (LL-LFS)
CITIFINANCIAL, INC.
300 St. Paul Place, Baltimore, MD 21202

Notification requesting authorization to solicit credit card application on behalf of a bank from licensed location, received."

   So now, beyond the move to use the predatory lending outlets of CitiFinancial to collect deposits (without, it seems, being covered by the Community Reinvestment Act, a matter on which Citigroup has provided closed-door briefings to the Office of the Comptroller of the Currency without sufficient public disclosure), CitFinancial would be "soliciting credit card application" too -- at a low interest rate, we're sure... From Business Week of Oct. 16: from Citigroup, "talented people who are frustrated by the pace of growth are heading for the exits. A number of high-level executives, from advertising to investment banking, have left for such companies as Macy's, Barclays, and JPMorgan, taking underlings with them."

Update of October 9, 2006: Shameless Citi-spin of the week, from Brownsville, Texas: "CitiFinancial announced it will host an identity theft prevention seminar from 6 to 7 p.m. Oct. 19. The seminar is open to the general public and will be at CitiFinancial's 2921 Boca Chica Blvd. location. The seminar is part of the bank's financial education program. 'We'll give them (attendees) examples of how ID theft occurs and what to do if your ID has been stolen, like contacting the fraud departments of the three major credit bureaus,' said Joseph Babineaux, CitiFinancial's branch manager."

  Given that CitiFinancial has released millions of customers private information, the seminar is more than a little ironic. Citigroup is now the fifth largest subprime mortgage servicer in the United States, ahead even of Wells Fargo, New Century and Ocwen (NMN 10/9). In other Citi subprime news, it was announced last week that "CitiFinancial Auto will be Chrysler's exclusive non-prime lender." Meaning, high-cost... And overseas in India, Citigroup is more focused on high-cost consumer finance (non-banking finance companies, NBFC) than on banking. Citigroup's NBFC has a branch network of over 400 compared to a bank network of 39.

Update of October 2, 2006: Florida is suing a "Tampa-area company called Global Information Group Inc., claiming it made thousands of calls impersonating customers of companies including Verizon Communications Inc., tricking them into providing private call records. Earlier this year the company's principals agreed to pay $250,000 to settle the case, and to cease any pretexting activities." Global Information's customers include two Citigroup units...

Update of September 25, 2006: From the (snail mail, hard copy) mail bag last week, a complaint from a Citigroup staffer who, among other things, sends out the Board of Directors Book, to directors who apparently couldn't care less:

"To Inner City Press, Investigative Reporter re Disability Harassment at Citigroup

If I had known this would be an unending ordeal here at Citibank, I would have contacted your office before now. This has been an ongoing disability since 9/11/01 and to which I have already filed 2 complaints with the EEOC... No one is responsible for not following policies and procedures as set forth in the Code of Conduct or Employee Handbook, which is garbage because no one can rely on those policies. Employees have to abide by Citibank law, but senior management protects themselves by whatever means necessary."

  Included is a written complaint to Citigroup's "Ethics Hotline," a complaint against one John E. Gunther, and a vituperative response to the EEOC from the Global Consumer Group, which mentions without comment that the charging party sends out the Board of Directors Book. What do the Directors think? Or about this --

Citigroup was tied for first place in the highest number of fines for violations from the U.S. Office of Foreign Assets Control -- six, from 2003 through August 2006.

Update of September 18, 2006: This week we return to the intra-Citi mailbag:

Subj: Employment Practice Abuse: The Travelers, Citigroup Connection 
Date: 9/12/2006 10:33:43 PM Eastern Standard Time
From: [Name withheld]

To: CitiWatch [at] innercitypress.org
I came across your excellent publication while searching the web.  Want to include a story relating to my own experience as an Asset Manager in Commercial Real Estate.  After nearly two years appraising commercial properties, I was terminated while recuperating and on paid medical leave resulting from an injury I sustained while inspecting one of their income properties.  I missed six weeks of work, and asked to be accommodated through the flex-work initiative propounded by the corporate offices.  The HR department told me that my request had been denied due to some late reviews and that I would have to return to the office to complete a conference call.  When I came in I was called into a manager's office with my immediate supervisor, and his manager and told that my request was denied, there would be no further discussion and if I wanted to continue working there I had better sign the forms being presented to me.  Although I was, and am still under a doctor's care, the forms basically stated that I felt ready to return to work and that a new work-plan was being devised to "accommodate" me.  No copies were provided.  I was also informed that my previous work load would increase by 100%, that nobody has completed any work of mine during my six week absence and the appraisals had been traded for others in different territories that I was unfamiliar with.  Additionally, many of the projects were unusual types such as self-storage, mixed use, and industrial properties that require far more research than a typical apartment building. 
Although I made a grand attempt at this Herculean task, and worked late into the evening, and over the memorial day weekend, I was still short of the goal (and working on painkillers, and a heavy dose of Ibuprofen)..Despite hiring a part-time data entry person using my personal funds, the project simply could not be finished in the allotted time.  Five weeks after I returned, I was terminated and escorted from the building by 4 vice presidents and the head of building security.  I told then that this seemed unnecessary, and was certainly humiliating since it would appear that I was some terrorist being escorted out of the Citigroup tower.
I would not have thought much more of the situation except for the fact the other employees told me of similar occurrences with "mature" workers over the age of fifty.  Just one month before me a 20 year veteran returned from hip-replacement surgery and was terminated exactly 4 weeks later.
Interestingly, while I was on leave I applied for a home equity loan, since my disability payments were "administratively" delayed by Met Life, their short term disability carrier.  According to Citibank, they were unable to verify my employment and my loan application was denied...but not until the refinance of my current mortgage had already been approved!  It seems they were willing to take on a $250,000 loan at 8%, but had no interest in the variable rate, lesser borrowing relating to the equity line.  This leads me to think that the management had already determined that my employment would not continue after my medical leave ended.  In addition, they did not provide the required Worker's Comp forms, did not respond to verification requests from the disability insurance provider (Met Life) and Travelers (a former fully owned subsidiary) denied my workers comp claim based on the fact that the forms were not filed until after the expiration of the short term disability claim.  They also had a myriad of other defenses based on the fact that the medical reports were not received (although the HNO has proof that they were sent on two different occasions)
In summary, for many years Citigroup was providing what looked like a generous employee benefits program, when in fact the employees disability coverage (1/2 paid by the employee) was being provided by their owned subsidiary, and the long term care (Travelers) an optional coverage was entirely paid by the employees.  With over 300,000 employees...that's not chump change! Why are the financial back office worker's not organized as under a labor union? Thank you for your in depth reporting. 

For or with more information, contact us.

Update of September 11, 2006:  To be celebrated for sleaze. Robert Rubin, who has been directly asked about Citigroup's predatory lending and said it is not in or under his "aegis," now sets up a public policy institute which the NYT (Sept. 8) says will be "addressing issues like the costs to the economy of excessive litigation and regulation."  Yes, without excessive regulation CitiFinancial could get even more vicious than even the Federal Reserve found it to be. The Times reports that "Mr. Rubin has kept himself at a distant remove at Citigroup" -- that is, still perceived as progressive even as the company that pays him is engaged in one scandal after another, including scandals like CitiFinancial which directly harm the poor. ''This is not a political undertaking,'' Mr. Rubin claims. If you say so... For or with more information, contact us.

Update of September 4, 2006: From The Asian Banker Journal of August 31: "Chuck Prince reportedly pooh-poohed the significance of the U.S. Federal Reserve Bank's unofficial ban on large acquisitions. But 18 months of M&A inactivity has clearly cost the bank in several ways, aside from reputational losses resulting from regulatory mishaps. Some time the world's largest financial services institution by market capitalization, it was for some time also the world's largest by assets, but no longer."

  Citigroup is staking its future on CitiFinancial, its subprime unit which has twice settled charges of predatory lending. In the Philippines, CitiFinancial has branches in Binondo, Kalookan, Cubao, Las Pinas, Marikina, Pasay Road, Taft, Imus, Calamba, Cebu and San Fernando in Pampanga. There are plans to expand the subprime CitiFinancial, in the next six months into Ortigas in Pasig City, West Avenue in Quezon City, and in Sucat, Paranaque. CitiFinancial says it will open its first branch in Mindanao, Davao, in 2006... 

Update of August 28, 2006: In Poland, according to the Gazeta Wyborcza, the "aim of Citibank Handlowy is to extend the number of its CitiFinancial branches to 225." Less specific was Citi's August 21 press release, that "Citigroup announced today that it has obtained the necessary regulatory approvals related to its acquisition of the U.S. Capital Markets business of TD Waterhouse and that the transaction is complete. Terms of this transaction were not publicly disclosed."  Ah, transparency...

  From the FT, about Citi's Doctor Evil trade: "In a leaked e-mail, Tom Maheras, Citigroup's head of global capital markets, admitted that 'we did not meet our standards in this instance and . . . we failed to fully consider (the transaction's) impact on our clients, other market participants and our regulators.' Chuck Prince called the trade 'knuckleheaded.' Yet in due course the traders, briefly suspended, returned to work. There was no news of anyone being fired."  What was that again, about the five point ethics plan?

    Even the Wall Street Journal reported that Chuck Prince more than doubled his $1M salary in 2005 with $1.1M in dividend payments. Some payments involved restricted stock, for which Mr. Prince receives quarterly dividends when they are awarded. That means he will receive $1.4M this year on invested restricted and deferred stock he held through February of this year, and another $9.7M in restricted stock awards of this 2005 performance. The Journal's abstract says this " stirs concern, investors concerned with awards in comparison with competitors' performances."  Yep...

  See this week's Inner City Press CRA Report for context on Citigroup's recent announcement that it will merge its subprime CitiFinancial into its mostly-prime CitiMortgage, thereby evading the Federal Reserve's "optional" steering analysis....

Update of August 21, 2006: Flogging that predatory lending. "Advertising Age estimated earlier that Citigroup had cut as much as $120 million from broadcast and print advertising. A company spokesman said Citigroup had re-evaluated its ad needs and decided Tuesday to step up spending for the second half of the year along with the rollout of new products. Citigroup added about 1,000 Citibank and CitiFinancial branches worldwide in 2006." And now, to try to lure victims into them...

Update of August 14, 2006: As in Poland as in the U.S., Citigroup's predatory lending. From the Polish News Bulletin of August 11, Citigroup's " Bank Handlowy (BH) wants to develop its daughter company CitiFinancial, responsible for retail clients. This means higher margins and higher profits. During the first half of the year, BH earned ZL343m, which is 8 percent more than a year earlier. However, more than a quarter of this result is an effect of a one-off transaction. BH Chairman Slawomir Sikora predicts that the results during the last six months of the year will not be quite as good. However, returning to the retail banking sector should be visible in the results. The market did not react with enthusiasm. BH quotes fell by more than 2 percent to ZL67.3. BH has high hopes in the development of the retail market. Credit cards are supposed to have a substantial effect. So far, this year the bank has issued 613,000 credit cards, 12 percent more than a year earlier. Sikora says that in three years, BH wants 15-18 percent of operational revenue to come from CitiFinancial."

Update of August 7, 2006: Citigroup exports predatory lending, and brags about it. Last week in Hong Kong it issued a press release: "CitiFinancial has opened two branches at Aberdeen and Sheung Shui which offer convenient, speedy and tailor-made products and services to customers in two key hubs in Southern and Northern Hong Kong. This development underscores CitiFinancial's commitment to expand its reach in the territory. The opening of these two new branches together with two others previously opened at Wanchai and Sham Shui Po are important milestones in CitiFinancial's strategic expansion plan to have a total of 20 branches in Hong Kong by the end of 2006." Watch out...

Update of July 31, 2006:  Well, well. Last week the Wall Street Journal covered Citibank trying to collect deposits through CitiFinancial, but mentioned neither the Community Reinvestment Act (which requires reinvestment in communities in which deposits are taken) much less CitiFinancial's two predatory lending settlements. Or check out the below sample email chain, cc-ed to Inner City Press:

Subject: Tired of being ignored by CitiFinancial

From: [Name withheld in this format]

To: LangJ@CitiFinancial.com; CitiWatch [at] innercitypress.org

Sent: Sat, 29 Jul 2006 10:33 AM

  Ms. Lang, I am writing in response to your letter dated 6/29/06.  It states you are in receipt of my e-mail and will respond no later than 7/10/06.  I assumed since this was put in writing and it was from the Office of the General Counsel, I had finally reached the correct party at CitiFinancial to respond to my request.  Unfortunately, this is not the case since it is now almost three weeks after I was supposed to receive a reply and I have heard nothing. Attached are all of my correspondence regarding this matter.  Please note this communication began in MAY.  It is now almost three months later and my

frustration level is at its maximum. Please refer to the last communication to Mr. Schrom.  Dated 6/29, I requested the automatic deduction be stopped effective immediately.  Since the July payment was deducted anyway, I decided to give you the benefit of the doubt and assumed my request was made too close to the deduction date. There will be no "benefit of the doubt" if the August payment is deducted.

-----Original Message-----

From:

Sent: Tuesday, June 20, 2006 7:39 PM

To: SchromR@CitiFinancial.com

Subject: FW: CitiFinancial Contact Us Form

Mr. Schrom,Please let me list several facts for you to ponder: My first email was on 5/5, where I requested the response be via e-mail or regular mail but also included my cell phone number.  The response was that my e-mail was FORWARDED to Sharon Ocasio on 5/8 and included her phone number.  After receiving NO response, I resent the e-mail on 5/27 and reiterated that I wanted all correspondence in writing.  On 5/30 I was advised the e-mail was forwarded to you.  Lo and behold, the notification I received about the change in payment was dated 6/1.  On 6/12, I resent the e-mail and copied you advising the effective date was incorrect and the new payment amount was not as I calculated it.  You asked Toni to "get" the information I requested so we could resolve this issue.  Her response was a phone number for ME to call to fix CitiFinancial's error! To add insult to injury, I received a letter from Sharon Ocasio dated 6/14 asking me to call her as the number she has is disconnected and she has no way to communicate via e-mail. How can an e-mail be forwarded to someone who has no way to communicate via e-mail?

From: Lawrence, Toni [mailto:LawrenceT@CitiFinancial.com]

Sent: Tuesday, June 13, 2006 12:59 PM

Subject: FW: CitiFinancial Contact Us Form

Thank you.  You need to contact the MOST Department @ 1-800-662-3787.

-----Original Message-----

From: Schrom, Ron

Sent: Tuesday, June 13, 2006 10:30 AM

To: Lawrence, Toni

Subject: FW: CitiFinancial Contact Us Form

toni, if what the customer states is true we need to adjust her rate for 2 months effective 5/1/06. also, she is requesting an explanation as to new payment calculation. can you help get the information she is requesting so we can resolve this issue?    thanks for your help. ron schrom.

-----Original Message-----

From: Sent: Monday, June 12, 2006 7:30 PM

To: Lawrence, Toni

Subject: RE: CitiFinancial Contact Us Form

Ms. Lawrence, I wanted to let you know that I received a "Notice of Change in Payment Amount and Interest Rate" form that was dated 6/1/06.  However, there is an error in the effective date.  My contract states after 24 consecutive payments, the rate would lower.  Our first payment was 5/1/04, which means the 24th payment would have been 4/1/06.  The lower interest rate should have been effective with the 5/1/06 payment, yet the form indicates it will not be effective until the 7/1/06 payment.  It clearly states the current rate is in effect for 26 months and it should be 24 months.  Also, I cannot seem to verify the new payment amount and would like an explanation as to how it was calculated.

    Just give us your deposits, Citibank is saying...

Update of July 24, 2006: Endless sleaze: last week, the U.S. Department of Housing and Urban Development fined CitiMortgage $650,000 for violating RESPA in over-charging for captive title insurance. Citigroup as per usually claimed it had done nothing wrong... From Citigroup's earnings statement last week: " International consumer revenues and net income grew 12% and 10%, respectively." During the quarterin Japan "85 new automated loan machines (ALMs) were added... Outside of Japan,.. 111 new branches were opened."  Yes, the export of CitiFinancial's predatory lending... 

Update of July 17, 2006:  As Citigroup prepares to release and spin its earnings on July 17, it's worth noting that Citi is still growing in the high cost lending for which it has settled charges of predatory lending. Citigroup is now the fifth largest servicer of subprime mortgages, with $60 billion dollars worth, an increase of 4.49 percent from a year before...

Update of July 10, 2006: The New York Banking Department on June 14 quietly "authorized" CitiFinancial to "solicit deposits on behalf of a bank" -- Citibank. So, a confessed predatory lender now solicits deposits? The pink Financial Times last week dutifully reported on Citigroup's cost-savings, including "a recent order for photocopiers for all the CitiFinancial consumer finance offices in the U.S.. This was procured centrally, yielding a much better price, and the machines were financed by Citigroup's CitiCapital leasing arm, rather than using the vendor's leasing service." Readers of ICP's CitiWatch Report will note that CitiFi long eschewed the use of shredders, and more recently loses customer information on laptops. Neither was mentioned in the FT...

Update of July 3, 2006:  Given the disparities in Citigroup's 2005 HMDA data, the Federal Reserve's wordless lifting of its 2004 cease-and-desist predatory lending order against CitiFinancial is shameful. So too was Citigroup's meeting with the Office of Management and Budget in June, to lobby about Basel II...

Update of June 26, 2006: They continue to spread: CitiFinancial Services recently leased 1600 square feet at 3150 Hotel Drive in Turlock, California... And in India, Citigroup disclosed in a filing with the Securities and Exchange Commission last week that it acquired a 6 percent stake in Videsh Sanchar Nigam Ltd., a Mumbai-based telecom service provider...

Update of June 19, 2006: In North Carolina, the Tillman case about CitiFinancial's mandatory arbitration clauses has been decided on intermediate appeal. It will now be appealed to the state's highest court. The underlying facts: out of 68,000 loans, CitiFinancial filed more than 2,000 collection actions and 1,700 foreclosures against North Carolina borrowers. No arbitration proceedings were filed by borrowers during the same time period -- because the mandatory arbitration process was so one-sided. Just the way Citigroup likes it, including with its employees, even at its investment banking and brokerage divisions...

Update of June 12, 2006: As Citigroup grows and exports its practices, this is the type inquiry Inner City Press / Fair Finance Watch receives:

Subject: Complaint against Citibank

From: [India]

To: CitiWatch [at] innercitypress.org

Sent: Fri, 9 Jun 2006 23:19:07 -0700 (PDT)

 I have a complaint against Citibank of Bangalore, India. The staff of both the local and Chennai office have dismissed my complaint giving lame excuses. I would like lay bare the fact to Citibank Chief Charles Prince himself. I don't want to deal with the Chennai office. They don't understand the damage they have caused me.

  Ah, Chuck....

Update of June 5, 2006: A recent Washington conference included, purportedly as a story with a happy ending, the tale of Paula Harrison of Raleigh, N.C., who was dealing with a high-cost 11.5% CitiFinancial loan and fighting foreclosure. While subsequently through mediation the rate was reduced, why was it so high in the first place?  The June Mortgage Servicing News story has meanings beyond those it was presented for...Meanwhile, Citi's CEO has said that the company will add 40 branches to the 27 it has already opened in Russia. 

Update of May 29, 2006: (Non) compliance watch -- Citigroup's brokerage unit has agreed to pay $98 million to settle claims on behalf of thousands of current and former brokers that they are owed overtime pay. Way to treat even brokerage employees... Much was made last week of Citibank's plan to open four branches in Boston. Thrown in as an aside were CitiFinancial's 22 high-cost lending offices in Massachusetts. It's subprime that drives Citigroup, at home and increasingly abroad...

Update of May 22, 2006: A deafening no-comment -- following the Wall Street Journal's May 11 article on the continuing investigation into the billions looted from Nigeria by ex-dictator Sani Abacha, which named as a conduit for Abacha's Transnational Bank's nostro accounts Citigroup and only one other institution (Deutsche Bank), nothing said by Citigroup...

Update of May 15, 2006: In Brazil, CitiFinancial is on record as planning to increase its number of subprime lending offices from 74 to 144. Meanwhile, Citi's proxy statement discloses that Robert Rubin, who could barely be bothered to stand up and wave at the annual general meeting, spent shareholders' $330,392 on personal travel in 2005. That's beyond what's spent spreading predatory lending around the globe -- about that, there's nothing personal, just business. Speaking of which, a headline in the International Herald Tribune of May 11, "Citigroup pulls back on Guangdong bank bid - Ownership law can't be circumvented" makes an interesting contrast to the United States in 1998. Then, Citigroup not only circumvented but broke the U.S. ownership law, the Glass Steagall Act prohibiting the mixing of banking and securities / insurance underwriting. Can it be that China has more "rule of law" than the U.S.? Or just that Citigroup doesn't have enough juice in China to allow it to circumvent the law? 

Update of May 8, 2006:  Citi's stealth subprime sleaze -- Citigroup will no longer break out the subprime production volume of its CitiFinancial mortgage business, a spokesman for the financial services giant confirmed to NMN, May 1. In reporting to the public, all of Citigroup's residential production will be disclosed as an item under real estate lending. The change became effective in the first quarter. "It's all been consolidated into one reporting line," said the spokesman, adding that "CitiFinancial has opened 200 new branches in the U.S. this year. Overall, CitiFinancial operates 1,000 retail branches in the U.S. and 1,200 overseas." So -- CitiFinancial now has more offices outside the U.S. than within (Mexico is hardly "overseas"). And was the spokesman who NMN quoted the ex-journalist Rob Julavitz?

Update of May 1, 2006: In a public forum in Brussels last week, marking the formation by NCRC and others of the ICRC, Citigroup's intrepid Jeff Jaffe spoke of Citigroup's endeavor to re-enter the mortgage market in Europe, due to changes in the Basel capital accords, and singled out Ireland as the type of economy, with limited regulation of financial services, which others in Europe might want to emulate. Elsewhere in the forum, advocates from Germany spoke of litigation about Citigroup for high-cost loans and payment protection insurance. Elsewhere in Brussels, a Citibank branch refused to exchange currency into Euros except for Citigroup customers; a Citi credit card was not enough to qualify, highly ironic in light of CEO Charles Prince's statements at Citi's annual shareholders' meeting, that the company has unified its customer bases instead of viewing each product or business line separately. Perhaps the message hasn't crossed the cold Atlantic?

Update of April 24, 2006:  On Tuesday at Carnegie Hall Sandy Weill, presided over his last annual shareholders meeting at Citigroup, handing the reigns to his understudy Chuck Prince. As reported by AP, questions were raised about predatory lending, money laundering and tax evasion. But the ritual rolled on, replete with videos of tributes to Sandy, from a craven Dan Rather to a gushing Robert Rubin, who called Sandy the "most knowledgeable" business leader he'd ever "engaged with." $45 million a year will buy these kind of plugs. During the meeting, one of the speakers asked to see Robert Rubin, who barely deigned to stand up, wave his hand once and then sat back down. Chuck Prince intoned that Citigroup will open over a thousand branches or consumer finance outlets in the coming year -- "three a day," he bragged. When asked by Inner City Press if Citigroup's stated "reforms" in the U.S. apply to its global consumer finance business, Prince said yes, it's a global platform, they do apply. We'll see...

            Inner City Press / Fair Finance Watch has conducted a comparative study of 2005 Home Mortgage Disclosure Act data, this time focused on New York City, and has found that Citigroup in 2005 confined its borrowers in The Bronx to higher-cost loans above this rate spread over 35 times more frequently than in Manhattan, worse than Citigroup's record in 2004. The Bronx is the lowest income and most predominantly African American and Latino county in New York State. In Brooklyn, Citigroup was almost as disparate as in The Bronx. In 2005, Citigroup confined its borrowers in Brooklyn to higher-cost loans above the rate spread 23 times more frequently than in Manhattan.  For the entire New York City Metropolitan Statistical Area in 2005 Citigroup confined African Americans to higher-cost loans above this rate spread over seven times more frequently than whites, also worse than Citigroup's record in 2004.  Chuch Prince called all this "too complex" to be addressed at the shareholders' meeting. Okay then...

Update of April 18, 2006: Inner City Press and Fair Finance Watch have reviewed the 2005 Home Mortgage Disclosure Act data of Citigroup and certain other lenders, including the new information concerning which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien), and have found the following:

--Despite claiming to have improved its corporate practices, the racial disparities in Citigroup's high cost mortgage lending grew worse in 2005 than in 2004. 

--In its headquarters Metropolitan Statistical Area of New York, Citigroup in 2005 confined African Americans to higher-cost loans over the rate spread over seven times more frequently than whites. This is worse than Citigroup's record in 2004.

            Citigroup also disproportionately denied the applications of people of color in 2005. Nationwide, for conventional, first-lien home purchase loans, Citigroup denied the applications of African Americans 2.69 times more frequently than those of whites, and denied the applications of Latinos 2.02 times more frequently than whites. 

            In the state's lowest-income and most predominantly minority county, The Bronx, Citigroup confined 7.39% of its borrowers to higher cost loans over the rate spread -- 35.19 times more frequently than in more affluent and less minority Manhattan, where only 0.21% of Citigroup's borrowers were confined to rate spread loans.  While of the five boroughs, The Bronx had the highest percentage of loans from Citigroup over the rate spread, Citigroup's percentage of higher cost loans in each of the four outer boroughs was higher than in more suburban, and less diverse, Westchester.

            While comprehensive income comparisons will not be possible until the aggregate data is released in September, ICP and its academic support team have designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on each lenders own customers. Nationwide at Citigroup for conventional first-lien loans, 37.73% of upper income African Americans were confined to higher cost loans over the rate spread, versus only 11.46% of upper income whites. Income does not explain the disparities at Citigroup.

            Citigroup, was disparate in MSAs all over the country in 2005. In Los Angeles, Citigroup confined African Americans to higher cost rate spread loans 2.13 times more frequently than whites; its disparity for Latinos was 2.02. Citigroup's African American to white disparity was 2.27 in the Washington DC MSA, 2.72 in Chicago and 3.43 in Philadelphia, where Citigroup confined Latinos to higher cost rate spread loans 3.50 times more frequently than whites.

            Elsewhere on the predatory lending front, Citigroup helped Dollar Financial to go public, and since continued to lend to and assist this pawn and payday lender. Despite claiming to have improved its corporate practices, the racial disparities in Citigroup's high cost mortgage lending grow worse in 2005 than in 2004.

Beyond the lending disparities reported here on April 10 (and in the American Banker newspaper of April 11), Citigroup continues to be chided for compliance, throughout its business lines, and not only in Australia. On April 12 in Ohio, it was disclosed that an arbitration panel of the National Association of Securities Dealers told Citigroup Inc.'s (C) Global Markets unit and its representative David Ridge to pay $900,000 to a couple, Suzanne and Joseph Carruthers, who lost retirement money in an investment program run by Citigroup's investment unit. It just goes on and on...

Update of April 10, 2006: The 2005 Home Mortgage Disclosure Act data, which Inner City Press / Fair Finance Watch received in late March from Citigroup, reveal that Citigroup in 2005, in its headquarters Metropolitan Statistical Area of New York City, confined African Americans to higher-cost loans above this rate spread over seven times more frequently than whites, worse than in 2004. The Federal Reserve has defined higher-cost loans as those loans with annual percentage rates above the rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.

            Redlining and continued disproportional denials to people of color are also evidenced by Citigroup's 2005 data. Nationwide for conventional, first-lien home purchase loans, Citigroup denied the applications of African Americans 2.69 times more frequently than those of whites, and denied the applications of Latinos 2.02 times more frequently than whites, both disparities worse even than in 2004.

            Citigroup was disparate in Metropolitan Statistical Areas all over the country in 2005. In Los Angeles, Citigroup confined African Americans to higher cost rate spread loans 2.13 times more frequently than whites; its disparity for Latinos was 2.02. Citigroup's African American to white disparity was 2.27 in the Washington DC MSA, and 2.72 in Chicago.  In Philadelphia, Citigroup confined African Americans to higher cost rate spread loans 3.43 times more frequently than whites; its disparity for Latinos was 2.50.

            While comprehensive income comparisons will not be possible until the aggregate data is released in September, ICP / Fair Finance Watch has designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on each lenders own customers. Nationwide at Citigroup for conventional first-lien loans, 37.73% of upper income African Americans were confined to higher cost loans over the rate spread, versus only 11.46% of upper income whites. Income does not explain the disparities at Citigroup.

Update of April 3, 2006:  As Citigroup reportedly eyes Finansbank in Turkey, and "wins" praise for supposed corporate clean-up, it has been hit with conflict of interest charges in Australia, that its traders used inside information about the plans of Toll Holdings, its client, to make a bid for Patrick Corp. Regulators are seeking orders requiring Citigroup to stop trading in shares in companies involved in a bid on which it is advising. Citigroup responds that such conflicts are an everyday occurrence. At Citigroup, sure, sleaze remains less the exception and more, the rule...

Update of March 27, 2006:  Citi-sleaze in the United Kingdom too -- last week, Citi hired Ivan Rogers, British Prime Minister Tony Blair's principal private secretary, to head its U.K. "public sector group." Then Gordon Brown named Citigroup as one of 12 companies to give advice on how to deal with globalization. Corruption and revolving-door, apparently...  From employment notices in San Juan, via the National Mortgage News of March 20: "R&G Financial Corp. said that Jose A. Diaz has agreed to join its R&G Premier Bank of Puerto Rico subsidiary as its president. Mr. Diaz most recently served as the president and chief executive officer of CitiFinancial Services of PR Inc." Close readers will remember that this CitiFinancial unit in 2004 violated Citigroup's loud commitment to have stopped make super high cost HOEPA loans.  And in 2005? We'll see.

Update of March 20, 2006: Last week, after repeatedly contacting Georgia's mission to the United Nations, Inner City Press / Fair Finance Watch finally obtained a copy of the National Bank of Georgia's letter to FATF, asking for action on what it calls the "illegitimate banking system in Abkhazia [which] provides broad possibilities for legalizing the income generated as a result of the above-noted crimes... smuggling (including arms), illegal circulation of drugs, kidnapping, etc.". The attachment to the letter lists, among the institutions which provide services to the unlicensed bank in Abkhazia, "Citibank (Moscow, Russian Federation)."  Meanwhile, Citigroup has gotten itself appointed to advise on the privatization of Greece's fourth-largest lender, Emporiki Bank.

Update of March 13, 2006:  In France the rumors are swirling, that Citigroup wants to take over Societe Generale, or maybe Barclay's Bank. The latter would require bank merger approval from the Federal Reserve, given Barclay's Juniper transaction. And the Fed has said (and not retracted) that Citigroup should stop merging, and reform its managerial mess-ups (which has yet to happen). So we'll see...

  Meanwhile last week in Geneva the press quoted Damian Kozlowski of Citigroup Private Bank that Citi is targeting "onshore clients" --  he said that globally, 45% of Citigroup's assets are offshore. "The 45% portion is in decline and we are moving towards an onshore world," he said, without mentioning Citigroup's prior work for Omar Bongo, Salinas and others...

Update of March 6, 2006: Citi's annual report tersely discloses that the Securities and Exchange Commission has expanded an accounting probe into the bank's activities in Argentina, and subpoenaed materials for four additional years… From the mail bag:

Subject: CitiFinancial
From: [Name withheld]
To: CitiWatch [at] innercitypress.org
Sent: Sun, 26 Feb 2006 09:27:32 +0000 (GMT)
   Have just found your site on CitiFinancial. It just the ammunition I need in my fight against this despicable company. They have destroyed our lives since June 2003 when we stepped into their office in Northampton here in England. Reading your page it seems that the methods they use there in America are also practiced here, delaying tactics, hiding documents so you don't see the contents (in our case a  fraudulent credit agreement we didn't know existed for over a year), lying, slamming the phone down if you catch them out in a lie and financially ruining us with their selling methods. Keep up the good work. Hopefully one day I will have my retribution from this predator.

    From India, Tata Consultancy Services Ltd last week clarified that it expects to announce a deal with Citigroup's "consumer unit" in four weeks. Further east, CitiFinancial last week strong-armed a deal with the Philippine Long Distance Telephone Company to be the lender to over five thousand Internet cafés… And the chairman and CEO were radically overpaid, including their taxes, for a year in which the company was essentially barred from acquisitions by the Federal Reserve… 

Update of February 27, 2006: Fortune’s March 6 puff piece on Chuck Prince quotes him that "the only way [Citigroup] could do a transformational acquisition would be to buy Canada." But why buy when you can just suck them dry? CitiFinancial has taken global its predatory model. In Europe in 2004 it was only in four countries. It is now in a dozen: the UK, Spain, Ireland, Italy, Poland, Slovakia, Romania, Russia, Finland, Denmark, Norway and Sweden. In the first two, mortgages are offered. Everywhere else, it’s high-cost personal loans, which is CitiFinancial’s unreformed focus in the United States as well… The Fortune piece makes only a one-line mention that Citigroup was built “from the bit parts of a low-rent consumer-finance outfit called Commercial Credit” – that is, CitiFinancial. The article doesn’t mention the Federal Reserve’s freeze-order, or its 2004 fine of CitiFinancial for predatory lending…

Update of February 20, 2006:  Lubricant: on Feb. 10 it was announced that Citigroup CEO Prince with also be a director of Johnson & Johnson (making of hand creams among other products).  Particularly given the conflicts created (and fines results) from Sandy Weill’s place on AT&T’s board, of what possible benefit to Citigroup can Prince’s J&J foray be? (Ann Dibble Jordan is already on both companies’ boards). Business Week of Feb. 27 has Prince getting advice from Johnson & Johnson's CEO Weldon. What’s the view on predatory lending, from J&J’s NJ campus?

 Taking its predatory lending in-house, and down to Georgia: Citigroup’s Primerica Financial Services Home Mortgages has converted more than 100 of its full-service offices in five Northeastern states to loan solicitation offices. Six of the new loan offices will be located in New York, including locations in Cheektowaga, Amherst, West Seneca, Clarence and Warsaw. The remaining offices are located in New Jersey, Connecticut, New Hampshire and Pennsylvania. Duluth, Ga.-based Primerica made the strategic change to reduce its operating costs and centralize the quality control of its application processing functions.. The reduced costs in state licensing fees will save Citi an estimated $26,750….

Meanwhile, on consumer / predatory accounts processing, from Mumbai on Feb. 15 Citi’s consumer division said it may opt to outsource information-technology work, probably to an Indian software company. Mitchell Habib, CIO of Citi’s consumer division in North America, said the new order would require at least 2,200 software engineers to work on it in the first year of the order being awarded. Habib was speaking at a joint briefing with Tata Consultancy Services Ltd.. He said he expected the order to be awarded to an Indian firm but declined to say if the order was likely to be awarded to TCS.

  The Wall Street Journal’s Feb. 17 story about corporate self-promotion in emergencies quoted Sandy Weill bragging that Citigroup was one of the few to help in Pakistan because “"There aren't a heck of a lot of companies that have business in Pakistan.” The WSJ didn’t add that Citigroup’s business there has included money laundering for its ex-rulers and now having a Citigrouper, Shaukat Aziz, installed as prime minister, making law breaking even less of a problem there…

Updated February 13, 2006: Walk like an Egyptian: a February 8 press release from Brussels mentions that Bob Willumstad, who misrepresented CitiFinancial’s high cost loans, will now be on the board of directors of Commercial International Bank (Egypt) S.A.E….

  Talk about tone-deaf: last week Columbia University named Citigroup’s Student Loan Corporation as its “preferred lender.” Let see: the Federal Reserve fines Citigroup for predatory lending, and tells it to stop expanding in light of money laundering and mismanagement – and then Columbia “prefers” it? 

Update of February 6, 2006: In the run-up to Super Bowl XL in Detroit, Inner City Press / Fair Finance Watch has analyzed mortgage lending patterns in the Detroit Metropolitan Statistical Area in the most recent year for which data is available, 2004.  At Citigroup’s mortgage company, CitiMortgage Inc., American Americans were over 8.6 times more likely to be confined to higher cost loans than whites…

  Insider trading charges settled: the Securities and Exchange Commission last week charged former Citigroup Inc. senior vice chairman, Victor Menezes, with insider trading and agreed to settle the allegations for $2.68 million. Menezes was head of Citigroup's emerging-markets group in 2002, when the company suffered significant losses in its Argentina operations. According to the SEC complaint, Mr. Menezes sold almost $30 million of Citigroup stock ahead of an earnings shortfall related to those losses. Upon the settlement, Citigroup put out a press release lauding Menezes’ “integrity.” Typical of Citigroup…

   Despite its environmental claims and friends, a press release last week (from the buyer) revealed the type of investments Citigroup holds: a stake in “90 oil fields in three basins in offshore Northwest Java and Southeast Sumatra,” just sold to London-based Salamander Energy…

  Meanwhile, Citigroup had the full court press on the China Banking Regulatory Commission's Guangdong branch, in support of its bid to own 85% of Guangdong Development Bank…

Update of January 30, 2006: In Davos, the Public Eye rogue prize has been awarded to Citigroup, this time for tax evasions and money laundering. The quasi-indictment was founded on a detailed report by the Tax Justice Network's Lucy Komisar, available online in PDF format here. The report, and then IPS, recite along with reigning-dates that “In October 2004, Chilean authorities brought a suit for tax evasion against former dictator Augusto Pinochet (1973-1990). One of the banks that laundered Pinochet's money was Citibank…A report by the U.S. Senate Permanent Subcommittee on Investigations said that Citibank laundered at least $ 5 million for Pinochet, "and perhaps millions more." The list of questionable characters who engaged in similar shady deals with Citibank includes Raol Salinas, brother of former Mexican president Carlos Salinas (1988-1994); Asif Ali Zardari, husband of deposed Pakistani prime minister Benazir Bhutto (1988-1990); and the dictator of Gabon, Omar Bongo, who has held power since 1967. [ICP note: For those keeping track, Omar Bongo only last week swore himself in for another seven year term…]Citigroup clients also include the three grown children of Nigeria's late dictator, Gen. Sani Abacha (1993-1998); former Venezuelan president Jaime Lusinchi (1984-1989); two daughters of former Indonesian dictator Suharto (1967-1998); and former dictator of Paraguay, Gen. Alfredo Stroessner (1954-1989).”

            A veritable roadmap to dictatorships. Citi could just as easily been given the award for global predatory lending. In Brazil, for example, Citigroup has been involved in the largest restructurings of the country's high-cost cards industry. On February 1, 2005 Citigroup agreed to divide equally with Itau the assets of Credicard, which added 3.8 million cards to Citibank's cards portfolio in Brazil, increasing it to 4.7 million and making Brazil Citigroup's second-largest cards market outside the United States after South Korea. Gustavo Marin, “country officer” for Brazil, bragged or threatened that Citigroup is  also adding a number of high cost CitiFinancial branches to its network in Brazil. And so it goes…

Update of January 23, 2006:  In announcing Citigroup’s earnings last week, CEO Chuck Prince acknowledged some problems at CitiFinancial. "It's obvious that our U.S. consumer franchises continue to face a challenging" environment, he said during a conference call with analysts. Dow Jones reported that “the network of CitiFinancial consumer-finance branches - the expansion of which is a cornerstone of the company's turnaround plan - struggled in the fourth quarter.”  Where are things headed, when the largest bank says its subprime lending subsidiary, which has settled predatory lending charges, is the “cornerstone” of its turnaround plans?

  Bob Willumstad, who falsely claimed at the April 2005 Citigroup shareholders meeting that Citigroup had not made super-high-cost HOEPA loans, has resurfaced – on the board of directors of the scandal-plagued American International Group. AIG’s press release states that “Mr. Willumstad, 60… joined CitiFinancial (then Commercial Credit, a predecessor company) in 1987.” Yep – he was in subprime consumer finance for a long time – and now still is. AIG also does subprime lending through its ex-American General units…. Another follow-up: Marge Magner, who used to train CitiFinancial branch managers, begins on the board of directors of Gannett on Feb. 1.  Will the Gannett newspapers disclose this connection and/or conflict when they report on Citigroup or predatory lending? We’ll see. 

Update of January 17, 2006: Inquiring minds want to know: why is Citigroup outsourcing the management of its profits from global predatory lending? Last week it was announced that management of the assets of CitiFinancial International and of Primerica has been awarded to Connecticut-based Conning Asset Management, owned by Swiss Re.   An analyst from Piper Jaffray opined that "Citi is steadily getting rid of all ties to the insurance business. They have done away with most of their insurance business already. This is just cleaning up some of the loose ends." First, CitiFinancial International is not (mostly) insurance. Second and more generally, what does this say of the “ground-breaking” 1998 acquisition of Citicorp by Travelers?

Update of January 9, 2006: The lede from the Wall Street Journal of January 3: “Citigroup Inc.'s anticipated purchase of a majority stake in Guangdong Development Bank could signal the end of regulatory limits on foreign ownership of Chinese financial institutions.” Citi is “partnering” on the bid with the Carlyle Group. The changing of laws is reminiscent of the violation then dismantling through lobbying of the Glass Steagall Act. Even since, Citigroup is the bank with the highest lobbying budget, according to the Public Eye’s LobbyWatch database, spending $42,410,000 from 1998 through 2004 (and fully $7,200,000 in 2004)...

Update of January 3, 2006: While various news services reported Bear Stearns SEC filings in the week before New Years disclosing that its subprime subsidiary EMC has received an FTC subpoena described as HMDA-related, few followed up to describe the disparities in the 2004 HMDA data, and the companies with the worst disparities and whether they’ve received subpoenas. Citigroup was asked; CitiFinancial’s spokesman Rob Julavitz issued a “no comment.” We’ll see.

Update of December 26, 2005: Last week Rhode Island regulators fined Citigroup $1 million for selling unsuitable investments to elderly customers, engaged in unauthorized trading, and misappropriated funds. That is, predatory in investment advice as well, at home as well as abroad. From DJNW Seoul on December 19: “The South Korean unit of Citibank said Tuesday it will return a total of KRW1.3 billion to customers who contracted floating rate mortgages but had been charged a higher fixed interest rate.” Citi’s predatory lending in Korea, too… From Japan Weekly Monitor of December 19: “Citigroup Inc. will reduce its equity stake in Nikko Cordial Corp. to 4.9 percent from the current 11.3 percent.. Citigroup will reduce its stake so as to reallocate the capital to other operations, Citigroup Chief Executive Officer Charles Prince said in a joint statement released by the two companies. The deal will enable Nikko Cordial to expand its presence in private equity investment and other businesses, President and CEO Junichi Arimura said. With Citigroup's stake falling below 5 percent, Nikko Cordial will be freed from U.S. Federal Reserve Board regulations.” 

   And that, being freed from Federal Reserve oversight, is perhaps the goal?

  Meanwhile, Citigroup is reportedly bidding to acquire 80% of China’s Guangdong Development Bank. Liu Mingkang, chairman of the China Banking Regulatory Commission, told reporters no decisions have yet been made.

Update of December 19, 2005:  During Citigroup’s acquisition of the subprime lender Washington Mutual Finance Group, Inner City Press asked Citi’s Robert Rubin if he was aware that the unit was subject to a $70 million predatory lending verdict.  He responded that subprime lending “is not really [in his] aegis.”  Now, in an interview in Business Week of December 19, he states: “We did two [in-depth] reviews [of our businesses] at the end of last year...one in fixed income, the other in the consumer business. I was part of both of those. It was [CEO] Chuck [Prince] and me and a few others. Right now we're looking at a possible acquisition abroad. I have no idea whether we'll do it, but a group of us went over it. It involves complicated questions, so they asked me to think it through.”  So: he was part of a review of “the consumer business,” and can no longer disclaim responsibility for CitiFinancial’s still-predatory practices. As to the alluded-to “acquisition abroad,” we’ll see…Meanwhile, as recounted by Dow Jones of Dec. 16, Prince “plans to add 150 to 200 new bank branches overseas next year, as well as 400 to 500 new consumer-finance branches. Prince said Russia and Turkey are among the countries that will get new bank branches, while Citi plans more consumer-finance offices in Mexico, Brazil and South Korea.” The export of predatory lending continues.

Update of December 12, 2005:  Last week the transcript of a deposition of Citigroup’s CEO was released. ''If you are asking me if these public perceptions had never come up, would we still have made the change, I don't know the answer to that,'' he said. While he was responding about the “synergies” of Citigroup-ers like Grubman, demanding investment banking business in exchange for recommending the companies’ stock, he might as well have been referring to Citi’s predatory lending: every change has been in response to, and attempt to sidestep, a scandal. And yet the scandals persist… The quoted deposition was taken in August in a lawsuit by Florida investors who say they lost more than $6 million on Grubman’s recommendation of WorldCom stock before the long-distance company filed for bankruptcy-court protection in July 2002.

Update of December 5, 2005: Military personnel on active duty are being overcharged on high interest loans by banks including Citigroup, a new investigation of compliance with the Servicemembers’ Civil Relief Act (SCRA) by Inner City Press / Fair Finance Watch has uncovered.  Through documents obtained under the Freedom of Information Act, ICP had documented widespread violations of the SCRA, defrauding and overcharging of those in active military service, and regulatory inertia in dealing with the abuses.

  Citigroup described in consumers’ complaints as demanding original copies of initial deployment orders, of refusing to deal by telephone with servicemembers’ immediate relatives, and of reporting adversely to credit agencies.

            The Servicemembers’ Civil Relief Act, at 50 USCS Appendix Section 527(1)(a) provides that “An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.”

            The purpose of the SCRA, formerly known as the Soldiers’ and Sailors’ Civil Relief Act, is to provide interest rate relief and other protections “to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation.” Section 502. Citigroup, however, routinely seek to deny the SCRA protections to servicemembers.  For example, beyond deployment orders, Citigroup has demanded original enlistment papers, as reflected in this complaint to Citigroup’s AT&T Universal credit card unit in Jacksonville, Florida, now placed online at www.innercitypress.org/citiscra4.jpg

“We received your letter telling us that you could not process [REDACTED]’s request to reduce the Annual Percentage Rate (APR) under the Soldiers and Sailors Civil Relief Act of 1940. We understand that you need another document to show when exactly she enlisted in the Army. We, her husband and children, regretfully inform you that we do not have access to any of her documents that pertain to her military career. As she is already in Kuwait, there is no way that she can send these documents to you until her return home. She is not expected to return for six months to a year.”

            Using prior military service as an excuse to maintain high interest rates despite the SCRA appears to the strategy as other Citibank units as well, as reflected by the complaint to Citibank’s regulator, the Office of the Comptroller of the Currency (OCC), now online at www.innercitypress.org/citiscra4.jpg

 “I am writing in regards to a dispute with The Associates credit card company of Citicorp Credit Services, Inc. (USA). The dispute pertains to my eligibility to receive the interest credit from the Sailors’ and Soldiers’ Relief Act (SSCRA) (50 U.S. App. Sec. 526).

“I first contacted The Associates in May of 2002. At that time I was denied enrollment. I was told that because I originally entered the military in 1989, I was ineligible. However, my tour of duty was over in 1993. I opened my account with The Associates in 2000. At that time, I was a civilian and had no intentions of signing back up with the military. Yet, in March of 2002, I entered into the US Army on full-time, active military duty. As the law states, the SSCRA regulates the amount of interest I am to be charged for any credit accounts I opened before entry into military service.

“I have disputed this matter with The Associates to no avail. I have sent them copies of my original orders showing my current enlistment date, as well as a copy of the law. Still I was denied. I was then forced to go to my JAG office on base to seek legal counsel. From there I was directed to the Attorney General’s office in Irving, TX, the headquarters for the aforementioned party. The Attorney General’s office then put me in touch with the legal representatives of the [REDACTED] County, where I received contact information for the OCC Customer Assistance Group.

“The Associates have repeatedly denied my claims based on prior service. Yet, I have found nowhere in the law where it states this as a deciding factor. So I write to you now, to examine the law and enforce the necessary actions. I have enclosed all pertinent documents in regard to this matter. I have been enrolled in a debt consolidation company, and have made payments to The Associates monthly for the last year.”

   The attachment, on Department of the Army stationary, reflects Citigroup’s Associates charging 12.99% interest.  In April 2005, a mother wrote to the OCC, in a letter now online now online at www.innercitypress.org/citiscra12.jpg

“Enclosed is a copy of my son’s military orders calling him to active duty, a copy of the affidavit designating me as his authorized representative, and a copy of my letter to Citibank, Sioux Falls, SD, dated 8 December, 2004. Citibank has given me all kinds of excuses for not acting on this matter. First they wanted an affidavit specifically addressed to them. They desisted on their request once I explained to them that the military do not have the time and manpower to prepare affidavits in the manner Citibank wanted. Then they told me that my son’s active duty orders were not with the correspondence I had mailed them. Then they said I needed to prepare a document which they were going to mail to me; I have never received such document. Last time I called I was told that they were still investigating!”

 Another mother complained:

…”His unit was deployed to the Middle East. In February 2003 his fiancé and I applied to Citibank to have his finance charges reduced under the Soldier’s and Sailor’s Relief Act of 1940. (Account # [REDACTED]). We have supplied Citibank with several letters of proof of my son’s service (copy of one enclosed) with no satisfaction. We recently received a letter requesting a “Proof of Service Letter” from Citibank. While the people at Citibank that I have spoken with are polite and helpful, nothing has been accomplished. Telephone calls to the customer service number are no help as the group that handles Soldier’s and Sailor’s Act requests are in Jacksonville, FL and can’t be reached by telephone, only by mail. I think the enclosed letter (which Citibank already has) from the Headquarters of II MEF should be sufficient proof of my son’s service and that Citibank’s foot dragging is nothing more than an attempt on their part to make the process so long and drawn out so that we will give up as they do not want to lose the 24.24% interest that is being paid on the account.”

  Even when compliance is belatedly obtained from Citigroup, accounts are still turned over to collection agencies, and credit ratings impacted, as reflected in this complaint to the FDIC, placed online at www.innercitypress.org/citiscra5.jpg

“My husband enlisted in the United States Marine Corps during the recent war in Iraq. Upon the advice of his recruiter, I requested relief from our creditors in accordance with the Soldiers’ and Sailors’ Civil Relief Act of 1940. Citibank finally responded and complied with the Act. However, they ALSO have turned this account over to TWO COLLECTION AGENCIES (copy of letter enclosed).

“I am filing a complaint against Citibank because they are ruining our credit rating by ignoring my requests regarding relief and selling this account to collection agencies.”

  The attached notice – even the name of the collection agency has been redacted by the Office of the Comptroller of the Currency – reflects a balance of $1,937.13. It begins: “This is to advise you that Citibank (South Dakota) Na (P) has transferred your delinquent account to our office for pre-legal collection.”

     Yet another sample complaint:

“I am serving in the United States Navy on active duty. Currently, I am stationed at the National Naval Medical Center in Bethesda, Maryland. The reason why I am writing to you is because I had a credit card with Citibank, I was getting the reduced interest rate on credit card under the provision of the Soldiers and Sailors Civil Relief Act of 1940. Today that bank is telling me that I am denied that provision and I sent all documentation showing that I am a member of the United States Armed Forces. I have kept my account clean, paid my bills on time and they have not told me why I cannot get the reduced interest rate. I am writing to let you know what the Citibank is doing.”

    ICP will be pursuing these issues further. For or with more information, contact us.

Update of November 28, 2005: Inner City Press / Fair Finance Watch is analyzing Gulf Coast mortgage lenders in the Katrina-zone, identifying those which in 2004 had the worst disparities between the percentage of African American and white borrowers who were charged higher costs, over the Federally-defined rate spread of 3% over comparable Treasury securities on a first lien loan, 5% on subordinate liens.  Interim results including this finding, that in Mississippi, Citigroup’s CitiMortgage in 2004 was 5.4 times more likely to confine African Americans to higher cost rates spread loans than whites...

Update of November 21, 2005: Expanding its predatory lending presence, CitiFinancial is reportedly opening at least one new office every week in India.  This according to Citi’s William Rhodes, bragging at the APEC conference last week in South Korea. Rhodes said of India, “’There are pretty significant restrictions with acquisitions, so until that changes it will be quite hard to expand inorganically. But we are looking to grow our organic business quite strongly.’ The group is already opening outlets of CitiFinancial, its non-banking arm, at a rate of one a week, taking advantage of regulations that do not consider the mortgage and personal loan provider a bank. Mr. Rhodes said Citibank's acquisition of South Korea's KorAm bank was proceeding well and would serve as a template for other purchases in the region.” Of course, as reported, Koram has already been charged with predatory lending....

            CitiFinancial is also moving back office functions for its predatory lending in the United States to Fort Mill, South Carolina. “CitiFinancial's Auto Center in Charlotte will be among the first to move to the operations center. About 150 workers, primarily customer call center and collections representatives, will move by Monday. The remaining 250 auto employees will relocate by mid-January. About 350 customer service, personal loan and debt consolidation workers from CitiFinancial's Branch Network will move the first week of December.” Bad karma...

Update of November 14, 2005: A series on mortgage fraud in the Chicago Tribune last week details egregious CitiFinancial loans.  CitiFi’s spokeman Rob Julavitz blames it all on Associates; even the Tribune notes that “the Federal Reserve Board fined Citigroup an additional $70 million--another record payout--for alleged subprime mortgage abuses from 2000 and 2001, after Citigroup took over Associates.” We’ll add that the Fed’s fine was not limited to actions stopping in 2001, and that Citigroup’s spin that it put the issues behind it by stopping making super high cost HOEPA loans was disproved by Citi’s 2004 mortgage data. Continuing with its lack of standards, Citigroup is underwriting $2.57 billion home equity deal by Ameriquest, even as Ameriquest is investigated for predatory lending in over thirty states. For more CitiFinancial analysis, click here (BankRate.com article).

Update of November 7, 2005: Citigroup bragged last week of its hiring of ex-World Banker James Wolfensohn, to add to a roster already including Robert Rubin, who has still done nothing to address CitiFinancial’s predatory lending (and took no public position on Citi’s super high cost HOEPA loans in 2004, leaving that task to the now-gone Bob Willumstad).   As noted by the FT, “the announcement came just a day after the world's biggest financial services group said it had hired Shengman Zhang, Mr. Wolfensohn's former number two at the World Bank, to be chairman of its public sector group.”  Here’s a thought: why doesn’t the World Bank have anti-revolving door policies, as even the U.S. bank regulators have had to adopt?

On Citigroup’s continued globalization of standardless subprime (predatory) lending, the Polish News Bulletin of October 31 reported that  “CitiFinancial, a department offering cash loans to less wealthy clients, will help it strengthen its position. After two years of operating, CitiFinancial's assets are worth around ZL 560 million and the department is beginning to generate a return on investment. In the near future it will diversify its offer.” High cost consumer lending in Poland by CitiFinancial -- what will Wolfensohn have to say about that? We’ll see. Or about this?

“Nov 2, 2005 - SEOUL (Reuters) - A one-day strike by unionized workers at Citibank Korea shut one third of its branches on Wednesday, the company said, with the union threatening to escalate the action over pay and welfare benefits. The union represents about 2,700 employees from former KorAm bank, which Citigroup Inc. acquired for $2.7 billion last year, and accounts for nearly half of Citibank Korea's workforce... The union said in a statement its members would boycott selling investment and bancassurance products beginning Thursday.” 

Update of October 31, 2005: At the United Nations on October 26, there was bragging about Citigroup’s micro-finance programs. But when the head of Citigroup’s microfinance group was asked about the relation between his unit and the larger subprime CitiFinancial was, he referred to “CitiFinancial and other micro-finance institutions” wanting effective regulation and transparency. His answer -- which a number of observers including from Citigroup peer banks and rating agencies notes was not at all responsive -- ignored that Citigroup has lobbied against regulation and transparency; it also implies that Citigroup is including its high-cost CitiFinancial unit in its definition of micro-finance. For shame...

Update of October 24, 2005:   Reporting on last week’s earnings conference call, CNN / Money reported that the “Federal Reserve also blocked the company from making any more acquisitions until it gets its compliance issues in order.” The NY Times reported that “the Federal Reserve [is] barring Citigroup from making any major acquisition until it tightens internal controls and addresses regulatory problems.”  Let’s hope that the Fed keeps its word, and sticks to its guns... Meanwhile, predatory lending will take you everywhere.  Beyond Citi’s global export of CitiFinancial’s practices, the defense lawyers are on the move as well. Last week the Free Press newspaper in London, Ontario, reported that among the “city dignitaries” who got photo-op face-time with ex-President Clinton at an event sponsored by CIBC Wood Gundy was... “Michelle Hayward of CitiFinancial.” And she used to be in Baltimore...

 From the mailbag:

Subject: CitiFInancial Automotive-repo for CPI

From: [name withheld]

Sent: Thursday, October 20, 2005 2:25 AM

To: CitiWatch [at] innercitypress.org

My daughter has just experienced a repossession of her car by Citibank.  Lo and behold, she wasn’t really in default for her car payments, but because of Creditor placed insurance.  She had a collision policy in place, but for some reason, Citi decided she didn’t and placed CPI, without notifying her. They admitted that they (oops!) made a mistake, but they still want the balance of the loan (which is now $2000.00 more than the original loan).  We went today to retrieve the personal possessions (Citibank sent a letter stating that the repo company would hold the personal items for 30 days after Sept. 19, 2005) only to discover, “they’re gone”…”we donated them”.  After badgering the repo man, he gave me a fictitious church charity’s name.    I, of course, notified the mission board of that denomination that the repo company was taking their name in vain….  I guess the big question is, when, ooh when will the feds squash these predators???  Or will they???   It just goes on and on…it shifts shape from one type of loan to another and continues…What will it take?  I’ve followed the stories on your site, got a few questions answered…like why we never got any response to a request for a statement of account showing how payments were applied…  How could they if we requested it in July, and they lost their account records in June??!!  At any rate, thanks for being a forum for sharing the info so that other victims of Citi realize that they’re not alone.

Update of October 17, 2005: We must of course note the U.S. District Court’s decisions in the cases by the OCC and the Clearing House banks -- including Citibank --against the NY Attorney General, to avoid providing the credit score information they say would justify the racial disparities in their lending. Why should the public believe a defense that they go to court to conceal? Whether or not an appeal is taken, and whether or not it’s successful, the public must demand that the OCC bring enforcement action(s) on Citi’s disparities, and must separately pursue them, far and wide and ceaseless...

Update of October 10, 2005: In Italy, MTS has barred Citigroup from bond trading on its Italy-based platforms for a month from Nov. 1 for breaching bond trading rules in August 2004, an unprecedented step for the electronic trading system. As recounted, on Aug. 2, 2004, Citigroup sold 12.9 billion euros ($15.54 billion) of cash bonds in one minute and bought back 3.8 billion euros of the paper within an hour on a day when the U.S market was closed for a public holiday. Much of the trade was completed over Italian-based bond trading platform MTS. Citigroup remains under investigation for this in Belgium and Portugal...

            Our book review this week concerns money laundering. Nick Kochan is a British business journalist; his book The Washing Machine (Texere Thomson, 2005) walks through recent scandals from Bank of New York through Casablanca to Citigroup. Of this last, Kochan writes: “One Citibank private bank official in Africa stated that he does ‘not have problems with the large deposits held in New York by [Gabonese] President Bongo, providing information concerning them is kept completely confidential.’” That’s Citigroup. Now Bob Willumstad is salivating to get top job at Mellon -- which last week received a Wells notice from the SEC. Bob W would be right at home...

Update of October 3, 2005:  CitiFinancial is the highest cost lender in Ireland, as well. The Irish Times of September 28 reports: “Consumers can save EUR 80-EUR 1,200 by shopping around for personal loans, the Irish Financial Services Regulatory Authority said yesterday. The financial regulator repeated its warnings about payment protection insurance, which it stressed was an optional and expensive type of insurance sold in conjunction with personal loans. The survey shows that the best value personal loans are available to members of EBS Building Society, who are charged an annual percentage rate of interest (APR) of 7.45 per cent. The total cost of credit for an EBS member on a loan of EUR 7,000 repaid over three years is EUR 805, compared to EUR 1,180 for someone who arranges a fixed-rate personal loan through a Bank of Ireland branch. The cost of credit at CitiFinancial... was a massive EUR 2,799.”  That’s 2.4 times higher than at the Bank of Ireland, and 3.5 times higher than the building society. And this is how Citi builds up its profits, without standards, outside of the U.S....

Update of September 26, 2005: Inner City Press / Fair Finance Watch has reviewed Citigroup’s mortgage record in the New Orleans Metropolitan Statistical Area in 2004, including not only denial rates but also the new information concerning which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien) --

 Whites: 1461 applications, leading to 484 denials (33.13% denied) and 605 originations; 179 [or 29.59%] exceeded rate spread.

African Americans: 1492 applications, leading to 747 denials (50.07% denied, 1.51 times higher than whites) and 406 originations; 285 [or 70.2 percent] exceeded rate spread [2.37 times higher / more likely to be over rate spread than whites].

Latinos: 129 applications, leading to 59 denials (45.74% denied, 1.38 times higher than whites) and 35 originations; 22 [or 62.86 percent] exceeded rate spread [2.12 times higher / more likely to be over rate spread than whites].

            Ugly... So’s this: Citi on Sept. 21 said U.S. Securities and Exchange Commission staff are considering administrative proceedings against Smith Barney Fund Management LLC and Salomon Brothers Asset Management Inc., both investment advisory companies that are a part of Citigroup Asset Management.  Back in May, the SEC ordered Citigroup to pay $208.1 million to settle administrative proceedings for alleged violations of the Investment Advisors Act of 1940. The SEC found then that Smith Barney Fund Management LLC and Citigroup Global Markets Inc. failed to disclose to the boards of the closed-end funds details of a new transfer agent agreement. So how’s the Five Point ethics program going? Meanwhile, after declaring itself the greenest of banks, Citigroup last week appointed to its board of directors the CEO of Dow Chemical Co., Andrew Liveris...

Update of September 19, 2005: The Federal Reserve must have been on summer vacation -- it waited under September 13 to respond to ICP’s “letter dated July 5, 2005, to Chairman Greenspan... regarding the proposed transaction between Citigroup... and FDS Bank... This transaction does not require approval by the Board but does require approval by the OCC and FDIC. Your comments have been forwarded to those agencies for consideration.”

            But wasn’t it the Federal Reserve, which said that Citigroup shouldn’t expand by acquisition until it cleans up its compliance problems?  ICP’s comments to the OCC and FDIC are still pending... Meanwhile, Citi is expanding into Kuwait. The Central Bank of Kuwait's board "initially approved the licensing of the New York-based Citibank to open a branch in Kuwait," CBK Governor Sheikh Salem Abdulaziz al-Sabah announced last week. All we can say is “watch your bond market -- and your consumers.”

Remember Citigroup’s loud claims to have become environmental? Well, last week it was reported that Citigroup will arrange a $10 billion loan to OAO Gazprom to finance the state-owned gas producer's purchase of a controlling stake in OAO Sibneft. Citigroup spokeswoman Lindsey Deans in London declined to comment. Typical...

Update of September 12, 2005: This week we venture beyond Citi’s still-predatory lending, back to conflicts in stock research. Released last week was a Citigroup memo from global research head John Hoffman to investment banking chief Michael Carpenter complaining that bankers and executives were pressuring research analysts to issue positive ratings. Hoffman wrote that "research analysts have been told repeatedly that the primary goal of the firm is to get our equity underwriting market share ranking into the top three." Citigroup’s response? "The issues in the memo were addressed in the global research settlement.” But in an ongoing WorldCom-related case, Chuck Prince was deposed in late July, and Sandy Weill was slated for grilling on September 9^th...   Meanwhile BusinessWeek quoted Prince that Citigroup’s “top priorities are to invest more in retail banking in emerging markets like Poland, Turkey, and India, at least double Citi's credit-card volume worldwide, mostly in Southeast Asia and Latin America.”  As reported, in South Korea in July, workers at Citigroup’s purchased KorAm complained to prosecutors about Richard Jackson, the consumer banking head of Citibank Korea, saying he helped the bank make unfair profits -- it’s called predatory lending...

Update of September 5, 2005: The Gulf Coast region is one of the most redlined by banks. Citigroup virtually withholds its normally-priced mortgages from the region. In 2004, over 70% of Citigroup's mortgages in Mississippi were over the Federal high-cost rate spread (3% over Treasury securities on a first lien, 5% on subordinate liens). Meanwhile, less than 10% of Citigroup's 2004 mortgage in Massachusetts were higher-cost. By race, over 75% of Citigroup's loans to African Americans in Louisiana were higher-cost, compared to under 40% of Citigroup's loans to whites. Click here for more of ICP’s Gulf Coast Watch.

From elsewhere, from the mailbag:

Subj: CitiFinancial Gross Exorbitant Interest Charges 

Date: 8/29/2005 12:23:56 AM Eastern Standard Time

From: [ ]

To: CitiWatch [at] innercitypress.org

Greetings, I sent this letter to CitiFinancial after I discovered how the interest charges have added up.  They just started adding daily interest to my account, increasing my principal.

CitiFinancial Mortgage

Attn: Customer Service,

         In December of 1995 I began a mortgage account with Ford Consumer Finance and later The Associates First Capital. In September 2000 CitiFinancial took over my mortgage account.  Upon reviewing my payment history I found two complimentary penalty charges applied to late payments on my record.  I was double billed for late payments.  There is an interest short penalty and also a interest related late charge per one late payment.  That calculation is a gross overcharge not clearly represented in the mortgage agreement.  The periodic interest rates and penalties were never disclosed, a violation of the Truth and Lending Act.

        The approximate balance on the Interest short column is well over $40,000.00 for the years in which daily interest was calculated.  This was then added to my principal balance along with loan restructure fees.   The loan restructure was recommended by your company and then added to my loan principal.

  And so it adds up...  

Update of August 29, 2005:  And now she too is leaving -- Marge Magner, we’re talking about, she who attended the hearing on Citigroup - Golden State but said nothing, she who trained CitiFinancial branch managers at the Beam-Me-Up meetings in Baltimore.  Perhaps the previous week’s announcement that she’d join a board at Brooklyn College should have been a clue... Meanwhile, an NASD arbitration panel has awarded two petitioners an aggregate $269,537 from Citigroup Global Markets, for breach of fiduciary duty and contract, material misrepresentation, and failure to supervise, among other charges. Citigroup claimed that the NASD lacked jurisdiction over the claims - but lost. More payouts -- for example, Citigroup's predatory lending settlement with the Federal Reserve is still being paid out, click here to view the settlement's website...

Update of August 22, 2005:  Two of Citigroup’s far flung purchases last week -- a move on oil company, Inchon Oil Refinery Co., in South Korea (how’s that for environmental standards?) and, a department store with a subsidiary called Parasito.com.  Yes, parasite -- that’s Citigroup.

Update of August 15, 2005: Oh, five-point ethics. How does Citigroup’s $50 million “investment” with Thomas W. Jones look now, with the SEC last week charging Jones with fraud. Settling Citi in May paid $208 million to settle the SEC's fraud charges against two of its divisions, including Smith Barney Fund Management LLC.  Now they’re phasing that name out. The SEC alleged that the divisions misrepresented and omitted facts when recommending to the funds' boards of directors that the funds change from a third-party transfer agent to an agent that was a Citigroup affiliate. Jones “approved the final structure of the deal fully aware that the affiliated transfer agent was projected to make tens of millions of dollars in profit each year for doing minimal work,'' the SEC asserts in its complaint.  But what of the $50 million “investment”?

This, we hadn’t seen until last week -- the publication Euromoney of July 2005 reported that ICP

“has a question. How come the firm, which undertook in January 2003 on its corporate citizenship website to stop making so-called HOEPA loans, has, according to its own home mortgage data for 2004, made a further 837 such loans? The reference is to high-cost loans charging 800 basis points or more above treasuries that are usually extended to borrowers with poor credit histories in poor neighborhoods and now covered by the Home Ownership and Equity Protection Act. Into the breach steps Robert Willumstad, president and chief operating officer of Citigroup. He tells Lee that the bank doesn't make such loans and that Lee must have misinterpreted the data. That's odd, Lee replies, as he is looking at a spreadsheet of loan figures provided by Citigroup that has a HOEPA status column with 837 loans marked yes. Home Mortgage Disclosure Act data is as familiar ground to Lee as negative operating leverage ratios are to the average bank analyst. Citigroup later pleads that although it instituted the policy of not originating Hoepa loans in January 2003, various divisions that it had acquired through the purchases of Associates and parts of Washington Mutual only phased in this new approach to lending over time. It's a messy fudge of an explanation.”

           Emphasis on “fudge”....

Update of August 8, 2005:  Continuing to pay out settlements -- on August 4, Citigroup disclosed it has settled three more investor lawsuits accusing its analysts of issuing biased research and failing to disclose conflicts of interest related to three telecommunications companies: Level 3 Communications, Williams Communications Inc. and XO Communications. A Citigroup spokeswoman declined to elaborate on the regulatory filing... But on WNYC radio on August 5, Citigroup’s Robert Rubin pontificated about our “probabalistic” universe and his existential leanings.  Sleazy is as sleazy does...

Update of August 1, 2005:  From a complaint against Citigroup from an employee in Europe, the other details of which remain confidential for now at his request: “In case this is not yet known in the U.S., a trick that is being used in Europe (especially Germany) by Citibank in Consumer Finance is the ‘Top Up’ -- Citi offers a loan to someone, then after a few months of repayments, Citi proposes (‘you’re a good customer’) an increase in the loan amount, which is processed through an early repayment and a new loan. What Citi doesn’t tell the customer is that the T&C include the payment of a penalty in case of early repayment, penalty that is charged and paid with the new loan, which makes it ‘invisible’ to the customer but juicy for the bank.”  Sounds like Citi...

Update of July 25, 2005:  Citigroup’s predatory lending is global.  A recent example, from AFX News of July 21: “South Korea's financial watchdog said it had launched a probe into allegations that Citibank Korea Inc, the local unit of US banking giant Citibank, has cheated customers out of millions of dollars while selling mortgage loans. 'The Financial Supervisory Service (FSS) is investigating the allegation and it will take proper measures in accordance with the outcome of the probe,' the FSS said in a statement. The FSS said it told Citibank Korea yesterday to submit documents including the protocols for the loans in question” following a complaint that “the bank had skimmed off 7.4 bln won from customers by applying fixed rates to floating-rate mortgage loans between the end of 2001 and early this year. Citibank Korea allegedly failed to lower interest rate on the loans when rates began to fall from late 2002.”

            Meanwhile, Sandy Weill wants to keep all his perks while starting a buy-out fund with the same Saudi prince who’s now funding HSBC’s (see last week’s report, below). Shameless...

Update of July 18, 2005:  Citigroup, blaming its systemic compliance violations on particularly individuals like Thomas Jones, disclosed in an SEC filing last week the dismissed Tom Jones is being given $50 million by Citigroup. Some ethics plan, eh?  Meanwhile, it was announced on July 14 that Bob Willumstad is leaving Citigroup in September. Maybe they’ll give him another $50 million -- to go make super high cost HOEPA mortgage loans. That’s the last we’ll have to say about him, and his previously reported on (by ICP) wire-transfer-to-nowhere, unless he or it resurfaces...

  In Citigroup’s headquarters, the New York Daily News, that is, which on July 15 reported that

“The Bronx firm demolishing a vacant supermarket that collapsed in upper Manhattan yesterday has links to the mob and has been cited for several safety violations during the last year, the Daily News has learned. Safeway Environmental Corp. is tied to Harold Greenberg, a twice-convicted felon who the FBI says is an associate of the Gambino crime family. Greenberg's Big Apple Wrecking and Safeway share the same Bronx address and phone number, and Safeway's equipment is leased from Greenberg's Dynamic Equipment, records show. Greenberg pleaded guilty to wire fraud in 1993 and was sentenced to 15 months for his role in a bid-rigging scheme involving Gambino-controlled demolition companies... In February 2003, Safeway withdrew its application to bid on school projects after the School Construction Authority inspector general began asking questions about its ownership... Within the last 15 months, Safeway has twice been cited by federal officials for safety problems they deemed ‘serious.’ Safeway referred all calls to spokesman Bob Liff, who declined to comment.”

            Inner City Press has looked into this. The referenced “Bronx address” is 1379 Commerce Avenue, Bronx NY 10461. Surprisingly, or not, Uniform Commercial Code records show loans to this company by Citigroup.  So what due diligence does Citigroup do? 

Update of July 11, 2005:  It was reported last week in Rome that Italian prosecutors have placed under investigation Citigroup’s Steven Compton, Spiros Skordors, David Riggs, Daniel Leadberter, Jan Robyns, Cristopher Sayerz and Simon Wivell for -- what else? -- the Doctor Evil bond trade...

            According to an SEC filing last week, Citigroup owns over 20% of Stratos International, which makes optical, optoelectronic and radio frequency and microwave components, subsystems and interconnect products used in telecom, video enterprise and military markets. Yes, military...

Four months’ notice? On July 7, Citigroup put out a press release stating that “Chuck Prince, Chief Executive Officer, and Bob Willumstad, President and Chief Operating Officer, will host a Citigroup Investor/Analyst Day on Friday, November 18, 2005 at 8:30 AM.”  That’s in eighteen weeks’ time.  And given the repeated (trial balloon) rumors, such as Willumstad to the GSEs, or Morgan Stanley, will he still be there in eighteen weeks?  If so (or not), will he have retracted his blatantly misstatement that Citigroup didn’t make super high cost HOEPA loans in 2004?

            And where, we ask, is antitrust enforcement? Last week HSBC announced a $200 million joint venture with Saudi Arabian Prince Alwaleed bin Talal. The money will move through HSBC Kingdom Africa Investments (Cayman) LP. HSBC’s CEO Stephen Green said, “We are particularly pleased to be a part of this venture” -- with the largest shareholder of Citigroup...

Update of July 5, 2005: on July 5, ICP commented to the Office of the Comptroller of the Currency on Citibank’s application to acquire the credit card operations of Federated Department Stores.   Just after announcing this proposal, Citigroup admitted having lost the Social Security numbers of 3.9 million consumers. Why impose Citigroup’s lax (and predatory) practices on yet more consumers?

            A policy issue raised in ICP’s comments to the OCC is that, while the OCC by suing the New York State Attorney General is trying to block an investigation of Citibank and its operating subsidiaries, the OCC until now has taken the position that it is not required to, or even that it cannot, review the record of CitiFinancial.  This is what the OCC has told ICP in response to ICP’s comments to the OCC about Citigroup’s super high cost HOEPA loans in 2004.  But since any legitimate fair lending review of Citigroup must cumulate and compare the subprime CitiFinancial with the predominantly prime Citibank and operating subsidiaries, it currently appears that the OCC is in effect blocking any comprehensive, consolidated fair lending review of Citigroup / Citibank. From ICP’s comments to the OCC:

 This is problematic: for example, in the New York City MSA, in which Citibank N.A. has CRA duties, Citigroup (Citibank and CitiFinancial, et al.) confines African Americans seven times more frequently than whites to higher cost, rate spread loans.  Also, Citigroup (including Citibank and its operating subsidiaries) in essence redlines whole states, profiling them and limiting its credit offers in these state to higher cost, rate spread loans (see below for more analysis).  The OCC must act (and allow action) on these outrageous disparities -- in this proceeding, by explicitly considering the record of CitiFinancial as well as Citibank, and, ICP requests, by changing its position on action on Citigroup’s (including Citibank’s) records, in New York State and elsewhere.

            ICP has submitted to the OCC (and Federal Reserve and FDIC) the pattern by which Citigroup redlines whole states, profiling them and limiting its credit offers in these state to higher cost, rate spread loans. Developing...

Update of June 27, 2005: The plot continues to thicken around the 837 super high cost HOEPA loans Citigroup reported in 2004 (after claiming to have stopped such loans in January 2003).   ICP raised the issue to Citigroup (leading to a knee jerk denial by CFO Bob Willumstad, which he has yet to retract), then to the regulators. The Office of the Comptroller of the Currency wrote back saying that none of the HOEPA loans were by a national bank or its operating subsidiaries. But for a number of the loans, Citigroup reported the OCC as the “Agency ID.” A second letter to the OCC raised this, and by letter to ICP dated June 21, 2005, the OCC’s head of large bank supervision Douglas W. Roeder writes:

“In response to your May 23, 2005 letter, we have determined after discussions with Citibank, NA, that Citigroup’s originally submitted HMDA Loan Application Registers (LARS) did not accurately reflect the correct agency code in all cases. This error has been corrected and Citigroup should be sending you an updated LAR reflecting the correct agency code for each loan reported on the LAR.”

            ICP has yet to receive the corrected data from Citigroup (which as noted below has already corrected its data once, having under-reported its high cost / rate spread loans by over 80,000 loans).  Will Citigroup be providing corrected data to, for example, the New York Attorney General’s Office (whose investigation of Citigroup, The Clearing House’s lawsuit on behalf of Citigroup is seeking to block)? Yet again: rather than send time and money schmoozing (for example the Georgia Attorney General’s office, as reflected in documents obtained by ICP under the Freedom of Information laws), how about improving?

            Meanwhile, on the June 24 conference call about its proposed swapping with Legg Mason, Willumstad said, "I don't think we're prepared to disclose" over what time period a reduction in the stake Citigroup would take in Legg Mason would take place. Reuters’ June 24 article, headlined “Citigroup garage sale may be over,” recounts that “last July, Charles Prince, the chief executive of Citigroup Inc., said the world's largest bank would hold a ‘garage sale’ to rid itself of assets it didn't need and focus on businesses where it wanted to grow.”  Funny choice of words -- as recounted below on this page, CitiFinancial would take lists of personal property like fishing rods as supposed security for loans, to sell credit insurance on them, leading some to question whether Citigroup would foreclose and hold a “garage sale”....

  Sandy Weill, meanwhile, was hob-nobbing with Vladimir Putin on June 25. As reported in the Moscow newspaper Vedomosti, “Sanford Weill, CEO of Citigroup, will lead the Americans who are meeting with Putin. At the meeting with the president on February 11 Weill offered to organize a ‘visit’ of a delegation of US business executives and Putin supported this idea, says a member of the presidential administration. Susan Tether, a spokeswoman for Citigroup Europe, confirmed that Weill will come to Russia together with several clients of the bank to take part "in several meetings," but refused to reveal the details. Alcoa CEO Alain Belda will visit Putin as a member of Citigroup's board of directors, a company employee explained... Alcoa has purchased two aluminum-rolling enterprises from RusAl for $300 million.”  Equator principles, anyone?

Update of June 20, 2005: On June 16, both the Office of the Comptroller of the Currency and the Clearing House, a trade association of large banks, sued the New York Attorney General, seeking an injunction against investigation of disparities in the subprime lending of HSBC, Wells Fargo, JP Morgan Chase and others. We say “and others” because, despite reports that Citigroup is not part of this, the Clearing House’s Order to Show Cause (available here in PDF) seeks to block investigation of Citibank, N.A., by name. This trade association would not include its largest member’s name without consent. So those reporting that Citigroup is not seeking to block fair lending enforcement are doing Citi a favor, as well as being inaccurate.

            On the other hand, here’s detailed reporting, from the San Francisco Chronicle of June 15: “It turns out that the financial consultant who advised BART on a big bond deal that went to Citigroup Global -- just before taking a job with the banking giant -- advised two other public agencies that made similar deals with Citigroup as well.... Alex Burnett, who took a job this spring at Citigroup Global Markets Inc. weeks after recommending that BART give the company a lead role in a $600 million bond deal.  Now we've learned he played a similar role in two other bond deals with public agencies that could put millions of dollars into Citigroup's coffers.  In April, the East Bay Municipal Utility District, which Burnett also advised, awarded Citigroup a lead role in underwriting $795 million in new and refinanced bonds for construction work.  Burnett also acted as financial adviser for the Metropolitan Transportation Commission in picking a group of banks that included Citigroup Global to underwrite $1.5 billion in bonds from regional Measure 2... Becerra said Burnett had told EBMUD that he was in talks with Citigroup about a possible job before he participated on a five-member panel that interviewed underwriting candidates March 15... BART Board President Joel Keller was more skeptical, telling us that ‘on the surface, there is the appearance of impropriety.’ ... Burnett has not returned our phone calls seeking comment.” Typical... And this, from the mailbag:

Subj: CitiFinancial records 

Date: 6/13/2005 10:23:23 AM Eastern Standard Time

From: [ ]

To: CitiWatch [at] innercitypress.org

Dear ICP,

I was not shocked to read the info about Citi's losing customer info. For years now [people] have been retrieving information from their dumpsters to steal mortgage accounts from them. they have even caught someone I know doing it and a month later they still didn't shred anything... Three boxes that someone had set out back of an office. In the boxes were old files with customers info. I mean everything from driver licenses to social security cards to credit reports and bank info... there was even complete employee files in there. How stupid can they be. They don't even protect themselves. -Anonymous

Update of June 13, 2005: Now Citigroup proposes to pay out $2 billion for its role in the Enron fraud. Citigroup says it has already accounted for this. It’s called, “A cost of the buiness model.” In further lay-off news, CitiFinancial will close an Owings Mills, Maryland center that handles loan defaults and has about 110 employees. The layoffs - scheduled for the last two weeks of July, according to Maryland Department of Labor, Licensing and Regulation - follow the closing last year of a back-office support center with 116 workers in Hanover, Maryland. The jobs were consolidated at centers in Charlotte, N.C., Dallas and Phoenix. But where’s the customers’ data? Although the Ohio AG's office does not have as much enforcement power with financial institutions as it does retailers, Ohio AG Petro said, "We'll be rattling the cage of Citigroup in the same way" it did DSW (a store in Ohio that sells, among other things, shoes). We’ll see.  Petro’s office has received 116 complaints against Citigroup, most of them against CitiFinancial, since 2000... For or with more information, contact us.

Update of June 6-7, 2005: CitiFinancial on June 6 admitted that it has lost nearly four million consumers’ files -- all customers of CitiFinancial’s branch system. The files lost include Social Security numbers. While the company expressed shock and predicted that no harm will come of it, it’s worth noting (as much of the other press didn’t) that CitiFinancial has had this problem before. For example, in Florida in 2002 -- as reported by the local NBC TV affiliate there,

“Citifinancial even left its files in convenient boxes, making it easy for anyone who wanted to cart them away. NBC2 decided to find out what kinds of records were there. What was found surprised even seasoned investigators: drivers license information, credit reports, social security numbers, even bank account numbers — for more than 1,000 people. ‘This would be a treasure trove of information for an identity thief. People’s names, social security numbers, banking information,’ said David White of the Collier County Sheriff’s Office Economic Crimes Unit. White said there was enough personal information in the company’s trash for an identity thief to bankrupt anyone. He said a thief could easily take over someone’s bank accounts with the data contained in the trashed documents... A spokesperson for Citigroup in New York admits wrongdoing in a written statement. It reads: ‘Keeping customer information secure is a top priority for Citifinancial. In an isolated incident at one of our offices, some files for inactive loan accounts that should have been destroyed according to our normal procedures were disposed of improperly.’” -- click here to view

  Citigroup’s June 6, 2005, statement included this quote: "’Customer security is of paramount importance to Citigroup,’ said Debby Hopkins, Chief Operations and Technology Officer of Citigroup. ‘While this incident affects the customers of only one of our businesses’” -- a business through which, even before losing the data, Citigroup was harming consumers. And now Citigroup wants to buy more consumers and their data -- all those who have credit cards with Federated Department Stores (which operates Macy's and Bloomingdale's), and May, which Federated is trying to acquire.

Update of June 6, 2005:  The (reverse) redlining of whole regions of the United States by the nation’s large bank, Citigroup, is the subject of an ongoing investigation by Inner City Press / Fair Finance Watch. Here now is a state-by-state presentation, by percentage of loans made in each state that are higher-cost “rate spread” loans, of Citigroup’s lending, compared in all but seven instances (coming soon) to the similar percentage in the state for an aggregate comprised of the three largest mortgage lenders in the country. For this aggregate, the percentage varies from six to twenty four percent. For Citigroup, the spread is from nine percent to a high of 71.61 percent, in Mississippi.  In West Virginia, ninety-one percent of Citigroup’s loans to African Americans were higher-cost rate spread loans. But the disparate pattern goes beyond race. Here’s above-described presentation, by state abbreviation, then percentage of Citigroup’s loans in the state in 2004 that were higher cost, rate spread loans, then the percentage for the aggregate, for all but seven states:

MS - Citi: 71.61% / Agg.: 24.72%; AL - Citi: 65.50% / Agg.: 18.13%; TN - Citi: 65.0% / Agg.: 14.25%; WV - Citi: 61.13% / Agg.: 20.76%; ID - Citi: 50.58% / Agg.: 8.81%; KY - Citi: 50.18%; OK - Citi: 49.35% / Agg.: 20.75%; LA - Citi: 48.54%; SC - Citi: 47.02% / Agg.: 14.29%; VT - Citi: 45.56%; ND - Citi: 45.41% / Agg.: 13.18%; NC - Citi: 45.20% / Agg.: 10.26%; OH - Citi: 44.35% / Agg.: 11.1%; PR - Citi: 41.56%; TX - Citi: 41.09% / Agg.: 13.60%; WI - Citi: 40.14% / Agg.: 11.28%; NM - Citi: 39.62% / Agg.: 14.27%; IN - Citi: 37.97% / 12.67%;   AR - Citi: 36.64%; PA - Citi: 36.42% / Agg.: 9.58%; KS - Citi: 36.23% / Agg.: 11.68%; GA - Citi: 36.09%; MI - Citi: 33.79% / Agg.: 12.09%; HI - Citi: 33.73% / Agg: 5.22%; ME - Citi: 32.06% / Agg.: 9.96%; WY - Citi: 31.56% / Agg.: 13.54%; VA - Citi: 31.21% / Agg.: 8.11%; WA - Citi: 30.49% / Agg: 6.38%; IA - Citi: 29.59% / Agg: 13.08%; MT - Citi: 29.39%; NE - Citi: 29.07% / Agg: 13.83%; DE - Citi: 26.89% / Agg: 7.17%; UT - Citi: 25.63% / Agg: 10.70%; RI - Citi: 24.48% / Agg: 10.41%; AZ - Citi: 23.94%; SD - Citi: 23.44% / Agg: 9.39%; FL - Citi: 23.28% / Agg: 9.29%; MD - Citi: 22.10%; AK - Citi: 21.19% / Agg: 12.19%; NV - Citi: 20.66% / Agg: 8.01%; NH - Citi: 20.66% / Agg: 10.18%; MO - Citi: 20.43% / Agg: 17.94%; OR - Citi: 20.41% / Agg: 7.25%; IL - Citi:18.76% / Agg: 12.67%; MN - Citi: 17.68% / Agg: 6.71%; CO - Citi:16.05% / Agg: 8.13%; CT - Citi: 15.92% / Agg: 9.10%; NJ - Citi: 15.73% / Agg: 7.28%; MA - Citi: 12.06% / Agg: 7.63%; NY - Citi: 11.90% / Agg: 7.26%; CA - Citi: 9.21% / Agg: 6.08%

  There is a major problem here, one that ICP is raising, state by state, to attorneys general and beyond. Meanwhile, in Citigroup’s wider business, it’s another week, another settlement. On May 31, Citigroup issued a press release saying that it will disgorge about $128 million and pay $80 million in penalties in the settlement of an SEC probe into arrangements between mutual funds of Citigroup's Smith Barney unit, an affiliated transfer agent and an unaffiliated sub-transfer agent. Citigroup noted that it has neither admitted nor denied wrongdoing. That is: still in denial... Beyond its own disparate and predatory lending, Citigroup Mortgage Loan Trust Inc.'s asset-backed pass-through certificates, series 2005-HE1, which closed on May 10, 2005, included loans from Argent Mortgage Company, LLC, and Olympus Mortgage Company -- both units of Ameriquest, which is under investigation in 25 states. Birds of a feather... For or with more information, contact us.

Update of May 31, 2005: In continuing analysis of the 2004 Home Mortgage Disclosure Act data, Inner City Press / Fair Finance Watch has come upon a striking disparity in Citigroup’s credit offerings by state and region. Among ICP’s findings: while 12.06% of Citigroup’s 8797 loans in Massachusetts in 2004 were are or over the rate spread, fully 71.61% of Citigroup’s 1909 loans in Mississippi were rate spread / higher cost.  In Tennessee, 65.50% of Citigroup’s 5548 loans were rate spread / higher cost. Other impacted states, (reverse) redlined by Citigroup, include Alabama, West Virginia, Kentucky, Oklahoma, Louisiana, South Carolina, North Carolina, Ohio, Georgia, Michigan, Iowa, Texas, etc.. ICP has filed complaints with the attorneys general in these states and others. [For more, see numbers in Report of June 6, 2005, above.]

Update of May 23, 2005:  ICP on May 20 submitted to the Florida Attorney General’s office an analysis of and demand for action on the glaring disparities in Citigroup’s 2004 mortgage lending in Florida:

Citigroup -- Whites: 35,194 applications, leading to 9438 denials (26.81% denied) and 17,786 originations; 3557 [or 20.0%] exceeded rate spread.
African Americans: 8061 applications, leading to 3338 denials (41.41% denied, 1.54 times higher than whites) and 2831 originations; 1410 [or 49.81 percent] exceeded rate spread [2.49 times higher / more likely to be over rate spread than whites].

Latinos: 8484 applications, leading to 2784 denials (32.81% denied, 1.22 times higher than whites) and 3574 originations; 708 [or 19.81 percent] exceeded rate spread [0.99 times “higher” / more likely to be over rate spread than whites].

            On May 17, two days before issuing a misleading press release about dropping arbitration on real estate loans, Citigroup added an “editor’s note” to its corporate citizenship web site, on the matter of the HOEPA loans in its 2004 mortgage data.  The editor’s note states:

“It is CitiFinancial’s policy not to originate loans covered by the Home Ownership and Equity Protection Act (HOEPA)... Yet some confusion has arisen because we implemented this policy over time. Our CitiFinancial branch network in the U.S. adopted the policy in January 2003, Citicorp Trust Bank adopted it in April 2004, and Associates Financial Services of Puerto Rico did so in July 2004. If we purchase a lender that makes HOEPA loans – as we did in 2004 with Washington Mutual Finance Corp. – as soon as we integrate the business it no longer makes them. And in the event that a HOEPA loan is inadvertently made, it is our policy to work with the borrower to lower the interest rate.”

           First, we note that the “confusion,” if any exists, starts with Citigroup chief operating officer Robert Willumstad, who on April 19 from the stage at Carnegie Hall directly denied that there were any HOEPA loans reported in Citigroup’s 2004 HMDA data. That statement was false and has yet to be retracted.

            Second, even the statement itself shows the gaping loopholes to Citigroup’s supposed commitment. Citigroup acquired Associates in late 2000 -- but “Associated Financial Services” continued making HOEPA loans until at least July 2004.   According to Citigroup, it can take more than three and a half years to “integrate” an acquired business. Given the number of acquisitions it makes (at least up until the Federal Reserve’s March 2004 “acquire-no-more” order), Citigroup always has an acquired-but-not-integrated business through which to violate its commitments.

            Given the duplicity of Citigroup’s handling of this whole matter, for example beyond Mr. Willumstad’s uncorrected misstatement having found the HOEPA loans and trying to cover them up, including by filing a separate 2004 Loan Application Register for Washington Mutual Finance Group, the acquisition of which Citigroup consummated on the ninth day of the year, and now the quiet footnote two days before making another supposed commitment, one presumes that Citigroup uses similar loopholes to its other commitments, on money laundering, five point ethics, etc.. Again the suggestion: less schmoozing, focus on improving. Until next time, for or with more information, contact us.

Update of May 19, 2005: Earlier today, Citigroup issued a press release making much of its commitment to end mandatory arbitration on its real estate loans by August 2005. Given that only two weeks ago, Citigroup finally admitted that it continued making super high cost HOEPA loans for at least a year and a half after it claimed to have stopped, there is reason to be dubious of this "new commitment." If Citigroup violated its previous commitment, how is this one different? There is a way: CitiFinancial legal officials have told consumer advocates that the arbitration announcement is little more than free publicity, given the new federal class action legislation and arbitrators' increasing willingness to hear disputes on a quasi-class action basis. Also, many binding mandatory arbitration clauses, including CitiFinancial's, have been found unconscionable and unenforceable by the courts. So -- free publicity. Somewhat shameless, though. The release says that says that Citigroup "Implemented a policy to not originate HOEPA loans in CitiFinancial, beginning with the branch network." As explained below, Citigroup claimed to have stopped HOEPA loans in January 2003, but reported 837 HOEPA loans in its 2004 HMDA data. These include loans made in 2004 by the branch network. See, e.g., New York Times of May 4, 2005, and the Reports below, back to April 19, 2005. Also unaddressed: Citigroup's glaring disparities in its subprime lending, see for example this sample ICP study, of the New York City MSA (where Citigroup confines African Americans to high cost / rate spread loans seven times more frequently than whites, much worse that its peers). Shameless...

Update of May 16, 2005: This week we step back, temporarily, from drilling ever-deeper into the 2004 Home Mortgage Disclosure Act data. In another part of Citigroup’s subprime scheme, the company announced on May 10 the combination of its auto finance subsidiaries Arcadia Financial LTD, Auto One Acceptance Corp. and TransSouth Financial Corp. -- the last of these was acquired along with Associates First Capital Corp. in 2000.  Since ICP’s inquiring into Citigroup’s 2004 HOEPA loans found that Citigroup has kept Associated-branded subsidiaries, to work around supposed “best practices” it has announced, one wonders what other Associates subsidiaries are out there in the netherworld of the Citigroup universe. In any event, the subprime car lending will now operate as CitiFinancial Auto.

And now a sample from the mailbag, which has been on hold during all this data:

Subj: Citigroup Watch 
Date: 4/13/2005 3:48:18 AM Eastern Standard Time
From: []
To: CitiWatch [at] innercitypress.org 

My partner has been looking for a job recently, and got an unplanned call from Primerica offering her an interview for a "management" position.  She's been studying to be an actuary and so has a financial and operations management background (although not much experience), so figured it was a good opportunity.  She went to the interview and started to be concerned when they mentioned "sales", but they downplayed how much of the job was sales.   They told her to go to a "benefits" meeting, and to bring me with; so, she did.
Right away, we knew something was wrong.  The whole meeting was set up like an infomercial; they were trying hard to *sell* the company, *sell* the position, and even sell Weill as some sort of genius.  The first 20 minutes or so of the presentation, plus any time that you got there early, was spent showing rave reviews of Citigroup and Weill from various publications.  They avoided talking about what the position was for most of the meeting.  My partner and I started exchanging notes, wondering what was going on.  The more they got into it, the worse it became: they set up their system for employees as a pyramid scheme, with up-front costs, and pay on commission.  
They even had a drawing displayed that was pretty much a pyramid, showing how you profit from those under you, and those under them.  The guy speaking tried to sell it as a "get rich scheme" - by the end, he was talking about meeting with Pres. Bush, vacationing in the tropics, boasting about his various new cars (after pointing to his new Humvee, asking the audience, "How would you like to get a new hummer for your birthday like I did?"), showing off his mansion, and talking about how he plans to buy a private jet.  I've never seen such unbridled greed and manipulation of jobseekers in my life; I hardly can even scratch the surface of what it was like; even the sword on the wall, right next to the presenter, was creepy.
I tried to get my partner to walk out in the middle of it, but she was embarrassed to make a scene.  We both vented as soon as we got out, furious that they lied to her to get her to listen to an hour and a half sales pitch.  The more I read about them, now, the madder I get about the whole ordeal. 

Until next time, for or with more information, contact us.

Update of May 9, 2005: The New York Times of May 4 reported that “Citigroup lenders made hundreds of high-cost home loans to customers with poor credit histories in 2004, even though the company had adopted a policy a year earlier to no longer issue such loans, the bank acknowledged yesterday.” But Citigroup chief operating officer Bob Willumstad, who from the stage of Carnegie Hall on April 19 directly denied even the presence of HOEPA loans in Citigroup’s 2004 HMDA data, has never acknowledged that what he publicly claimed was and is not true. Citigroup’s chairman Sandy Weill, who referred the question about the HOEPA loans to CEO Chuck Prince, who passed the buck to Willumstad, was recently in Turkey with Citi Global Bank head Michael Klein, meeting with prime minister Recep Tayyip Erdogan. Watch out... On the HOEPA loans, Citigroup’s deceptions and/or cover-up were in fact even worse than reported in the New York Times.  Fully 180 of the 837 HOEPA loans were reported in Citigroup’s HMDA data has having been made by “Washington Mutual Finance Group.” At first after ICP raised it, Citigroup claimed that these loans were made by Washington Mutual Finance Group prior to its acquisition by Citigroup.  But as it turns out, that deal was consummated on January 9, 2004.  So were the 180 loans all made in the first nine days of the year? It is striking that Citigroup chose to separately report some of its 2004 data as “Washington Mutual Finance Group,” a company it acquiring in the year’s first month. Another subprime acquisition of Citigroup’s, Easy Money, bought half-way through the year, didn’t report its own data. It appears that the only reason for Citigroup’s separate reporting for Washington Mutual Finance Group was an attempt to distance itself from the HOEPA loans, which were made AFTER Citigroup acquired the company. It just gets worse and worse....

The grapevine has it that CitiFinancial, just after having to acknowledge violating its previous “best practices” commitment, may make a *new* commitment: to drop mandatory arbitration from some loan contracts. The same grapevine -- of Citigroup’s chosen “partners,” mind you -- says that Citigroup has admitted that such an announcement would be less than meaningful at this point, after passage of the federal class action legislation and since arbitrators have shown a willingness to hear cases as a class. “Free public relations,” is how one Citigroup lawyer has characterized an announcement dropping arbitration. We’ll see.

   Another indicative development: a recent fraud lawsuit by the attorney general of New Mexico against Furniture World Inc. for “delivering  used, broken or damaged furniture to customers who had paid for new merchandise” also alleges that as the sale financier, CitiFinancial “continued to charge customers who had canceled contracts, which led to delinquent accounts.”  (Albuquerque Journal, May 6). This is CitiFinancial’s Sale Finance program, one goal of which is to pitch high-cost home-secured loans to those who buy furniture. Employees are tracked on what percentage of such “Sales Finance Conversions” they can get the customers to undertake.   A pointed question: why does CitiFinancial work with merchants like this whose defense is that they don’t provide refunds and that all merchandise is sold ‘as-is.’?  Maybe the answer is somewhere in the fine print of the “Five Point Ethics Program.” Or in Turkey, where Sandy Weill was looking for it...

            ICP Fair Finance Watch continues drilling deeper into the 2004 Home Mortgage Disclosure Act data.  Following its petitioning last week of state attorneys general, ICP was asked to produce a study of disparities by gender as well as race. The results, being forwarded to those who requested them, are not pretty. Here’s Citigroup:

White men: 169,992 originations of which 37,974 (or 22.34%) were at rate spread

White women:  67,291 originations of which 21,689 (or 32.23%) exceeded the rate spread (1.44 times higher / more likely to be rate spread than white men)

African American men: 16,512 originations of which 8499 (or 51.47%) exceeded the rate spread (2.30 times higher / more likely to be rate spread than white men)

African American women: 16,116 originations of which 9099 (or 56.46%) exceeded the rate spread (2.53 times higher / more likely to be rate spread than white men)

Hispanic men: 22,757 originations of which 7393 (or 32.25%) exceeded the rate spread (1.44 times higher / more likely to be rate spread than white men)

Hispanic women: 9241 originations of which 3649 (or 39.49%) exceeded the rate spread (1.77 times higher / more likely to be rate spread than white men)

            ICP has provide this and other analysis to the regulators and state attorneys general, demanding investigation and action, including on the issue of Citigroup’s HOEPA loans, and reportedly impending announcement about arbitration -- both may constitute false advertising....

Update of May 2, 2005: The scandal of Citigroup’s super high cost HOEPA loans -- as well as its disparate lending, particularly in its headquarters city -- has now been raised to attorneys general not only in New York, but in dozens of other states. While Citi’s press office bobs and weaves, those in charge look away and face no repurcussion.  Take for example Mister Robert Willumstad.  Since 2002 he’s been in charge among other things of Citigroup’s operations in Mexico and Puerto Rico.  In Puerto Rico Citigroup continued blithely making HOEPA loans long after the Harry Goff commitment. When this violation of the commitment was discovered, no public disclosure was made. And on April 19, from the stage of Carnegie Hall, Robert Willumstad outright denied that there are any HOEPA loans in Citigroup’s 2004 data.  One wag wondered why Willumstad (yes, that’s four W’s in a wrow) didn’t say, “I don’t know, someone will get back to you.” But this is the time for taking charge (if not responsibility) at Citi. Talk about ethics, but deny, deny, deny.  And in the nearly two weeks since, there’s been no retraction, no letter to the regulators misled, not even a change to the Citigroup web site. Somewhere we heard it: “by your fruits shall ye be known.”

Update of April 25, 2005: in May 2004, Citigroup was fined $70 million by the Federal Reserve, including for violations involving Regulation Z, which implements the Home Ownership and Equity Protection Act of 1994 (HOEPA), which applies to very high cost mortgage loans (eight percentage points over comparable Treasuries on first liens, for example). Citigroup’s response including a statement that it had stopped making loans covered by HOEPA in January 2003. This statement appears, among other places, on Citigroup’s web site -- in a May 27, 2004 Memo and a list of what Citi says it doesn’t do.

            When the 2004 Home Mortgage Disclosure Act data was released, ICP Fair Finance Watch found in Citigroup’s data at least 837 loans that Citigroup itself had reported as covered by HOEPA.

            On April 19, ICP’s executive director attended Citigroup’s annual shareholders’ meeting and asked for an explanation of this seeming violation of Citigroup’s public statement of its “best practices.” Citigroup chairman Sanford Weill said that CEO Charles Prince would answer the question, but he did not. Rather, Mr. Prince referred the question to Citigroup chief operating officer Robert Willumstad, who stated that ICP must be misreading the mortgage data by incorrectly inferring from the interest rates at which Citigroup’s loans are made that some are covered by HOEPA.  But in the data, there is a column with a simply yes or no answer: covered by HOEPA or not.  And 837 loans in the data Citigroup provided to ICP (and to it regulators) are covered by HOEPA.

            After Mr. Willumstad’s denial from the stage of Carnegie Hall, where the meeting was held, two Citigroup staffers summoned ICP’s director out into the lobby. They acknowledged that hundreds of loans in Citigroup’s 2004 data are covered by HOEPA. They put the number at 797, and according to ICP's notes broke that figure down as follows:

180 HOEPA loans attributable, they said, to the acquired Washington Mutual Finance Group pipelines or to unexplained "errors;”

29 HOEPA loans by CTB, Citicorp Trust Bank;

582 HOEPA loans by "Associates Puerto Rico;" and

six HOEPA loans by CitiFinancial Puerto Rico.

   Because the meeting was nearly over, ICP’s director went back in and asked a third question: "There seems to be a disconnect between senior directors and the staff at CitiFinancial, because they've just acknowledged that Citigroup did make and report HOEPA loans in 2004, contrary to the statement on Citigroup's web site, and contrary to what Bob Willumstad just said.  You should correct the statement on your web site, and all regulators you've made that representation to, forthwith."

          There was no response from Citigroup.  Further inquiry by ICP has found this breakdown:

611 HOEPA loans by “Associates International Holding Company;”

29 HOEPA loans by Citicorp Trust Bank fsb (fka Travelers Bank & Trust);

180 HOEPA loans by Washington Mutual Finance (now CitiFinancial); and

17 HOEPA loans by CitiFinancial Services of Puerto Rico.

          It is ICP's position violates both the letter and spirit of Citigroup’s “commitment.” There are HOEPA loans reported as CitiFinancial, in 29 states as well as Puerto Rico, and it is not at all clear that these were all acquired among with the subprime lender “Easy Money,” which Citigroup acquired in 2004. Latin Finance magazine of July 2002 reported that “Willumstad will now have an oversight role in Citigroup's operations both in Mexico and Puerto Rico. Willumstad, president of Citigroup and Chairman and CEO of the company's global consumer group, will run credit cards, consumer finance and retail branch banking.” The American Banker newspaper of June 12, 2004, was even clearer: “Mr. Willumstad, 56, also assumes full responsibility for Citi's activities in Mexico and Puerto Rico.” Given Citigroup’s many statements that it was integrating and reforming Associates First Capital Corporation, that its defense now is that it could continue making HOEPA loans as long as it kept subsidiaries with the old Associates name is disingenuous and troubling. So too are Citigroup’s spin to journalists, and other rationalizations.  For example, Citigroup has claimed that the distinction is that its operations on Puerto Rico only came under Harry Goff’s jurisdiction in mid-2004. But the commitment was not by, or about, one person, but rather the company. Citigroup has said that “Associates Puerto Rico” was run out of Dallas and not Baltimore. And? So what? Citigroup is in denial.

            Inner City Press / Fair Finance Watch has reviewed, now for the New York City Metropolitan Statistical Area, the 2004 Home Mortgage Disclosure Act data of Citigroup, including the new information concerning which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien), and has found that at Citigroup for all type of mortgage loans in the NYC MSA in 2004, African Americans borrowers were more than seven times more likely to receive a rate spread loan than white borrowers. Meanwhile, Citigroup denied the applications of African Americans 2.67 times more frequently than those of whites. Latino borrowers were 3.92 times more likely to receive a rate spread loan from Citigroup than were white borrowers, and Citigroup denied the applications of Latinos 2.35 times more frequently than those of whites.

Update of April 18, 2005: In a new low, Citigroup on April 13 informed ICP that the data Citigroup had given it on March 31 was incomplete and incorrect. Based on that data, provided by Citigroup the full month after ICP’s request, ICP conducted an analysis and found for example that for home purchase loans at Citigroup in 2004, African Americans were 4.34 times more likely to receive higher-cost rate spread loans than whites. Citigroup’s spokesman, asked to respond by the Associated Press and the American Banker newspaper, called ICP’s findings, and its director, “reckless,” and claimed that the data showed otherwise. See, e.g., “U.S. community group alleges Citigroup, Bank of America discriminate in mortgage lending,” by Eileen Alt Powell, Associated Press, April 4, 2005; “First HMDA Fallout - Activists Hit Citi, B of A,” by Hannah Bergman, American Banker, April 5, 2005, Pg. 1; and "Groups Make Hay of HMDA Data," National Mortgage News, April 11, 2005, Pg. 2.

            On April 14, ICP received from Citigroup new compact disks and repeated its analysis.  The number of originated loans and mortgage records have remained the same – 351, 811 loans and 1,218,402 records.  But the number of the loans that are higher-cost rate spread loans  has increased from 11,000 in the first, incorrect CD, to fully 93,103 rate spread loans in the second set of data. That is to say, the data Citigroup provided on March 31 underreported its 2004 higher-cost loans by 82,103 rate spread loans. Based on the new data, fully 26.46 percent of Citigroup’s originated loans in 2004 were higher-cost rate spread loans.

            This is still lower than at HSBC, where 32.7% of 2004 loans were higher-cost rate spread loans – but it is much lower than at Wells Fargo, where 9.13% of 2004 loans were higher-cost rate spread loans.  For home purchase loans, Wells Fargo denied the applications of African Americans 2.28 times more frequently than those of whites, and those of Latinos 2.02 times more frequently than whites.  At Citigroup, the disparity for African Americans is higher (a denial rate for African Americans 2.54 times higher than for whites), while for Latinos it is slightly lower (a denial rate for Latinos 1.93 times more frequently than whites). These comparisons are for the holding companies as a whole, cumulating all of their HMDA-reporting affiliates.

            Based on the new data, for home purchase loans at Citigroup in 2004, African Americans were 3.88 times more likely to receive higher-cost rate spread loans than whites.   While this is slightly lower than the disparity, 4.34 to one, in ICP’s first study based on the data Citigroup provided, it is still much higher than for example the lenders reviewed above. Strangely, the Wall Street Journal’s April 11 report, based on Citigroup’s self-generated percentages, had Citigroup appearing less disparate than nearly all other lenders. Now it appears that the Journal’s April 11 report was based on Citigroup’s own self-presentation of its data and ratios, and not on (correct) raw data. Developing...

Update of April 11, 2005: Citigroup’s response to ICP’s analysis of its mortgage data, in which ICP as Citigroup had suggested looked at particular mortgage lending products, beginning with home purchase loans, was to call the conclusion “reckless.” This ad hominem response was delivered by CitiFinancial’s ex-journalist spokesman, to the publication he used to work for; then it was repeated to the Associated Press. See, “Group Alleges Bank Discrimination,” AP of April 4, 2004.  For a bank which has been subject to prosecution and de-licensing for both predatory lending and money laundering to characterize as “reckless” the analysis of data, using methods the bank itself suggested, is laughable.

            Citigroup's March 2005 memo about its then-still-withheld data said, in the second paragraph, "As a result of these efforts, the homeownership rate in the United States hit a stunning 69% last year... efforts to expand credit, particularly through the use of risk-based pricing, have contributed to these incredible gains in homeownership."
            That's why it's more than legitimate (and not "reckless") to look specifically at risk based pricing for homeownership loans. A separate methodological issue it that we'd resist including home improvement loans in the analysis since Citigroup's home improvement loans include a slew of non-secured loans for which they don't report whether the loans are rate spread or not -- including these would skew any analysis.

            Substantively, even as ICP analyzes other banks’ data as it arrives, Citigroup continues to stand out. For example while at Wells Fargo for home purchase loans, African Americans borrowers are 3.9 times more like to receive a rate spread loan that white borrowers, this is still less disparate than Citigroup, at which African Americans borrowers are 4.34 times more like to receive a higher-cost rate spread home purchase loan that white borrowers. Meanwhile, Wells Fargo denies the applications of African Americans for home purchase loans 2.3 times more frequently than those of whites, nearly as disparate as Citigroup’s 2.6 to one denial rate ratio between African Americans and whites.

            Perhaps rather than spend its staff time on spin, and then insults, Citigroup ought to focus on improving its performance, including fair lending performance. Paraphrasing “Don’t move, improve,” the message / lesson to Citigroup is “Don’t schmooze, improve.” We’ll see.

Update of April 4, 2005: The 2004 Home Mortgage Disclosure Act data has come out, not unlike pulling teeth. Inner City Press has done an analysis of a half-dozen banks, and found the the largest (and most disparate) among them to be Citigroup -- click here to view. ICP’s top line finding so far with the 2004 data is that at Citigroup for home purchase loans, African Americans borrowers are more than four times more likely to receive a higher-cost / rate spread loan than white borrowers. Meanwhile, Citigroup denied the applications of African Americans for home purchase loans 2.6 times more frequently than those of whites.

            Citigroup’s rate spread disparity for Hispanics was even worse: for home purchase loans, Hispanic borrowers are 6.48 more than six times more likely to receive a rate spread loan from Citigroup than are non-Hispanic white borrowers.

            Citigroup has been providing pre-data “spin” to numerous reporters, complete with a talking points update labeled “not intended for public use or dissemination.” ICP’s sourcing for this is from reporters, one of whom told ICP, “They must really have something to hide, to be spinning so hard.” There’s probably more; ICP’s analysis continues. The above-identified disparate treatment by Citigroup of people of color seeking to own their homes is decidedly more pronounced, and more troubling, than for example National City Corporation’s two-to-one disparity reported in the Wall Street Journal of March 30, 2005. National City apparently presented its data in the light most favorable to it, leading to the summary conclusion that African Americans are 2.21 times more likely to receive rate spread loans than whites at National City, and Hispanics 1.26 more likely. See, “Blacks Are Found to Pay High Rates for Home Loans,” WSJ of 3/30/05, D2.

            National City’s over two-to-one disparities are troubling -- but they cast Citigroup’s four-to-one disparity for African Americans, and over six-to-one disparity for Hispanics seeking home purchase loans in starker contrast.  The nation’s largest bank is also its most disparate, when it come to targeting people of color with higher-cost home purchase loans. On this and the other Citigroup abuses / scandals, watch this space.

Update of March 28, 2005:  While the Federal Reserve has put its unique cap on significant expansion by Citigroup, it has yet to take other appropriate actions, not only on CitiFinancial’s ongoing predatory lending, but also on retaliation and systems breakdown elsewhere in the bank. First a predatory lending sample, then a follow-up on our whistleblower’s report from two weeks ago.

Subj: citifinanial

Date: 3/21/2005 8:40:57 PM Eastern Standard Time

From: [ ]

To: CitiWatch [at] innercitypress.org

My mother in law just found out today, by reading the local paper, mind you, that her house and land are to be auctioned off two weeks from now at a public auction. CitiFinancial was her lien holder. She has been paying them thousands of dollars over her min. payment and has receipts. She was never served. Never notified of even being in default. She never would have known what was going on if my brother-in-law didn't read the paper. Has anyone else had their house auctioned off by CitiFinancial without ever getting any kind of notice? Does this sort of thing happen often with them? What can be done?

   Ask, among others, the Federal Reserve, which has fined CitiFinancial $70 million for predatory lending, but still needs to follow-through. Speaking of following through (on our whistleblower report of two weeks ago), among other other missives this came in this week:

Subj: Citigroup Audit 

Date: 3/23/2005 11:07:22 AM Eastern Standard Time

From: [ ]

To: CitiWatch [at] innercitypress.org

The group that audits Citigroup's domestic consumer operations is run by one Thomas Anderson.  Thomas Anderson knew about situation with the whistleblower in your March 13 piece, and particularly about the fact that the whistleblower brought to Senior Management's attention flawed audit of Commercial Business operations.

A friend in the know (a Citibank officer who works in the Long Island City facility where Anderson has his office, and who also has a contact in Audit) informed me that, prior to becoming head of Domestic Consumer Audit, Mr. Anderson ran other Citibank divisions, including a credit card operation. Right before his appointment to Audit, Mr. Anderson's business was undergoing an internal audit.  The auditors were preparing what was reportedly an adverse report on the operations Anderson was responsible for when they received a call from "somebody".  This "somebody" informed them that they might want to "rethink" what they were about to publish as they were about to get a new boss in Audit; and that boss was Anderson himself.

Another friend, a former Citigroup officer, tells me about the background of the Audit Director (under Anderson) who is responsible for auditing the business operations of the consumer group.   This individual is Mr. E. Ramos.  Prior to joining Audit, Mr. Ramos ran a Citibank loan portfolio in Puerto Rico.  By all accounts, the portfolio "blew-up" (loan losses) and the Global Consumer Risk Officer (name available upon request) was ready to "can" Ramos.  Anderson reportedly stepped-in and said he wanted to work with Ramos, and gave Ramos a job in Audit.  Ramos has since elevated to a prominent position. Ramos and Anderson were in direct contact with the whistleblower in the March 13 piece.  They knew that the whistleblower asked for Audit to be thoroughly investigated.

       We are also informed that

“There are several SCO's (Senior Credit Officers) at Citibank who contributed to the retaliation who at still at Citibank.  One, in particular, was instrumental in the Citibank purchase of EAB (Bruce Fletcher, SCO, Global Risk). A few more ‘migrated’ over to JP Morgan Chase (how's that for a boy's club?). Whistleblower can also prove to anyone willing to listen how he demonstrated to Compliance, Global Risk and HR how Audit is compromised. Whistleblower also worked on shared syndicated loan between JP Morgan and Citibank, and uncovered JP Morgan tampering with publicly traded company.”

         Among Citi-now-JP Morgan (well, Dimon) connection in all this is one John Watkins.  Another story-inside-Citi:

“The new thing at Citigroup: going forward, if a unit fails an internal audit, the "responsible" unit managers have to meet personally with Prince and Willumstad. So what?  Willumstad, by the way, was so anxious to use the bank's money to buy good press and goodwill that he authorized a wire transfer a couple of years ago in excess of one million US dollars thinking he was contributing to [a non-profit]. Turned out the money went to some trailer in a park in California, then it was forwarded to a destination in Europe. The Feds were called and an arrest was made of a man in the trailer, but the money wasn't recovered.  How does a bank, of all places, fall for such a scam? This story came straight from the lips of the Senior Manager at Corporate Headquarters assigned to "plumb" the transaction. And wasn't Willumstad (along with Magner, among others) "on watch" and repeatedly promoted while Citigroup's reputation went down the drain amid increasing scandals? So how credible is it to have such an executive sit in judgment of anybody?”

We’ll have more on this.

Update of March 21, 2005: Following last week’s ICP reporting on the Federal Reserve’s order that Citigroup should not expect any approval for “significant expansion” for the foreseeable future, there’s time to look more closely at the Senate’s second Pinochet report from the U.S. Senate, which states that its “investigation has determined that Citigroup had a substantial, years long relationship with Augusto Pinochet and his family"... Only in "response to Subcommittee requests, Citigroup has identified 63 U.S. accounts and certificates of deposit that were opened for Mr. Pinochet and his family in New York and Miami at various points in time from 1981 to 2004... It was not until July 2004, two years later, that Citigroup first alerted the OCC to its years-long relationship with the Pinochet family.”  The report at page 82 deadpans that Citigroup “declined to provide any information in response to Riggs’ Section 314(b) requests. When the Subcommittee asked why, Citigroup pointed out that, at the time the requests were made, Riggs was under civil and criminal investigations raising questions about the bank’s management and operations."  That's ironic -- because under that standard, no one should answer Citigroup's questions either...

   In other Citi global sleaze, Citi’s former head of emerging markets Victor Menezes may face civil charges in connection with the sale of $29.8 million worth of company stock in March 2002, weeks before the company took a charge because of losses in Argentina. The SEC sent Menezes a Wells notice in August 2004, which was only reported on March 18, the day after the Fed’s Citi-First American Bank order, reported on immediately below.

Update of March 18, 2005: In the Federal Reserve Board’s order issued late on March 16 on the Citigroup - First American Bank application on which Inner City Press / Fair Finance Watch has been commenting since October 2004 -- not only on predatory lending issues, but also Citigroup’s serial crises in Japan, the European bond market, and, only yesterday, money laundering for Pinochet -- the Fed states as follows:

“Given the size, scope, and complexity of Citigroup’s global operations, successfully addressing the deficiencies in compliance risk management that have given rise to a series of adverse compliance events in recent years will require significant attention over a period of time by Citigroup’s senior management and board of directors. The Board expects that management at all levels will devote the necessary attention to implementing its plan fully and effectively and will not undertake significant expansion during the implementation period. The Board believes it important that management’s attention not be diverted from these efforts by the demands that mergers and acquisitions place on management resources.”

   As reported by CBS Marketwatch's David Weidner, "The Fed challenge does not entirely come out of the blue. Inner City Press/Fair Finance Watch, a Bronx, N.Y.-based community group, opposed the First American acquisition citing Citigroup's lending practices and the scandals faced by the bank. 'Unless Citigroup actually improves its practices, rather than only its public relations as has until now been the case, this block on expansion should become permanent,' said... the group's executive director. 'The Fed should not have given Citigroup any merger approval given the scandals that are swirling around it.'"

    Initial press reports entirely missed the above-quoted language from the order and merely noted the approval, and (near-meaningless) antitrust numbers. ICP/Fair Finance Watch endeavored to correct this, emphasizing the above: the Fed “expects” that Citigroup “will not undertake significant expansion” for the foreseeable future.  The Fed’s inappropriate failure to address last week’s comment and Report (below on this page), and yesterday’s Pinochet report on Citigroup from the Senate, will be inquired into going forward. The Order also acknowledges disparities in Citigroup’s mortgage lending and other issues ICP raised (click here for PDF of the Fed's order) -- but the above-quoted seemed noteworthy.  On this, ICP’s position: While the Fed should not have given Citigroup any merger approval given the scandals that are swirling around it -- from money laundering including for Augusto Pinochet and in Japan, to rogue bond trading and predatory lending -- ICP take note of the Fed implying that Citigroup can’t expand any more, for the foreseeable future. Unless Citigroup actually improves its practices, rather than only its public relations as has until now been the case, this block on expansion should become permanent. 

    The press coverage by Thursday afternoon noted the language, but quoted a slew of industry analysts trying to first minimize then generalize its import.  Reuters quoted a former Fed associate general counsel that "the Fed is not saying Citigroup can't make acquisitions." Dow Jones newswires later quoted ex-Comptroller Jerry Hawke that "If Citigroup is told in the context of a small, not terribly consequential acquisition that they should steer away from more substantial mergers until they get their risk management in shape, that's a message to everybody."  Of course, it might be be so "inconsequential" if you lived in a community previously served by First American Bank, now to be replaced if the Fed has its way by "Doctor Evil." DJNS noted that "the Fed's guidance to Citigroup was buried in its order approving the deal, with a number of banking experts only discovering it Thursday after reviewing what at first glance seemed like a routine bank order."  But Inner City Press has learned that a Federal Reserve staffer urgently called Washington media outlets trying to reach reporters directly after 5 p.m. on Wednesday, to specifically alert them that an order, presumably important and out of the norm, was coming.  So why was the language missed "at first glance"?  Perhaps because Citigroup has been so embroiled in scandals, for so long, that it seems normal. It is not. On Friday the WSJ, which has generally turned a blind eye to number of Citi-scandals, including predatory lending, chimed in that "From time to time, the Fed has placed similar restrictions on other institutions, but rarely on such a large institution, in writing and in such a public form."  The Citi - FAB order was public because the application was challenged; Fifth Third for example, and PNC before it, needed nods from the Fed to even consider acquisitions. But the language in this order is unique.

  CBS Marketwatch quoted a professor from NYU that "Citigroup will have to open a backdoor dialogue with the Federal Reserve and receive tacit approval before pursuing a deal. 'They'll have to have assurance it's worth the bother.'"  But the Fed is not allowed by pre-approve (or "tacit[ly] approv[e]") merger applications, which are subject to public comment, the Community Reinvestment Act, and other statutory factors. "Backdoor dialogue" with a rogue bank would not be appropriate. The Fed should stick to it, and also take appropriate enforcement actions against Citigroup.

Update of March 14, 2005:  This week’s Citi-Watch story, recounted here and to the Federal Reserve, involves a breakdown, seemingly intentional, in Citibank’s auditing and safeguards, followed by a cover-up and retaliation against a whistleblower. Three senior credit officers were fired in April 2004. The whistleblower who brought the fraud to light (and reported it upwards in the company) was let go as well, but remains concerned about Citigroup’s ability to retaliate more broadly throughout the industry. Therefore this is as much detail as can for now be given:

            The underlying loan was to business in Suffolk County, New York. The loan was initially originated by European American Bank; Citibank took over the loan along with EAB. The soon-to-be whistleblower, an individual entrusted by Citibank with teaching in the bank’s credit training program, became aware of problems with the loan.  The audit department had ostensibly reviewed the loan but had done nothing. Later the loan was referred from a line lending unit to the work-out / collections department, and yet more credit was extended.

            The whistleblower, having pointed out the irregularities, began suffering retaliation, and complained as high as possible, including to “Global Compliance.”  Nothing was done (except to prepare the ouster of the whistleblower). The underlying borrower released financial statements suddenly showing a large loss, resulting in a December 2004 write-off by Citibank of the loan to the tune of $8,000,000. Additionally, the whistleblower showed senior management how Citigroup's computer systems are seriously compromised, demonstrated how Citigroup employees with basic systems clearance can log on and view customer deposit accounts -- consumer checking and savings accounts and balances -- as well as the accounts of fellow Citigroup employees. The individuals implicated are precisely those involved in the attempt to acquire First American Bank. Citigroup executives aware of the retaliation include Ajay Banga, and, it is reported, Marge Magner. The Federal Reserve and OCC, and others, have a duty to inquire. We’ll see. Until next time, for or with more information, contact us.

Update of March 7, 2005: CitiFinancial’s mandatory arbitration clause has been found to be “unconscionable” in North Carolina by Durham County Judge Ronald Stephens. The suit was filed in Vance County, north of Raleigh, in 2002 by CitiFinancial customers Fannie Lee Tillman of High Point and Shirley Richardson of Henderson. Their suit accuses CitiFinancial, formerly doing business as Commercial Credit Loans Inc., of excessive and improper fees. It’s important to note this case has nothing to do with Associates First Capital, but rather the subprime operation designed since 1986 by those now controlling Citigroup. 

          How this fits in to the 25-minute revisionist video Citigroup began screening last week for its employees is not yet clear, nor have the just-hired Howard Baker’s views on CitiFinancial’s practices beyond the U.S. been inquired into yet. On March 1 in Singapore, Marge Magner announced that Citi “will be opening 200 branches across Asia for consumer finance.”  Magner said countries that would see more Citi outlets this year include India, Indonesia, Thailand and the Philippines. Unconscionability goes global...  Of Howard Baker, note that the law firm he was at, Baker, Donelson, Bearman, Caldwell & Berkowitz PC, has represented CitiFinancial on predatory lending-related matters...

Update of February 28, 2005: Falling fast: France's treasury gave Citigroup a ranking of sixth out of nine financial institutions in its overall 2004 league table list, a lower ranking due to the Citi’s $16 billion “Doctor Evil” bond trade in August. The treasury's list is used to award government business and helps determine which banks are awarded bond syndication and derivatives trading mandates or lead roles in state privatizations. The treasury said that Citi's ranking would have been higher were it not for the August trade. So there are some ramifications - but with a trillion-dollar bank, internally they figure they make more from rogue behavior than they lose. For now, at least.

   From inside:

Subj: Re: Citigroup Watch -- An Update From an Employee 

Date: 2/23/2005 7:51:31 AM Eastern Standard Time

From: [ ]

To: CitiWatch [at] innercitypress.org

Update of February 7, 2005: The corporate business press pegged the announced sale of Citigroup’s Travelers Insurance to Met Life as the death-knell of the ideas of conglomerates and cross-selling.  Travelers bought Citicorp, putting the Weill - Prince - Willumstad - Magner axis in the driver’s seat, from which they’ve now sold off insurance. But Citi’s press release said, “In connection with the transaction, Citigroup and MetLife have entered into ten-year agreements under which MetLife will greatly expand its distribution by making products available through certain Citigroup distribution channels, subject to appropriate suitability and other standards. These channels include Smith Barney, Citibank branches, and Primerica in the U.S., as well as a number of international businesses.” Interestingly, although it sells insurance, including credit insurance, CitiFinancial was not listed... Investigations of Citigroup’s predatory bond trading -- which Citi’s employees called their “Doctor Evil” plan -- last week spread from Germany to Italy, Spain and Portugal. The European Central Bank president urges a "thorough and deep" investigation. Citigroup’s application to buy First American of Texas, on which ICP filed opposition in October, is still pending. It’s hard to imagine Citigroup, embroiled in scandal, being a buyer not a seller. Stock analysts said the cash could be used to buy a credit card unit, or to “accelerate its plans to open 300 to 500 consumer finance offices.”  Yes, that’s CitiFinancial...

Update of January 31, 2005: Ah, Citigroup. On January 24, the Germany regulatory agency Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) made a referral to criminal prosecutors of Citigroup’s bond manipulation of August 2004. Citigroup Global Markets sold some $15.7 billion US in European government bonds on 13 different trading platforms in 11 different markets, causing prices to fall across the board; Citi then bought back roughly $5.3 billion in bonds at lower prices an hour later. Citigroup has been claiming this is a much smaller scandal than its loose anti-money laundering practices in Japan; we’ll see. On January 25, ICP filed supplemental comments with the Federal Reserve opposing Citigroup’s pending application to buy First America Bank in Texas...

Update of January 24, 2005:  Going global, including with subprime: on the Jan. 20 earnings call, Chuck Prince spoke of Citigroup’s focus on international growth as its income generated outside the U.S. rose 43 percent in 2004. "Mexico is up. Asia is way up," Prince gloated. It was not clear to some how the shut-down in Japan impacts these numbers; then it was clarified: the latest quarter's earnings reflect a $244 million after-tax charge to close the Japan Private Bank and a $131 million after-tax reserve taken in relation to the expected resolution of a But investigation of transfer-agent matters. But the charges were offset when Citigroup released cash from its loan-loss reserve and an insurance recovery against WorldCom and Enron.  Great... "We increased our stake in Brazil just recently,” Prince continued. "I think that we are going to do very, very well in the future.”  In Japan consumer finance, building on The Associates’ predatory inroads there, “CitiFinancial Japan KK” now plans to increase its fleet of automatic consumer loan application machines about 40 per cent this year.  The Citi subprime unit operates such consumer finance companies as AIC Corp. and DIC Finance Corp in Japan... More corporate Citi-watchers wondered why on January 21, Citigroup's Fixed Income Investor Presentation was cancelled and postponed to February 11.  Some suggested that the cancellation was in honor of the just-deceased Walter Wriston (who one wag quipped is now trying to find a loophole into the afterlife); others saw darker motives.... Those who can’t waiting until Feb. 11 can catch COO Bob Willumstad at his own firm’s (Smith Barney’s) Financial Services Conference on January 26 at 12:45 PM -- and maybe ask him about these Japan high-cost loan machines...

Update of January 18, 2005:  From the mail bag, responding to last week’s squib:

Subj: Wombold
Date: 1/10/2005 2:06:26 AM Eastern Standard Time
From: [14 year Manager]
To: CitiWatch [at] innercitypress.org
 I was intrigued by reading your follow up to the Wombold case. As a former CitiFinancial Manager, I know how money grubbing these individuals are/were. The objective at Citi continues to be to make the maximum profit possible on each customer without regard for "doing the right thing" (their motto by the way) At Citi, doing the right thing is whatever is best for the company's bottom line. By the way, I would love to hear their response to the heavy prepayment penalties CitiFinancial imposes on their real estate loans. Customers also can't refinance with CitiFinancial without taking an additional cash advance of $10,000 or more in many cases. This includes a refinance for lower rate purposes only. In other words, the only way to get a lower rate mortgage is to wait until your prepayment penalty expires or by taking a BIGGER loan out. They never waive the prepayment penalty, EVEN IF THE CUSTOMER SELLS THEIR HOME... Color me glad I left after 14 years...

Until next time, for or with more information, contact us.

Update of January 10, 2005: Citi-watchers may want to read the just-released Montana Supreme Court decision, in Wombold v. CitiFinancial / Associates, affirming among other things that Associates / CitiFinancial “violated the Montana Consumer Loan Act.” Further afield, Citigroup is being fined for consumer fraud in India:

“The Visakhapatnam District Consumer Forum has directed the Citibank not to make illegal demand and pay Rs.10,000 as compensation to a consumer for deficiency in service.  An agent of the foreign bank wooed a consumer, A.B.V.K. Ramalingeswara Rao of Ukkunagaram into taking a credit card, which allows drawal of emergency cash from any of the ATMs. For this the consumer needs a pin number, which the bank promised to send shortly. Even before the consumer received the pin number, the agent informed the consumer that the latter had withdrawn Rs.5,000 on his credit card and had to repay Rs.5,146.60 as outstanding dues. Stunned by this, the consumer explained he was yet to get the pin number.  The consumer later received the pin number but without opening the sealed envelope, he went to the branch office of the bank in the city. From there, he was asked to contact the Citibank's Chennai office. The latter, to his surprise, alleged that he had used the Indian Oil Citibank card which he held for the last two years and which could also be used to draw the money. However, the consumer was not aware of it until he was told about it. Also, the number of Indian Oil card, which he was said to have allegedly used and the card, which he possessed were different. When his repeated pleas went in vain and he was harassed by the bank's agents, the consumer filed a complaint (Consumer Dispute No: 696/2004) against the Citibank.”

More here, from India’s National Newspaper, “Citibank asked to pay compensation."  From Montana to India...

Note of January 3, 2005: The Federal Reserve, still considering Citigroup’s attempt to buy in Texas, should read Bloomberg News’ most recent expose of Citigroup’s lack of anti-money laundering controls), and take action on them...

Update of December 27, 2004:  CitiFinancial is now offering high-cost loans through pawn shops in Poland.  The Polish News Bulletin of December 20 reported that “Kantor Polski (KP), a new financial services provider was launched today... The idea of forming KP was put forward by The Polish Currency Exchange and Pawnshop Association (SKiLP). Apart from the normal services currency exchanges supply, KP will offer clients CitiFinancial (financed by Bank Handlowy) consumption and cash credits.” Great... Even during this holiday week, we've heard from people  in-the-know that Citibank's Private Bank in Japan was hardly unique in the Citigroup family -- but more on that in 2005.

Update of December 20, 2004: Citigroup’s fast-and-loose practices, well beyond CitiFinancial’s insurance-sales and other predatory high jinks, begin to come home to roost: an account at Citigroup’s recently-sold subsidiary in Saudi Arabia will be charged with being used to collect and pass funds to organizations which then used the money to help suicide bombers and their families. It’s the Account 98 scandal. According to London’s Sunday Times, “Leah Johnson of Citigroup, its parent company, said: ‘Any assertion that Citigroup supports terrorism in any way is an outrage.’” But having so demonstrably loose a know-your-customer regime, for example in Japan (regulators’ order against Citigroup is available via this link), is the real outrage...

Update of December 13, 2004: Citigroup’s subprime unit, CitiFinancial, repeatedly charged with predatory lending including even by the Federal Reserve, is now slated to dramatically expand, in the U.S. and beyond.  Last week Citigroup announced that CitiFinancial will be opening 400 new branches in North America, will be entering Russia (as it has Australia, Indonesia and Finland, in 2004), and, in Japan, will set up a 100 automatic loan application machines and branch offices in 2005 -- under the trade name CFJ KK. This last was bragged about by Dave Lowman of CitiFinancial International, to the Nikkei Financial Daily. In New York, Citi’s Kevin Kessinger told an investors’ conference that even before the 400 new slated branches, CitiFinancial has 2,273 branches in the United States, Canada and Puerto Rico; in Mexico, going under the name Credito Familiar, it has 199 branches.

            In continuing fall-out from Sandy Weill, the master of CitiFinancial and Commercial Credit before it, last week Southern District of NY Judge Gerard Lynch allowed the case against Citigroup for the AT&T (Sandy-Grubman-Armstrong) ratings games to go forward, In Re Salomon Analyst AT&T Litigation, 02 Civ. 6801.  For those who forget, Weill was told by AT&T chair [and Citigroup board member] Armstrong that Grubman's negative ratings of AT&T were hurting Salomon's bid for AT&T's investment banking business. [Salomon Brothers has since been renamed Citigroup Capital Markets.] Weill allegedly urged Grubman to take a "fresh look" at AT&T, and Grubman did that and changed his rating on the stock...

            ICP has put directly in front of the Federal Reserve, in the form of a supplemental comment on Citigroup’s pending application to acquire First American in Texas, Citigroup’s meritless lying to Bloomberg News (see last week’s Report), and the total or selective breakdown of Know Your Customer at Citigroup.   We’ll see...

Update of December 6, 2004:  After Citigroup’s denials, Bloomberg News of Nov. 30 nailed it down: “Yasser Arafat controlled a company that Palestinian Authority documents show held a $ 6.8 million account at Citigroup Inc., Palestinian legislators Hanan Ashrawi and Azmi Shuaibi have confirmed. The company, Palestine Commercial Services Co. (PCSC), held the account until it was transferred to the Palestine Investment Fund, according to the fund's 2003 annual report. The fund was created in 2002 to consolidate the PA's assets and bring them under the control of its Finance Ministry.  Palestine Commercial Services ‘was a company that was founded by Arafat,’ Ashrawi, 58, a former member of Arafat's cabinet, said in a telephone interview from Ramallah. ‘He had the authority.’ Disclosure of an account linked to Arafat is an embarrassment for Citigroup.. Charles Prince and Michael Schlein, a senior vice president who oversees public relations and ethics programs, called Bloomberg last week to demand a previous story about the account be retracted. They refused to be interviewed by a Bloomberg reporter. ‘Citigroup does not have any accounts for Yasser Arafat - and we never have,’ company spokeswoman Shannon Bell said in a statement issued November 19... The PCSC account was held at Citigroup's private bank, Andreas Martin, a Standard & Poor's analyst who helped value the assets for the Palestine Investment Fund, said in a November 16 interview... Palestinian and Israeli officials agree Arafat controlled PCSC, the company that held the Citigroup account.”  But Citigroup denied this...

Update of November 29, 2004:  CitiCapital, which last week proposed to sell its (capitalized) Transportation Finance Business based in Dallas and Toronto to GE Commercial Finance for approximately $4.4 billion, is also a lender to, among others, private prison companies, and providers of privatized military services.   As simply one example, as recently as August 2004, CitiCapital extended credit to, and filled a UCC lien against, Wackenhut, which runs private prisons including Australia’s notorious Woomera asylum-seekers’ processing center.  Citigroup's lack of standards runs deep...

  A follow-up to last week’s report.  An inside-Citibank reader whom we respected has protested that Robert Annibale is one of the good guys.  To clarify, that may or may not be: our point is that an individual carrying the water of, and seeking to get good will for, Citigroup should be prepared to answer obvious questions about the company.  Even staid Business Week, of Nov. 29, reporting on Citigroup’s “support to micro lenders in developing countries,” posited the motive: “As Citi positions itself to be the banker of choice globally, it is already building a name for itself in the developing world. In addition, CEO Charles O. Prince is trying to clean up Citi's image after highly publicized regulatory problems this year in London, Tokyo, and elsewhere. Philanthropy plays a starring role, says Citigroup Foundation President Charles V. ‘Chip' Raymond: `It's critical to helping us.'”  [Why BW added “Chip” but not “Chuck,” we don’t know.] For more poignant example, the question asked of Annibale: how can Citigroup on the one hand claim to be benevolently helping micro-credit to the poor, while being charged repeatedly with predatory lending to the poor? ICP posed a similar question to, for example, Robert Rubin on WNYC Radio in New York, where it also went unanswered. (See below, Archives, and note in last week’s WSJ Rubin’s inside-play for Sears/K-Mart fees for Citi: very classy, like the calls he made for Enron). Anyway, these are fair and obvious questions, which will continue... And a clarification about Citigroup’s poisoning of micro-credit: last week, Mark Malloch Brown, the United Nations Development Program (UNDP) Administrator, said that Citigroup is “now mainstreaming microfinance into its banking activities around the world.”  Yeah -- it’s called CitiFinancial, and high-cost micro-insurance, and it’s not pretty. United Nations beware!

Update of November 22, 2004: Citigroup can use, abuse and poison almost anything.  On November 16, 2004 at Columbia University in New York City, the present and future of microcredit was discussed by a five-person panel which included two representatives from the U.N., and two individuals affiliated with Citigroup. Even beyond these two Citigroupers, the U.N. representatives referred repeatedly to Citigroup vice chairman (and ex-IMF official) Stanley Fisher.  Thus it appears that, at least for the U.N. and the self-defined elite of the microcredit industry, the world’s largest bank is the leader of banking for the poor.

            There’s a problem, however.  Citigroup has been charged with predatory lending to the poor, not only by consumer advocates, but by the Federal Reserve Board, the Federal Trade Commission, and other governmental agencies.  Citigroup’s seeming “capture” of microcredit as-industry does not bode well.

            During the November 16 discussion, Citigroup’s Robert Annibale stated that through time, Citigroup might be the originator or “booker” of the retail loans made by microfinance institutions. He said that Citigroup might sell “micro-insurance” through the microfinance industry’s distributions network, which “digs deeper,” he said, into the target population.

            Mr. Annibale was asked, by Inner City Press/Fair Finance Watch, to address the incongruity between the activities of CitiFinancial and its predecessors, which have led to governmental charges of predatory lending, and Citigroup’s claimed role in micro-finance.  His response alluded to codes of conduct and legislative change in various countries, but did not address Citigroup’s predatory lending settlements directly.  If anything, letting Citigroup have a hand in designing the legislative proposals put forth by the microcredit industry might explain this industry’s elite’s lobbying against usury caps and other potential consumer protection laws.

            A representative from Women’s World Banking, Nancy Barry, did distinguish between loans for small business and loans for television sets and the like (and stated that the latter makes up 90% of the purported micro-finance loans in South Africa).   In a discussion following the panel, one wag speculated that Citigroup might assist microfinance institutions to make loans to prop up Citi’s own “television” and other consumer finance lending.  While microfinance certainly has promise for those in need, its capture by the likes of Citigroup is a troubling development...

  Citi classic -- from Charles O. Prince III, to Fortune Magazine interviewer (and Buffett ghost-writer) Carol Loomis: “We used to have a model where we'd wait for Sandy to shoot a moose and drag it home, and we'd all feed on it. That model doesn't work anymore because the family's too big. We have to grow our own food.”   Feeding on the moose -- like Associates First Capital, and Commercial Credit / CitiFinancial before that -- that Sandy dragged home...

Update of November 15, 2004:  From inside CitiFinancial comes this warning: customers will beginning to be solicited to refinance / rewrite their loans at so-called “Customer Appreciation Days,” with fees added in, to put the payment dates back into 2005. Some appreciation...

Update of November 8, 2004: From Citigroup’s November 4 response to ICP’s submission of Uniform Commercial Code filings by Citi and its proposed acquisition, First American Bank:

“ICP attaches certain records of [UCC] filings related to several Citigroup and FAB clients... As a practice, Citigroup and its bank subsidiaries do no engage in the business of funding check cashing or payday lending businesses. Citigroup’s account opening procedures and credit policies generally prohibit the opening of new accounts for businesses identified as check cashing operations. Citigroup does have a single active relationship with an armored car company that also includes a checking account to an affiliate in the check cashing business. This account predates the Citigroup procedures for check cashers, and Citigroup has been in the process of winding down the relationship pursuant to a gradual exit strategy.

“In addition, on occasion check cashing businesses have become customers in connection with Citigroup’s acquisition of other financial institutions. In such cases, Citigroup undertakes a post-acquisition review of these relationships and takes action to close or limit them, when appropriate. Citigroup makes changes to conform with its business practices as expeditiously as commercially reasonable, yet in a manner that does not unduly disrupt the operations of an existing client... The UCC filings relating to Citigroup that were attached to ICP’s comment letter are dated 2001 and 2002. Citigroup has no active accounts with, and no outstanding loans to, any of the parties named in those UCC filings. Although some of these inactive accounts may still appear on Citigroup’s account system and Citigroup may not have revoked the UCC filings, Citigroup has not had a business relationship with any of these companies for at least two years.

“With respect to the UCC filings related to FAB that were attached to the comment letter, Citigroup has learned that they relate to pawnshops, not check cashing or payday lending operations.”

            Citigroup’s response is noticeably silent on when this “policy” was adopted.  Citigroup states that it “has not had a business relationship with any of these companies for at least two years.”  But, simply as one example, there is a February 20, 2003 UCC amendment, on “Debtors: MONTGOMERY CHECK CASHING CORP., Secured Parties: CITIBANK, N. A., AMENDMENT, 2/20/2003, 5:00PM, 1675531, 1675531, NJUCC.”  February 2003 is, obviously, within two years of the date of Citigroup’s response. 

   Citigroup did not respond to ICP’s presentation into the record of, for example, the relationships between Citigroup and Dollar Financial; questions must be answered concerning the application of these claimed policies to all of Citigroup’s subsidiaries, including for example its investment bank(s) and  CitiCapital, which it has owned since acquiring Texas-based Associates First Capital Corporation. (ICP has submitted exhibits to these effects, and also touching on Citigroup’s proposed acquisition of much of ABN AMRO's custody, securities clearing, and fund services business, particularly in Indonesia, Russia and Holland...

Where-are-they-now update: a reader has responded to our “extra credit” question regarding the whereabouts of ex-Skadden Arps Citi-defender Stacie E. McGinn. According to this reader -- who would know, and whose contact we appreciated -- Ms. McGinn is now in Charlotte, NC, in the consumer financial services legal division of Bank of America...

Update of November 1, 2004: ah, Citigroup, hit by record NASD fines, just after Japan's Financial Services Agency (FSA) cited a long list of problems at Citi's Japanese private banking unit, including failure to prevent possible money laundering and making loans to clients engaged in various forms of wrongdoing, including tax evasion and stock manipulation. The regulator also claimed bankers misled customers about investment risk and overcharged for some financial products. Regulators said Citibank also went beyond the scope of its banking license by brokering real estate and art deals for its rich clients - activities not allowed under Japanese banking laws.

The NASD specifics: Citigroup distributed misleading sales literature for hedge funds. The bank failed to properly describe the risk of investing in them while presenting rosy scenarios for likely returns, NASD said, adding that the sales documents also exaggerated the performance of the schemes.

Update of October 25, 2004: In its second timely filing opposing Citigroup's proposal to buy First American Bank in Texas, ICP has documented the two's funding of pawnshops and check cashiers, including College Station Pawn & Cash Station Jewelry and Loan, Q-Pawn, Inc., Decker Prairie Pawn, Inc., Zerega Check Cashing Corp., Montgomery Check Cashing Corp. of 403 East Third Street, Mount Vernon, NY; Castle Check Cashing Corp., continued in 2002; City Check Cashing of Jersey City, NJ; and Rite Check Cashing Inc. and G&R Check Cashing Corp. of New York.   And what, after delay, will Citigroup say?

Update of October 18, 2004:  On October 14, ICP/Fair Finance Watch received a letter from Citigroup’s outside law firm, Skadden Arps.   The letter recounted:

“Earlier this week, Citigroup’s offices at 425 Park Avenue suffered a fire. Mail to that address has been redirected, and consequently, Mr. Howard has yet to receive the original [ICP] letter. The October 6^th Letter was carbon copied to Stacie E. McGinn who is no longer with our law firm. The letter was received by our law firm on October 12 and redirected to my attention yesterday. I have forwarded a copy of the letter to Mr. Howard. In the October 6^th Letter, the FRBNY indicates that if Citigroup intends to respond to ICP’s comments, it should do so within eight business days of the date of the letter... Citigroup intends to respond to ICP’s comments and hereby requests an extension of time to respond until October 25, 2004”--

  Which just happens to be the day on which the comment period is slated to expire... ICP has responded. [And see above.]

Update of October 11, 2004:   Federal Reserve chairman Greenspan, in meeting on October 1 with select members of the Financial Roundtable, was face-to-face with Citigroup’s Bob Willumstad.  ICP’s timely comments to the Fed on Citis pending application to buy First American Bank include Willumstad’s response to ICP’s questions about CitiFinancial’s standards overseas. ICP has asked the Fed to nail this question down. Citigroup, meanwhile, has yet to respond in any way to ICP’s comments. Citigroup likes to ignore the Fed’s rules about responding in eight days, and only make a submission after the comment period closes [And see October 18 Update, above].

Update of October 4, 2004:  On October 4, ICP/Fair Finance Watch filed two 21-page comments opposing Citigroup’s applications to acquire First American Bank, with the Federal Reserve and OCC. Click here to view.

Update of September 27, 2004: From Business Week of Sept. 24: “By Prince's own measure, he is failing. The bank is harvesting negative headlines galore and has regulators on its back on three continents. On Aug. 18, the British Financial Services Authority launched a formal investigation into the London bond coup. And Citi -- though it won't say who authorized the trades -- apologized for what had happened and promised not to repeat the behavior.”  Haven’t we heard that before?

This week, we’d be remiss not to note the publication of a much-needed, straight-forward book on predatory lending, Rich Lord’s “American Nightmare.”  In nine chapters and an appendix of questions that consumers should ask lenders, Lord surveys the field, from Pittsburgh to Wall Street, from brokers to services to lobbyists and beyond. Along the way he notes the work of non-profits in the trenches. From the Pittsburgh Community Reinvestment Group to Self-Help, from ACORN to Sunflower Community Action of Wichita, Lord profiles organizations and their campaigns. (A cynic might note that this is not a bad beginning of a marketing strategy, either.)  One critique -- because there must be at least one, right? -- is that punches get pulled. Lord shows, for example, that the two settlements of HSBC’s Household have not even slowed the company’s foreclosure rate.  Still the second settler, which last week praised CitiFinancial as well, is immune from Lord’s otherwise-trenchant analysis. (The same cynic might question whether this is a matter of politeness, or a marketing-related desire not to step on the toes of the field’s elephant.)   But that’s quibbling!  The book describes in novelistic detail the lives, both financial and emotional, of the people known as subprime. Here are two CitiFinancial victims:

“Mike and Ellen Papuga had tried for years to make a baby, but it just wasn’t happening... Then, in 1997, the apartment they were living in caught fire, and many of their belongings went up in smoke... The fire led to some financial and credit problems... So they went to CitiFinancial... The transaction reflected one of Sandy Weill’s mantras: cross-selling... In 2003, a miracle occurred: As her 40^th birthday approached, Ellen became pregnant... They wondered why nobody at CitiFinancial had through to remind them of the [insurance] policy... Even though Triton is a Citigroup subsidiary, the collection staff claimed they had no information about the insurance policy.”

  And so it goes... Two points of full disclosure: ICP is covered in the book, including the questioning of Citigroup’s Robert Rubin, pages 106-7, and ongoing campaign against Citi’s and HSBC’s export of predatory lending, pages 59-62. Also, Lord reviewed Predatory Bender (click here for the review). Since he noted that book’s first edition’s typos, here’s a petty tit-for-tat: the executive director of CRA-NC is not Jeff but Peter.  Don’t rob Peter to pay... Jeff? Nor, we can’t resist, last week’s praiser of CitiFinancial. This is a book that Citi-watchers will want to read...

   Last week, ICP/FFW filed comments based on the Senate Riggs Bank report’s findings regarding HSBC and Santander, click here for article in the Glasgow Herald, reporting that “A US-based human rights group has written to Britain's financial regulator urging it to halt Santander's £8bn acquisition of Abbey National until it fully investigates its part in the alleged "violation" of US money laundering laws.Inner City Press and its Fair Finance Watch, based in New York, has drawn the Financial Services Authority's attention to the US Senate's recent report on Riggs Bank's alleged money laundering for former Chilean dictator Augusto Pinochet, and the dictator of Equatorial Guinea;” click here for more.

Update of September 21, 2004, 5:55 p.m. -- It has just been confirmed that in the mortgage program Citigroup announced on Sept. 20, $3000 in closing cost assistance will be given, and no social security numbers will be required.  While Inner City Press had heard this, on Sept. 21 it contacted the Citigroup spokesman listed on the press release; he cordially looked into it, and just after close of business confirmed the two above-recited elements of the program.  Neither was disclosed in the press release. While the reasons for omission might seem obvious, and while one might well agree with at least one of the reasons (ICP’s on record advocating for immigrants’ rights), the silence is strange behavior for the world’s largest bank, disseminating paid praise on a day it was otherwise slammed. In a sense, we ask these questions and report the results at the behest of our readers. A sample, from the mailbag:

Subj: ACORN and Citi?
Date: 9/21/2004 10:23:16 AM Eastern Standard Time
From: [Name withheld]
To: info [at] innercitypress.org

I'm very shocked to have just learned that Acorn joined with Citibank. Is Acorn selling out? Did Citibank really clean up its act? I'm confused by all this. Have you tried contacting Acorn to see what they have to say about all this? I guess you will post any new info on the site.

   The answer to the second question, "did Citibank really clean up its act," is no, contrary tothe press releases. No overall dollar value for the partnership was given, by either party; whether the “best practices” paraded in the release apply to CitiFinancial in, for example, Puerto Rico (which Citi recently bought a subprime mortgage lender named “Easy Money,” see Report of Sept. 6, below), or Ireland, where CitiFinancial has been found to have the highest interest rates, see penultimate report, remains to be seen. One wag noted the ironic contrast between the press released-program and not only CitiFinancial's practices in the U.S., but with CitiFinancial being an entirely unreformed predatory lender in the countries of orgin of immigrants to the U.S.. As the ICP reader quoted above put it, it's confusing.  One certainty among others: when a trillion dollar bank is essentially making and dictating public policy (as it did with the Gramm-Leach-Bliley Act), and buying allies for that purpose (natch), watch out, scrutiny is needed. These additional questions, ICP’s been told, will be answered. Meanwhile, Citi on Sept. 20 submitted its application for its proposed Texas acquisition to the Office of the Comptroller of the Currency. Developing... Until next time, for or with more information, contact us.

Update of Sept. 20, 2004, 1 p.m. -- Well, Citigroup at 7 a.m. on September 20 put out its press release. Citigroup's paid partner does not even mention that Citigroup and its subprime CitiFinancial continue with mandatory arbitration, which the group has diagnosed as a predatory practice. So: a partnership with a predator? Citigroup's press contact on the release is Rob Julavits, until recently a reporter (on Citigroup) at the American Banker newspaper... At 1 p.m. on September 20, Mr. Julavits was not answering his phone: he was en route to Citigroup's "event" / announcement, on the 14th floor of Citigroup Center. Subsequently, three questions have been asked, the answers to which will be reported in this space. Until then, for or with more information, contact us.

Update of September 20, 2004: Regarding today’s Orwellian announcement, see ICP’s Reports of Sept. 16 and 17, below -- and note that Citi’s partner today has criticized other lenders for using mandatory arbitration, in testimony to the House (“Lenders should not be curtailing borrowers’ access to appropriate legal remedies when the lender breaks the law”) and Senate, in its recent press release about a lawsuit; its putative head has said, in a prepared and still-up statement that "these mandatory arbitration clauses are meant to allow the company to escape the consequences of making illegal and abusive loans.”   Yeah, exactly -- including as to CitiFinancial...

Citi’s sleaze is also overseas. The Irish Independent of September 17 reports on a survey by the Irish Financial Services Regulatory Authority, comparing the costs of borrowing over different terms and is based on the main lenders in the Irish market. “The same loan at a variable rate of interest will cost Euro 2,748.60 at the Ulster Bank but only Euro 2,338.40 at Permanent TSB. But it was CitiFinancial, a UK lender operating at the higher risk end of the borrowing market, that charged the highest rates. On a Euro 10,000 variable rate five-year loan, CitiFinancial charged a whopping Euro 6,471 over the life of the loan - Euro 4,420 more than the total credit charged by Tesco.”

  And the sleaze, beyond subprime lending, is recognized: in Japan on September 17, financial authorities ordered Citigroup Inc. to suspend its private-banking operations, in one of the harshest penalties ever handed down against a bank in Japan. The Financial Services Agency on Friday it would revoke subsidiary Citibank N.A.'s effective license to serve high net-worth customers. In a strongly worded statement, the financial regulatory body criticized the unit for not having properly functioning internal controls, adding that it found a long list of "serious violations of laws and regulations" and "extremely inappropriate transactions."  Just like CitiFinancial! 

Update of September 17, 2004:  A bit more detail has emerged. Alongside the below-referenced endorsement of CitiFinancial’s claimed reforms (limited, it appears, only to CitiFinancial’s mortgage lending, and decidedly silent on Citigroup’s planned continued use of mandatory arbitration), Citigroup on September 20 will be announcing a mortgage lending program that will be related to immigration issues.  It might be fine product; it does not change or mitigate the harm that CitiFinancial continues to cause in low-income communities of color, including those with significant immigrant populations... For or with more information, contact us.

Interim update of September 16, 2004:  We'd be remiss not to report the rumblings that Citigroup intends to announce, on Monday September 20, its praise by (or purchasing of, as some wags put it) a nationwide organization, which has already delivered such praise to HSBC's Household (in a process that began in conjunction with HSBC's purchase of both Household and its critics). Even some of the settlement-professional who praised and/or participated in the Household settlement are expressing dismay at the slated announcement regarding Citigroup.Developing...

Update of September 13, 2004: Citigroup’s compliance problems are global: last week the head of Japan's Financial Services Agency Hirofumi Gomi acknowledged the media reports saying the financial watchdog is poised to (lightly) punish the Japanese branch of Citibank for alleged crimes: that is, for selling products that are banned under Japan's Banking Law. The agency may order Citibank to suspend part of its operations in Japan, including private banking services for wealthy customers, Kyodo News reported. "What I can say now is that we inspected Citibank between November and April and issued results" to the bank in late May, Gomi said. The FSA is likely to decide on specific administration measures against the bank by the end of September. In June, the agency ordered Citibank's Japanese branch to improve control over customer information after revelations it lost backup data on transactions. For or with more information, contact us.

Update of September 6, 2004: What's in a name? Citigroup's new purchase on Puerto Rico, a subprime lender, is named "Easy Money." It comes with six offices, to add to the six branches from which CitiFinancial is already robbing people on La Isla del Encanto; CitiFinancial plans to open three more this year, and ten in 2005... Sin verguenza is the word: shameless.

Update of August 30, 2004: at Citigroup, there's no wall between banking and predatory lending. And the whole team gets involved. For example, on Citi's Texas deal last week, the press release quote from the Bob Willumstad; Marge Magner spun the FT, and another a main spokesman was Ajay Banga, previous spinner for CitiFinancial (now that job's gone to an just-retired reporter, Rob Julavits, see below). Banga, who admitted that CitiFinancial sold insurance on fishing rods on which it never foreclosed, told the American Banker that "We don't have to be in every state, but we do have to be in the more critical ones." The deal is scheduled to be completed in the first quarter, after which Citi would build more branches in Texas or seek further acquisitions, Banga told the American Banker -- which misreported that "Dallas is the headquarters of the consumer finance business, CitiFinancial." Uh, that'd be Baltimore, to which Sandy, Bob W, Marge M. and even Jaime went in the Eighties, and cut a Faustian deal... Thought CitiFinancial did announce some 116 layoffs in Hanover, Maryland last week, while keeping its skeezy subsidiary Chesapeake Appraisal and Settlement Services in Columbia, MD... The spokesman for this layoff announcement? Ex-American Banker reporter Robert Julavits. "It is an effort to maximize efficiencies and leverage our resources in technology," said spokesman Robert Julavits. There ought to be anti-revolving door provisions between industry and the supposedly independent press, as well.. An anecdote: when CitiFinancial was acquiring Washington Mutual Finance Group, but leaving behind its Mississippi offices, ICP explained the scam to Mr. Julavits, and to reporters in Seattle. The latter covered the scam, but Robby the J didn't. And now... 

   Stray Citi squib of the week: this article from Savannah, CitiFinancial's shenanigans in bankruptcy court...

Update of August 23, 2004: Citi last week bought servicing of $10 billion of Hibernia’s mortgages; eighty jobs will be eliminated.... Last week regulators throughout Europe announced an investigation of Citigroup’s bond trading there... Not to worry: Citigroup is a top-ten funder of both Republican and Democrats: fundamentally amoral, or meta-political, desiring access whoever wins. Seen at the DNC in Boston was Citigroup’s Robert Rubin, strategically placed in the quasi-royal box to ensure "chatter" (to use a word that’s that lately been shifted from Al Qaeda to demonstrators, see below) that Rubin might, just might, become the chairman of the Federal Reserve if the Democrats win. So either way, bankers will rule. Surprised? We aren’t. We’re just outraged. Call it the (real) Predators’ Ball...

Update of August 16, 2004: On August 10, another boot dropped: Citigroup announced that among the result of its acquisition of Sears' credit cards will be the laying-off of 450 employees, and the closure of a credit customer service center in Iowa. This follows other closures from Ohio to Idaho, and 105 earlier Iowa lay-offs by Citigroup. Citi spokeswoman Janis Tarter said, somehow with a straight face, that the purpose of these 450 lay-offs is to "maintain the highest level of service to customers." Meanwhile, last month, Sir Deryck Maughan, the chairman of Citigroup International, also talked about internal growth but acknowledged that over the next six years 20% of the company's growth abroad would come from acquisitions. The goal is to raise the international units' contribution to earnings to 50% from 37%, he said. International consumer operations are targeted to account for two-thirds of this growth. Boosting the consumer business "will require an acquisition to get to scale," he told analysts. "Which target, what we're going to pay, and when is to be determined."

   Uh oh... Subprime will take you everywhere: in Taipei, Taiwan, on August 30 Citigroup "will celebrate four decades of island banking with a reception at the Grand Hotel. Company dignitaries who will be there include Marge Magner, Chairman & CEO of the Global Consumer Group" -- previously, trainer of CitiFinancial subprime branch managers at the Baltimore "campus," where her speech droned on through a World Series baseball game, which many (still, and gone) branch managers still groan about... But in Taipei, "there will be entertainment from well-known singer Tsai Chin who will sing hits from the 60s to 90s, a lion dance and other cultural events and a slide show and photo exhibit along with speeches." (Quotes are from the China Post of August 13).

Update of August 9, 2004: This week, while our wider anti-predatory lending campaign is ongoing, it's back to the mailbag:

Subj: citifinancial predatory lending
Date: 8/6/04 1:25:17 PM Eastern Daylight Time
From: [ ]
To: CitiWatch [at] innercitypress.org

i have been on both sides on the lending game. i was in the consumer finance business for 16 years. i am also a current customer of citifinancial. i was informed recently that my "consumer loan" that originated in 2002 was an interest bearing loan. this loan is secured by an auto. i was not told this at loan closing, nor would i have agreed to this had i known. the young and dumb manager informed me that i was given this information at loan closing, at which point she was a secretary, but she remembers that day two years prior when her manager closed the loan. i am furious .. talk about predatory lending...

  Yep.. For or with more information, contact us.

Update of August 2, 2004: Despite its politics, we don’t deny that the Wall Street Journal usually includes in its reported stories facts not elsewhere available. We say "usually," because the Journal’s July 27 front page article about Citigroup "goes downmarket" in Mexico, even "competing with loan sharks," amazingly did not even mention CitiFinancial, which is a major engine in Citigroup’s downmarket aspirations all over the world. (The article also barely mentioned Citi’s interest rates). The article compares today’s Citigroup to the Citibank of previous decades. The comparison ignores that Sandy Weill’s Travelers Group, founded on the subprime lender Commercial Credit now known as CitiFinancial, bought the old Citibank and irrevocably changed it. A shady subprime lender bought the biggest bank, and now goes subprime all over the world. When even the Journal misses this part of the story, it makes you wonder... Speaking of Sandy Weill, the bonus Citi’s board awarded him last year, $29 million, was the largest in the country (and world)... Who was it, again, who was at the helm when Citi ran up its liabilities re WorldCom, Enron and predatory lending? And now (8/1), Citigroup is named as an "iconic" target.   It's certainly not ironic... 

Update of July 26, 2004: Of Citigroup’s set-aside of $2.65 billion for (some of) its misdeeds with WorldCom, Chuck O. Prince said last week, "While it feels bad to have to pay out dollars of that magnitude, it feels very good to clear the decks and to put those issues behind." That feeling’s become addictive and routine for the world’s largest bank, often for smaller sums of money (though the deck is often repopulated). Consider for example the FTC and private firm settlement with CitiFinancial, which didn’t stop predatory lending, or even include any injunctive relief or reforms -- contrary to the Federal Reserve’s later finding in May 2004 that predatory practices continued... Meanwhile, Citigroup is rumored to be one of the two main hunters seeking to acquire Cendant Mortgage Corporation... 

Update of July 19, 2004: The spinning never stops. On July 16, Citigroup's Bob Willumstad was in Upper Manhattan, with an oversized check for $900,000, ostensibly for financial literacy. The receiving organization, without mention that CitiFinancial was charged with predatory lending by both the Federal Trade Commission and, less than two months ago, by the Federal Reserve Board, lavishly praised Citigroup, including in a op-ed disseminated over the Copley News Service. Its affiliates in five other cities issued identical press releases praising Citigroup. One wag questioned whether this financial literacy partnership will include objective presentations about the costs of credit insurance (of the type CitiFinancial still hard-sells), about the dangers of being talked into converting unsecured debt, including retail installment contracts, into home-secured debt, the type of "sale finance conversion" that CitiFinancial urges all of its offices to do. For now, as a matter of financial literacy, any and all of Citigroup's potential partners or "students" should at least look at the Federal Reserve's May 2004 predatory lending cease-and-desist order about CitiFinancial, here.  

Update of July 12, 2004: CitiFinancial takes predatory lending global -- from the Western Mail of July 8 reports that "A loans company has agreed to redeem a couple's mortgage after an appalling catalogue of errors that included threatening them with having their home repossessed.: CitiFinancial says sorry: Last night a spokesman for CitiFinancial offered Mr. Mullan an unreserved apology and said that in view of the errors that occurred, the company would immediately redeem the mortgage. The spokesman said, 'We do have serious concerns about the way this case has been handled, and in the circumstances believe the right thing to do is to redeem the mortgage.'"

On the lay-off front, Citi is slashing 400 jobs in Des Moines, Iowa, and in Overland Park, Kansas, and Columbia, Maryland, it’s eliminating another 160 jobs.

Update of July 5, 2004: In "Fed Fines Citigroup for Abuses," in July's Origination News, a pro-subprime lawyer from Kirkpatrick & Lockhart is quoted that the settlement "definitely addresses asset-based lending... I have never heard of a settlement where the lender is required to release the security interest on the loan." One advocate was quoted with qualified praise of CitiFinancial, stating that it has "definitely improved." We dispute that -- the abuses have been shifted from high-profile issues like single premium credit insurance (and the even-longer clung-to personal property insurance, on fishing rods, ice chests, etc, see below in this Report) to other aspects... The same Kirkpatrick & Lockhart lawyer is quoted that "It is certainly my sense that it was in large part because the Fed felt it had been misled and they are just not going to put up with that... A $70 million penalty is a big hit." But it's not a big hit, to a $1 trillion bank... Meanwhile, it's now rumored that Citigroup is in the run to acquire New York Community Bancorp and its 141 branches. Developing..

Update of June 28, 2004: Turns out that CitiMortgage, and not just CitiFinancial, is doing subprime loans. CitiMortgage in St. Louis has posted an advertisement trying to hire a " Risk Management Analyst" to be "responsible for analyzing potential sale opportunities of subprime whole loans." Who knew? Citi usually claims that its subprime loans are only made through CitiFinancial...

   From subprime to China: Citigroup has suspended two of its senior China bankers, including the high-profile Margaret Ren, in a move that raises questions about the U.S. investment bank's interests in the China issuance market. On June 24, Citigroup spokeswoman Katherine D'Arcy confirmed the contents of an internal company memo that said the New York-based financial-services giant had suspended Ren, daughter-in-law of former Chinese premier Zhao Ziyang and the vice chairman of Citigroup's China investment banking operations, and Earl Yen, director of China investment banking. "With regret, after a careful and thorough review, we have suspended Margaret Ren and Earl Yen,'' Citigroup said in an internal memo sent to senior management on June 23. "The conduct for which they were suspended, which did not involve client matters, related to the presentation of false information to the company and its regulators,'' the memo said. Lying to regulators -- it seems to be common throughout Citigroup's regions and lines of business..

Update of June 21, 2004: Ten days after announcement of the Federal Reserve's settlement on the cheap ($70 million) of predatory lending charges against Citigroup, Cit's sent out a letter announce their hiring of one Eric Eve, previously "special assistant for political affairs for President Clinton," as head of "community relations." Well, Citigroup sent down to South Carolina one of Clinton's lawyers in the Paula Jones case, Mitch Ettinger, to intimidate CitiFinancial's own ex-employees... Intimidation, retaliation and schmoozing appear to be the job description, not reform. But we'll see... Beyond revolving door, there's deep political connections, to Buffalo assemblyman (and deputy Assembly speaker) Arthur Eve, and Sen. H. Clinton counsel Leecia Eve, whose position Eric E. alerted Leecia E. to, according to the Buffalo News of Feb. 23, 2001. This is how Citigroup tries to not only cover its sins, but allow the predatory lending to keep on keepin' on. Here's another letter, from another (new) source:

Subj: CitiFinancial

Date: 6/16/04 12:57:39 PM Eastern Daylight Time

From: [ ]

To: CitiWatch [at] innercitypress.org

Keep up the good work of exposing CitiFinancial. I worked for CitiFinancial for 8 years. I was a manager for almost 3 years. I hate CitiFinancial. The pressure put on the employees is unbelievable.... The advertising is very deceptive to customers. Employees are trained to avoid disclosing the excessive interest rates as best they can. Employees are also trained to sell the high priced useless insurance such as credit life, credit disability, involuntary unemployment and personal property. It is ridiculous how much insurance premiums can be added to a loan... Upper management puts soooooo much pressure on branch managers and branch employees. They use intimidation and love to embarrass you in meetings. I worked in several offices and almost every employee in every office feels the same way I do. I assure you, at least 90% of the employees would leave CitiFinancial if they could, and many do -- they have a very high turnover rate.

Another thing among several others, regarding employee overtime. Upper managers want it both ways. They want employees to work a lot of overtime hours but sure don't want to have to pay them for it. I heard a district manager praising an employee one time because the employee worked a lot of overtime but never included it on her time card. The DM said "that's the kind of employee I want". It happens ALL THE TIME! Employees working overtime but they know they better not claim it on their timecard if they know what's best for them. They know if they claim overtime they will face the WRATH of their Regional Manager. Employees know they better not get on their supervisors bad list.

  ICP note: including by whistle-blowing...

Update of June 14, 2004: Now that even the FDIC has acknowledged a need to protect consumer information during outsourcing of the kind engaged in by Citigroup, U.S. regulators including the Federal Reserve just might want to pay attention to Japan's Financial Services Agency's recent finding that Citigroup "lost data" on 123,690 banking, credit card and investment transactions during shipment to the bank's Singapore data center. On June 11, the FSA in Tokyo criticized Citigroup for having taken a full month to even inform customers of the data loss; the report requested by the FSA on the problem was about a month late, and Citigroup's Singapore branch took six days to inform the Japanese unit of the loss. Hey -- at CitiFinancial in Tennessee (and elsewhere), they just shred the information, before the Fed's examiners show up...

   Some more insight into CitiFinancial, from (among our favorite) sources:

Subj: Everything you always wanted to know about credit insurance but was afraid to ask

Date: 6/8/04 3:02:08 PM Eastern Daylight Time

From: [Long Time District Manager] To: CitiWatch [at] innercitypress.org

Re: ICP's pressure to revise Citi's personal property insurance sales. I followed this closely. It was awfully embarrassing to ask for fishing tackle, bug zappers (literally), and ice chests as security. Bravo to ICP!

...As far as the ancillary products, we sold Home and Auto (an over inflated auto club program that included additional warranties on major home appliances, emergency room/ambulance reimbursements, support to initiate neighborhood watch programs, child registry, etc. Really not a lot to do with respect to a personal or home equity loan. We sold them in 1, 3, 5 & 10 year policies at premiums of from $249 to $1749. The approach we took to selling these was to sell three year or less policies on our personal loans, and 5 year or more policies on anything that was secured on real estate...

ROCopoly.... In order to qualify, the branch team had to score QUICPlan (Quarterly Incentive) points. These were accumulated based upon growth (in the personal and real estate loan portfolios), delinquency (30 day personal loan, 60 day personal loan, 60 day real estate, and 60 day sales finance), and insurance sales (personal loan $/K, Equity Plus $/K, real estate premium/loan, and non-credit premium/loan). Then there were the various ROCopoly categories: SFCs (which had a per person pay out based upon the 5-age of the baseline converted), PB renewals (calculated as the SFCs were), Home and Auto (paid out on a pool basis - and yes this would be divided among the branch team), Equity Plus and then Real Estate.

You referenced a DM to BM memo (that frankly sounded all too familiar) whereby the DM states that "...where credit approval exceeds...authority...refer to [me]...if it qualifies for Equity plus...(s)he should find notes ...reflecting that conversation..." The notes would ideally be placed in the MAESTRO system, although it is possible that these notes would just be hand written on the Pricing Exception Request form. Normally, these pricing exceptions had to go higher than the DM up the chain of command. If the branch and the DM could not overcome the customers objections to a 24.99% - 27.99% rate, you had to seek an approval to the exception request. There was always mass confusion on what we were to offer those customers who received a particular direct mail piece. It involved double speak from Clements (for over two years he adamantly stated that the branches were to charge the noted rate (18.99%) on the mail piece, and declared he would defend any branch cited for doing so by audit, and then he would alter this claim refuting he had ever stated such, and with equal adamancy declare that the branch that did not price at the required pricing was out of compliance and deserved an audit citation. Exceptions were sought by indicating that you had attempted to sell a real estate secured loan at a much lower rate (from 8% to some 18.99% depending on the qualifying demographics such as equity position, credit, and ability to pay...

You asked about the discretion allowed to BMs in their quest to secure sales finance dealers. We were instructed to source dealers with a higher probability of home owners as customer: carpet, home improvement, higher end furniture stores. The BM was supposed to source this business, but the company also has people in place whose responsibility is to just source corporate accounts. In terms of measuring the number of home owners: the results are tracked from the time that the first sales contract is purchased. Every dealer had its own report showing what the home ownership status was, how much equity was in the home, what the high credit might be for that individual, and if you coupled that report with another branch/district report the delinquency status of that customer could also be tracked, as could the yield on his sales account...

One more item. Thought you might want to understand the insurance penetration formula. On ROC (manager yearly bonus program) and ROCOpoloy (employee monthly bonus program) points were gained towards bonuses based on the "dollars per thousand" method. For example: sell a single life premium of $250 and the total of payments on the loan is $5000 you divide $250 by $5000 and multiply times 100. This gives you $50 per thousand for the bonus program. As you can see, by simply selling life insurance only, you won't even qualify. Thus the pressure to sell. They have a similar method for monthly premium real estate loans too. Don't let the "customer first" thing fool you, its still required that you sell insurance. If you don't, you don't get paid bonuses!

  On CNNfn's Money Gang last week (6/8), Farrell said what "bothers me about Citigroup is the executive compensation. Mr. Weil retired last year and he got like $38 million or $40 million as a going away present and Mr. Prince that came in, he was a chairman for brief period, got like $29 million. And Robert Rubin , who I think is one of the great people in finance." KIERNAN: But he hasn't been with the company for all that long. FARRELL: Well, he has one direct report, which I think is his secretary. He gets paid something like $15 million. And that bothers me that there's this pay scale that exists.  ICP note: particularly at a predatory lender...

Update of June 7, 2004: This week, in continuing whistleblowers' analysis of the Federal Reserve's half-way measures with CitiFinancial, we have dueling (interacting) messages, from "13 year branch manager" and "long-time district manager" (who we'll call "LTDM"). In reverse order:

Subj: Consumer Appreciation Days [at CitiFinancial]

Date: 6/1/04 10:05:43 AM Eastern Daylight Time

From: ["LTDM"]

To: CitiWatch [at] innercitypress.org

Just read the excerpt from the 13-year manager re: CAD (Customer Appreciation Days). This is one of those events that I was going to allude to down the road. This manager is right on in his/her assessment. It's a program that has gone on for years. At one time it lasted from 3 days to a week during the months of May and November. It has since become a two week stint. Honestly, we drove it like hell! Recognition for a successful CAD month was EXTREMELY HIGH! We expected branches to write 100 loans during a week's period of time.. and yes, God help the manager whose area didn't have substantial growth after a week of this type of production! Usually they did, but occasionally there were those areas that kept the brow beatings at bay by simply "re-writing balances only" (just a straight refinance of an account with nominal cash advance). The loans were not supposed to simply help the customer w/a refinanced loan at a lower payment, the loan was to increase the amount owed by the borrower, increase the security (collateral) position, and provide further "protection" on the loan.

"Protection" was the safe means to refer to credit and ancillary insurance products. We coached to offer protection, not credit insurance - ever. Thirty percent of a branch's profit is attributed to the sales of insurance products. In fact, from the credit insurance premiums that a branch sold, they received 35% commission if Accident & Health or Involuntary Unemployment Insurance, and 30% commission if for credit life insurance. All of the ancillary products - which included something called Home and Auto - are worth 40% commission back to the branch. Every branch, as well as every employee is required to track their results. Regardless of the staff position, every one is held accountable to produce at acceptable levels. This is not measured simply by the dollar amount of premium sold, either. For instance, it is possible for an employee to sell as much as $20,000 insurance premiums on a $120,000 loan. The $20,000 premium may satisfy that employee's premium goal but that was never regarded as sufficient measure! Insurance sales were tracked on "dollar per thousand" , or "dollar per hundred". This was a method whereby the amount of premium was measured against the total loan volume (or in the case of personal loans, it was measured against the "total of payments"), in order to keep track of the percentage of premium sales. Normally every insurance product that was sold was tracked on an individual employee basis: credit life, credit disability (accident and health), credit involuntary unemployment, and the various ancillary products.

As for SFC's...these are those accounts generated from a retail sales contract that was opened to finance a customer's purchase from a community business (furniture, appliances, home improvement items). In order to appeal to the business owner, Citi offered great programs such as 90-, 120-, even 360-day same-as-cash, or no interest etc., at very reasonable interest rates as low as 16.99% to 24.99% depending upon the quality of business that the business can generate. As these contracts are purchased into the branches, it is the responsibility of the branch team to "convert" them into personal, Equity Plus, or real estate loans. The SFC program was tracked as intensely as the insurance sales were. And again, certain rules applied to ensure growth to the branch: there had to be a $500 advance on these loans in order to get ROC-opoly credit. Huge audit violation to payoff a deferred program sales finance account, but everything else had to be converted because no income is credited to the branch from the existence of sale finance accounts. On any branch-, district-, state- (any level really) Goal Report, or ROC Report as it came to be known, you could see the profit margin that was possible given the sales finance base, but the next line to the report subtracted out that income. The income went somewhere (!), but the branches were not entitled to include it in the Funny Money known as the ROC Report (which ultimately lead to what was then annual bonuses of up to a full year salary for some branch managers!), or ROCopoly. (I guess that's some of the profit that allows Citi to buy out restitution programs when they really screw up!)

LTDM added:

Subj: Re: CAD

Date: 6/1/04 10:39:31 PM Eastern Daylight Time

From: ["LTDM"]

To: CitiWatch [at] innercitypress.org

... Every time that we would merge with or acquire another faction, I always pitied the poor bastards for the integration process that we would require. It was always a big deal when we merged with or acquired another group, to run a huge solicitation program of some kind or another. The idea was that we would host a "grand re-opening" by acquainting our new customer base to CitiFinancial. That's probably why the "13 year manager" from whom you recently received correspondence is feeling so much pressure. Besides CAD being CAD, there's the additional expectations of what the new WaMu branches can provide, and if they are not doing so, how the existing Citi branch managers can set the tone for them...

"Making Payoffs difficult" -- We had a whole program - "Save a Payoff"! My branches could not quote a payoff until they faxed me the demand, and I personally called the customer to find out what they were going to get in replacement of my Citi financing. I was to coach my branch managers that they have 28 days to get the payoff to the requesting party and if any one had any issues about this length of time required to respond that they should call the District Manager, myself. For awhile, we (District Managers) were instructed to have the customer call our Region Managers if we could not convince the customer to not pay off their account. Of course there was a two fold message to this: 1) the DM clearly did not have the capacity to bargain with the customer. 2) the DM needed to be humiliated by calling upon their RM for support. The response from the branches may, or may not have been that calculated. The work load in the branches is immense! So the fact that payoff demands are delayed may not always be at the DM/RM directive, it could also be that the branches are simply over burdened and are unable to respond to the request.

...The organization really needs to come down from the TOP. I have sat and dined at Chairman's Forum events with Sandy. What a pompous ass... He has his wife deliver PR to a eight person banquet table so he doesn't have to intermingle! I have observed Bill Clements make a fool of himself kissing K.C.'s ass during a manager's meeting. I have listened to Bill and his Region Managers discuss how they were going to "...piss [xxx] off to see how {he/she} responds" .... That is how Citi management operates.

Until another time....Regards!

And now, 13 Yearzo's most recent:

Subj: Re: Citifinancial practices- many thanks for your message; a few questions, a...

Date: 6/2/04 12:32:29 AM Eastern Daylight Time

From: ["13 year branch manager"]

To: CitiWatch [at] innercitypress.org

Here's my attempt to answer your questions... While "breaking delinquency" is a huge item at Citi, we wouldn't put deals into equity plus loans because it took too long with these disclosures. Sales conversions were not converted to break delinquency because we didn't have them as delinquent accounts in the branch. Sales were converted to equity loans for growth and profit. Personal loans were rewritten to make additional income and cure delinquency. Understand that Citi wants all accounts to be less than 30 days delinquent by the last working day of the month. Branch employees will do ANYTHING necessary to not carry an account delinquent. Rewrites, free deferments, payment manipulation, etc. Understand they MUST collect or move these accounts to prevent serious problems from supervision.

Hope this helps. Please keep my name confidential... But you can ask me questions anytime.

  Oh, we will, we will...

Update of June 1, 2004: Below is ICP's analysis of the Federal Reserve's May 27 cease-and-desist enforcement action against CitiFinancial. Since then, the whistleblowing continues:

Subj: Citifinancial practices

Date: 5/29/04 6:11:28 PM Eastern Daylight Time

From: [13-year CitiFinancial branch manager]

To: CitiWatch [at] innercitypress.org

Just read your comments regarding the $70 million dollar Citifinancial settlement. I'll tell you, the pressure is on for managers and staff to book business with high balances at high rate to increase yields and profits. Take these two examples: Citifinancial has a bi-annual event they refer to as Customer Appreciation Days (CAD) in which they "thank" their customers by soliciting them to rewrite their personal loan with either no payment until July (event held in May) or Next Year! (November event). The idea here is to rewrite every customer, recharge them for insurance premiums and fees, and advance a small amount, say $500 or so in order to renew income and cure delinquency. They expect to add one month in productivity each time, thus getting 14 months production in 12.

Tracking by branch staff starts with calling customers and setting up appointments early in the month so to maximize the number of rewrites they can get. And, you are accountable for these results! Just another way to increase predatory lending income! (By the way, personal loans are rate structured to 27.99% on renters and 24.99% for homeowners, a rate exception is an audit exception and highly frowned upon by the company!)

As for the lawsuit issue, the pressure is on branch staff to "convert" as many sales accounts to loans as possible. Rocopoly tracks SFCs because the branches don't make any income from sales accounts. They must have a high rate loan to make any money at all. The loans in question were converted sales accounts, written on 90 day, 180 day or 360 day same as cash deals converted to 17.99%-21.99% second mortgage loans. They sometimes used a "blended rate" deal that started at 17-21% for 30 months then reduced to lower rates after that time. They advertised these loans at lower rates because they were "blended"...And the premiums for insurance on these deals were HUGE income for the branches!!!

Stay tuned, there is more. Customers have the "choice" of having a prepayment penalty on their first or second mortgage loans. The choice is whether to pay an additional 1/2 in APR to do it without! And they don't allow customers to refinance for lower rates without taking additional cash! Growth is such an important area to them they penalize customers who want to simply refinance at a lower rate, the same rate they may be offering to other customers with the same credit and loan to value ratio!

The Fed has their hands full if they want to dig a little bit more and tap some of the penalty income they can claim from this predatory lender! Regards -- 13 year branch manager

  Until next time, for or with more information, contact us.

Update of May 28, 2004: Yesterday, the Federal Reserve announced a cease-and-desist enforcement action against Citigroup's subprime CitiFinancial unit, calling for $20 million in restitution, a $50 million fine, and some "remedial" actions -- including revising its conpensation structure and its practice of misleading examiners and destroying or hiding documents. See, e.g., "Citi Unit Here, Parent Fined: Fed penalty is $70 million for fair-lending infractions;" by Bill Atkinson, Baltimore Sun, May 28, 2004.

   The practices the Fed describes in the order -- illegal requiring of co-applicants in order to sell more joint credit insurance, and shifting personal unsecured loan customers into high-cost mortgage loans -- are only a few of CitiFinancial's problematic and predatory practices, the tip of the proverbial iceberg. CitiFinancial's business model is based on the sale of credit insurance that is neither asked for by, nor in most cases beneficial to, the customer, and on "upselling" customers from unsecured to home-secured loans. During the Citi - Golden State proceeding, ICP submitted to the Fed as Exhibit 7.1 a CitiFinancial insurance sales script, which under the heading "Questions to Ask During the Application" listed, as the first question, "Your wife / husband's name is? (Joint Loan)."  The upselling was documented by a CitiFinancial program called "Upsell Challenge." For further and ongoing example, ICP has evidence that CitiFinancial pays its branch managers based on how many sales finance loans (for furniture, for example) are converted to more lucrative real estate-secured loans. It's called "Sales Finance Conversion," or SFC, in CitiFinancial's compensation scheme, called ROCO-poly.

  Downplayed in the order, in Paragraph 14, is the Fed's requirement that CitiFinancial henceforth ensure "full and honest cooperation with regulatory authorities" and improve "document retention policies." The background to this is instructive:

  While Citigroup was applying to buy European American Bank in 2001, Inner City Press was contacted by CitiFinancial employees in South Carolina, who described how they were ordered and compensated to fool customers, with credit insurance and upselling to high-cost loans. ICP submitted these complaints to the Fed and to the press: the American Banker of July 10, 2001, quoted from "an affidavit taken Sunday by the community group Inner City Press/Community on the Move that CitiFinancial pressed customers to refinance loans at higher rates -- a practice known as flipping."

  Soon thereafter, two of the CitiFinancial ex-employees who contacted ICP were threatened by Citigroup with being sued for violating a so-called "non-disparagement" clause they had signed. The clause, by its terms, prohibited the employees from describing, even to regulators, what they were paid to do at CitiFinancial. ICP provided copies of these gag orders to the Fed and to the press. The American Banker of July 30, 2001, reported that ICP

"has interviewed numerous former CitiFinancial employees [and] has alleged that several were told they had to sign nondisparagement agreements with the company as a condition for receiving their final paychecks. A copy of one such agreement, obtained by American Banker, bars the former employee from making 'any statements to any person regarding the company and its agents of a derogatory nature or which disparages the reputation, business, or integrity of the company or any of the executives or employees of the company.' It also contains a clause barring the former employee from disclosing the agreement."

   Citigroup sent down to South Carolina a partner from its outside law firm. Reuters, in a July 27, 2001, article entitled "Citigroup Hires Lawyer in Loan Abuse Case" reported that Citigroup "impressed on former workers that Citigroup will enforce so-called non-disparagement clauses, which keep employees from making derogatory statements about the company, according to the person who was questioned by Ettinger's legal team and [ICP].... Citigroup spokeswoman Leah Johnson [said] 'Our severance agreements, like those of most companies, include a standard non-disparagement clause. Because of our desire to assure that our stringent standards of conduct are upheld, such clauses at CitiFinancial never apply to employees bringing any concerns about illegal or unethical activity they believe they have witnessed to the appropriate authorities inside and outside the company.''"  The Fed conditioned its Citi-EAB approval on conducting an examination of CitiFinancial.

  By the terms of the May 27, 2004, cease and desist order, particularly Paragraph 14, what the Federal Reserve found was at odds with the above-quoted, Reuters-reported claims of Citigroup's spokeswoman - who's still listed on Citi's May 27 release (in which Citi brags that $70 or $100 million has "no material impact" - too big to discipline).

   Before the Fed even got the CitiFinancial examination going, Citigroup applied to buy Golden State Bancorp. During this challenge, ICP was contacted by CitiFinancial whistleblowers in Tennessee and elsewhere. ICP submitted these complaints, and evidence, to the Fed, and soon the Federal Reserve Bank of New York sent two attorneys to Tennessee, to depose the CitiFinancial ex-employees who had contacted ICP, and others. The American Banker of October 11, 2002, reported

"In the interviews taking place this week in Tennessee, Fed officials will meet face to face with former CitiFinancial employees who had told Inner City Press of unethical sales practices...  including how she was trained to cover a loan document with her forearm when filling it out, so the customer could not see portions. Shari Leventhal is the Fed attorney who was dispatched this week to Tennessee to conduct the inquiry, according to Inner City Press. A spokesman for the New York Fed confirmed that Ms. Leventhal was a counsel at the bank, but would not comment on her activities."

   ICP was informed, by those deposed, that accompanying Ms. Leventhal were Yoon Hi Greene, Counsel, and Ms. Gretchen Downing, Bank Examiner, both of the FRBNY. ICP also reported to the Fed, and the above-named Fed employees were informed, that CitiFinancial offices removed and shredded documents. ICP named names, and locations: for example, that CitiFinancial District Manager Nancy Neel removed boxes of documents from CitiFinancial's Morristown TN office, took them to Jefferson City TN and shredded them. ICP reported this to the Fed, and directed the Fed to specific documents that remained unshredded (because whistleblowers had hidden them), in the Jefferson City office. ICP asked for copies of the deposition transcripts. The Fed refused to provide the transcripts, either to a (deposed) jocular ex-employee, or to ICP, including under the Freedom of Information Act.

  Now, more than a year later, the Fed fines Citigroup $70 million, while downplaying Citigroup's blatant attempts to conceal and destroy evidence, and to gag its own employees. WorldCom has cost Citigroup $2.6 billion (so far); apparently low income consumers are worth less than three percent of that.

  CitiFinancial on May 27 tried to "spin" both the press and certain Citi-selected consumer advocates, claiming the problems are behind it, and stating that "only" 1900 customers are eligible for the HOEPA / high cost loan restitution, and 100,000 customers for the forced co-signed joint insurance. It's important to note that the practices alleged by the Fed were not limited to -- in fact, had nothing to do with -- the business Citigroup bought along with Associates First Capital Corporation in 2000. These were and are the practices of CitiFinancial, previously known as Commercial Credit, where all of Citigroup's senior executives worked (and designed these practices). Until next time, for or with more information, contact us.

Update of May 24, 2004:  From last week's correspondent:

Subj: Re: citifinancial [Second dispatch]

To: CitiWatch [at] innercitypress.org

... Marge Magner was integral in training sessions, manager orientations, etc. And yes, there'd be plenty of times when she would facilitate the meeting as well. If not with the actual training materials, but with the evangelical punctuations that she, KC Mead, Bill Clements and Bill Starkey are famous for! I was there for 14 years., so I was in just as Marge was gaining a foothold to her status.. Believe me, every utterance in "rote" training programs were cleared by Marge... Willumstadt was very visible at annual meetings, "kick off meetings" of various kinds....However, he was never as outwardly, warmly endearing for the masses as was the outward facade of Marge, so he was not quite the PR figure that she was...

  Until next time, for or with more information, contact us.

Update of May 17, 2004: Quite a week for Citigroup: paying off $2.65 billion, supposedly, to atone for its enabling of the WorldCom's fraud, then scooping up for $1.26 billion the mortgage business of Principal Financial (to, if the past is any guide, defraud or nickel and dime yet more consumers). Principal, we've heard, has faced numerous complaints about its servicing; there'll be more. We continue to receive information from those inside or who've just left the company, such as this, from a long-time CitiFinancial employee:

Subj: CitiFinancial
Date: 5/10/04 6:06:46 PM Eastern Daylight Time
From: [name withheld]
To: CitiWatch [at] innercitypress.org

I have been perusing your site for a couple of years. I worked for CitiFinancial for 14 years in a number of supervisory capacities... You are pretty much right on the money in assessing the problems at Citi, but there is so much more. You haven't tapped into the management style of the folks at CitiFinancial...that is where the real travesty lie. Upper management is riddled with phony evangelicals ("Do the right thing - first time, all the time.") the likes of Bill Clements, K.C. Mead, a "Managing Director" who was involved in the suicide of one of her region managers shortly after Citi acquired he and she from Transamerica. (Yes, there was a time when Citi was conducting a due diligence of that organization, too. That was just before Citi bought Sec Pac Finance - the financial services arm of BofA at the time.)... You also haven't dug as deeply as you can into the incentives at Citi - everything from the lucrative Chairman's Forum to the bonus structures to the means of promotions. Now, this company has once again bought themselves out of being held accountable - for a mere $2.65M. The dogma of "getting this behind us" is so resonant in my ears. Management touts this ability...don't believe for a moment that it's a lesson learned. It's just a very small fine to pay out of the huge Citi coffer that gets fatter & fatter everyday with the help of the products of the environment - as I myself once was.

  We will have more from this correspondent...

Update of May 10, 2004: A Dow Jones headline from May 7, followed by an explanation. Citigroup's Banamex Targets 8M Homes Without Bank Accts - yep, targeting them with CitiFinancial, settler of predatory lending charges in the United States. Meanwhile, CitiFinancial has announced plans to open ten new offices in Hong Kong... COO Willumstad said, at the AGM on April 20, that the same practices apply outside the US as within. Well, the newspaper The Standard quotes CitiFinancial's Simon Chow that CitiFinancial's "average interest rate will be over 20 per cent annually."

Update of May 3, 2004: Citi and the predators -- it's not limited to mortgages, or even to CitiFinancial. A recent connection is Citi's decision to be underwriter and book runner for a major stock offering by Dollar Financial Group, another other things a nationwide check cashier (mostly under the Money Mart brand name), and a payday lender subject to class actions for usury. Dollar settled such a class action in California, in 2001. Doesn't bother Citigroup -- Dollar Financial's books are stored at Citigroup in the Brooklyn Army Terminal, 8th floor of 140 58th Street... The OCC has reached a formal finding that "Dollar Financial actively promotes loan rollovers, creating "a misuse of the loan product for long-term credit." Citigroup's lead bank is the OCC-supervised Citibank, N.A....

Update of April 26, 2004: It's a once-a-year event, so it will occupy this week's CitiWatch Report: the shareholders' meeting held April 20 at Carnegie Hall. Onstage was a table with three seats: Weill, Prince and Willumstad. Behind them a screen, on which a video would later be played. Weill began the meeting comparing Citi's performance to AIG, Berkshire Hathaway and GE. "If you have personal business," he said, "representatives of Smith Barney and others are in the back of the hall." Then he endeavored to move quickly through the agenda, almost closing discussion on Agenda Item One (election of directors) before any questions could be asked. A certain Ms. Davis, soon to depart for Stanford, Connecticut and Morgan Stanley's meeting, spoke at some length. [Just prior to Weill's kick-off, she accused ICP of misquoting her, without saying how or where; there will be no direct quotes from her in this report, since taping at the meeting at prohibited to everyone except Citi, which should we think provide copies.]

  This question of directors had been big, in the run-up to the meeting, with even the New York Post running a headline, CAL-PERSONAL, reporting that Calpers would vote against Weill and Prince, the latter for conflict of interest. But there was very little debate at the meeting itself. ICP finally asked a question -- Weill demanded to know if it would relate to directors, it did: why should those who ran Commercial Credit and CitiFinancial, leading into the predatory lending settlement with the FTC, continue on the board? Why has director Robert Rubin claimed that this controversial subprime prime lending is not under his "aegis"? (See further below on this page: word search "aegis," we did). Why does CitiFinancial have not even purported "best practices," outside the U.S.? Weill asked Willumstad to answer; Willumstad said that he didn’t agree, that "we have retooled to the standards of our critics," then claimed that CitiFinancial has the same practices outside the U.S. as within. ICP asked, where do you suggest we go with the inconsistencies? Weill responded, Willumstad, and asked Rubin (seated in the front row) if he'd heard about aegis. We'll see.

   There was some humor -- of Parmalat, for example, Prince groaned that to be defrauded by an Italian milk company was truly to be defrauded, indeed, to which another on the stage - Weill perhaps? We want the tape -- said, "It's powdered milk." Much was made of Citigroup's $100 billion of equity. A union presented a proposal that Citigroup at least better disclose its political campaign contributions; ICP supported it, noting Citi's lobbying against anti-predatory lending laws at the state and local levels. A video was shown, of Citi's $200 million financial education program, with talking head shots of all three on stage, only this time in a windowed office over Park Avenue. Rubin and Marge Magner were also interviewed. Among the project profiled was one in which a Russian banker -- to know who, we'll need the video of the meeting -- expressed gratitude for having been flown to the U.S. and put up for four weeks. Then it was open mike time, and time for another question: is flying for-profit Russian bankers around part of the financial education program? Prince deadpanned: if it's in the video, it's in the program. Okay then -- any reaction to JP Morgan Chase's $800 billion pledge, and BofA's $750 billion? Willumstad responded that those were done in the context of mergers, and that in Citi's last merger, Golden State, $175 billion was committed to those Golden states (Cali and Nevada). He said while Citi's number one or two in subprime, it's number five in prime mortgages. ICP's subprime question -- whether the financial education is tied in any way to the relatively lower income customers to whom CitiFinancial is directed -- was answered by Prince, who said "we accept that we need to be leaders... as noted, we were all at Commercial Credit since 1986," and more -- we'll need the tape. An ex-Primerica employee presented a symphony for the company (very surreal, that) -- Weill joked that the man had made it to Carnegie Hall with his music. It was very magnanimous, it was very self-satisfied, it was the world's largest bank, praising itself, in a concert hall named for a robber baron...

Update of April 19, 2004: Smug dinosaur, now under fire: Sandy Weill, speaking or rather pontificating April 14 in Ithaca, New York, at a love-fest at Cornell, said "I don't do e-mail and I think that turned out to be a good idea." Leave no paper trail: it's one of the prime techniques of, among others, predatory lenders. Power corrupts -- and makes blind. Weill also said, of Citi's many scandals and fines, "I don't know what I did wrong." Then he hasn't been paying attention; he hasn't been listening. Further efforts in that regard will be made this week [See Report of April 26].

Update of April 12, 2004: Who benefits from the lack of follow-up? Citigroup, of course. Two examples from last week: on April 7, Chuck Prince, Marge Magner and their successor as high-cost lending wizard Ajay Banga led a team of Citigroupers who filled, nearly entirely, the Jackie Robinson Youth Center in Harlem, all for the purpose of blowing Citi's trumpet regarding the funding of "financial literacy." Many of the journalists present -- or who didn’t' bother to go to Harlem, but only conduct phone interviews -- ran the story without qualification, not even mentioning that Citigroup has settled charges of predatory lending, and also of misleading investors. One reporter who did make this connection disclaimed ICP's congratulations, explaining that it's simply that he has a memory that runs more than a few days backwards. Or maybe the suck-up to Citigroup, by not only regulators but some reporters, has a more sinister explanation...

  A second example: after being praised in some quarters for embracing pro-environment policies (allegedly, Sandy Weill decided he didn't want his grandson to hear he was destroying the planet), Citigroup appeared last week on a last of banks who are undercutting even their "Equator Principles" -- and was chided by organizations including Friends of the Earth, and IPS, calling Citigroupers "wolves in sheep’s clothing." But given their history, why would anyone believe these Citigroupers?

Update of April 5, 2004: The financial media's kids-glove coverage of Citigroup continues to amaze. Last week Business Week Online purported to interview Citigroup's Marge Magner, calling her "Sandy Weill's protégé." Yep -- Ms. Magner started as subprime lender Commercial Credit in 1987. BW's run-down of deal didn't mentioned Associates, nor what Washington Mutual Finance Group does (subprime lending). Instead, Ms. Magner was allowed to pontificate about how much due diligence Citigroup does. She states: " you're looking to acquire products, a distribution method, or something that you don't have now that clearly moves you forward in terms of your business strategy or provides greater leverage for your overall business platform. Maybe the acquisition allows you to bring costs down or to distribute your products to an expanding consumer base." So -- what was the purpose of Citi's acquisition of Associates First Capital? Increased predatory lending, including into Japan and India...

  Meanwhile, Citigroup's claimed new environmental consciousness is reflected by the selection as "lead outside director" of Alain Belda of the aluminum company Alcoa... 

Update of March 29, 2004: This week, some numbers: Citigroup's new CEO Chuck Prince has already been shown to have contributed $2000 to both the Bush and Kerry campaigns.... Meanwhile, higher than last week's estimate, Sandy Weill's payday's now been valued at $44 million: $30 million in cash and 2.5 million options in Citigroup stock worth about $14 million. Robert Rubin, who has claimed that Citigroup' subprime / predatory lending doesn't happen under his aegis, pulled in $17 million....

From the mailbag:

Subj: Citiwatch

Date: 3/24/04 9:49:26 PM Eastern Standard Time

From: [Ex branch manager]

To: CitiWatch [at] innercitypress.org

  As a 13 1/2 year former CitiFinancial employee, I have found your report to be quite accurate. I was an award winning manager who left in January for refusing to let my district manager badger me into his predatory lending ways and bullying style. It was so bad that I left prior to my bonus being paid for last year. My branch made a profit of $750,000 which amounts to a "surplus" of $150,000 over Citi's goal for me. However, since I left prior to February's pay out, they refused to pay it to me. This loss amounts to over $8000...This company is not only a predatory lender but a predatory employer.

  Meanwhile, Citigroup's high-cost lender CitiFinancial uses the ad agency MindShare Japan for "its entire centralized planning," according to resurfaced journalist Sebastian Tong. Question: does that mean, the centralized planning of predatory lending? In Dallas (strangely), the CAO of " CitiFinancial International Ltd." is a Robb Webb. Is that, "Rob-web," as in "Robbery network"?  

Update of March 22, 2004: Simultaneous with its broadcast of voice-over identity theft TV advertisements throughout the United States, on March 19, Citigroup admitted that a magnetic tape containing information on over 120,000 of its customer accounts had gone missing in Singapore. The back-up tape, which had monthly transaction data on 123,690 Citibank customer accounts in Japan, went missing on February 21 while a local security company was transporting it, the Japanese unit of Citibank NA said in a statement. 120,000 people trying to "get their lives back," due to Citigroup's negligence -- how can they film it all?

   In Mumbia, India, on March 16, Citigroup announced the appointment of Mr P.S. Jayakumar as Region Head for Asia-Pacific (Consumer Finance). Mr P.R. Seshadri, formerly in charge of Marketing - Consumer Loans, will now take over from Mr Jayakumar as Consumer Finance head in India, where "CitiFinancial provides services in the areas of housing, auto and white/brown goods purchase in addition to mortgage and personal loans."

   Citigroup: this is how they steal it. Sanford "Sandy" Weill receiving a 2003 cash bonus of $29 million, according to the bank's shareholder proxy statement filed with the Securities and Exchange Commission. Weill was given a package of more than $30 million for 2003, including salary and other compensation, the proxy said. The package compares with the roughly $18 million in stock options and other compensation Weill received for 2002. Prince, Willumstad and Rubin also made out like bandits -- and we mean that literally...

Update of March 15, 2004: We step back this week from the nitty-gritty of Citigroup's sleaze to two takes at the big picture. Dueling articles in Barron's and the March 15 WSJ tout Citi's global push. The Barron's "analysis" is a puff piece, blatantly seeking buyers for Citigroup's stock. It quotes Citi's CFO Todd Thomson that "[t]his isn't a financial supermarket," Thomson said Friday. "We have no interest in becoming a financial supermarket. What we are trying to do is focus on high-growth and high-return areas of financial services" -- yeah, like predatory lending. The WSJ article is somewhat more informative, quoting the head of Citigroup's international operations Deryck Maughan that Citigroup has targeted 14 countries where it will try to triple its credit-card business in the next seven years, says Mr. Maughan, who declines to name them. He has set similar goals for consumer finance, and aims to build retail branches as quickly as possible in 20 countries. The article continues (speculating about which country) -- "In less than 40 years, the combined economies of Brazil, Russia, India and China -- the BRICs economies -- could become larger than the combined economies of the U.S., Japan, U.K., Germany,