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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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:

I’m ashamed as an American to admit that Citigroup’s headquarters is based in the USA. (Maybe that’s one of the reasons that the rest of the planet hates us so much!)

I’ve had my own dealings with Citi, Citigroup, Citibank, Citifinancial, Citi-U, and whatever other names they want to call themselves. I was finally able to pay them off, break free of the Citi BS, and get my life back. They are still trying to ruin my credit, but this too with pass and be corrected with time. I have been a loyal customer of Sears and Kmart for over 40 years. I’ve spent tens of thousands of dollars at Sears and a great deal at Kmart also, but now I will never buy even so much as a bolt or pack of gum from either one of them again. Because they have joined forces with Citigroup, and let them take over their credit card business, they have lost me for a customer, forever. I’d rather drive farther, go and pay more for something, at another retailer, than hand anymore of my money to a group of idiots that support and agree with Citibank policies.

Many thanks to ICP for trying to expose these people for what they really are. I only wish you could get all the big people in Washington, DC to stop having lunch & cocktails with them, or playing golf with them on Saturday’s. A twenty million dollar fine, is just a slap-on-the-wrist joke to Citigroup. Let’s take over their assets and pay off the national debt, shut them down, and throw their executives, (retired or not), in prison for about forty years or so. It’s about time that our government starts doing something about the real evil in the world. It’s not Iran, Iraq, or the Korean’s, …it’s Citigroup!

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.

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.

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.

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.

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:

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.

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?

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.

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.

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: