U.S. GOVERNMENT APPROVES CITIGROUP MEGA-MERGER!
WE THE PEOPLE SAY - NO WAY!
ORGANIZE TO TELL CITI YOUR COMMUNITY WON'T BUY
INTO THEIR SYSTEM OF DESTRUCTION!
On this Page:
1) Action Alert - Condemn the merger!
2) Inner City Press/Community on the Move's comments
3) Press Clips
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1) ACTION ALERT:
Last week the US government approved Citigroup's $31 billion
merger with Associates First despite a storm of public protest.
The approved merger promotes Citi to the position of "#1 predatory
lender" in the United States, resulting in larger profits for the
mega-bank and foreclosed homes and bankruptcy for the country's
economically marginalized communities. The merger is just one
example of Citi's commitment to profit regardless of the real cost
to the environment, communities or basic economic and human rights.
Citibank's predatory lending practices keep the working poor trapped
in a cycle of debt that mirrors Citi's policy of profiting from the
crippling debt of countries in the Global South. Predatory lending
practices often results in individuals losing their hard won homes.
In the Global South, entire countries are held hostage to a debt burden
which much be paid off through the destruction and extraction of natural
resources. The result whether its in Indonesia or the South Bronx is
entire communities of people being marginalized, poisoned and displaced.
Underwriting the injustice is a financial system that operates in a moral
vacuum and uses our money to finance and profit from destructive practices
globally. It is time to demand that our credit card balances, our savings
accounts, our student loans, our pension funds are no longer used to fund
the
destruction of the environment and communities worldwide!
Let Citigroup know that you refuse to buy into their system of destruction.
Call now and express your outrage that Citigroup discounted community input
opposing the merger, and proceeded with plans that now make them the
world's largest sub-prime predatory lender. Let them know that they need to
start investing in a just, democratic and ecological sane economy that
accounts
for environmental and social needs.
Until they do, we won't do business with them. Let them know!
Call Charles Prince, general counsel and Chief Administrative Officer of
Citigroup at:
212-793-8854
Visit your local Citibank, CitiFinancial, Salomon Smith Barney or Traveler's
Insurance office. Organize a demonstration, information picket or direct
action!
For more information and action ideas check out www.ran.org
or contact Beka (NY) at beka@r... 718-218-7566
and Patrick (SF)organize@r... 415-398-4404/1-800-989-RAIN
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2) COMMENTS FROM INNER CITY PRESS/COMMUNITY ON THE MOVE ABT THE MERGER
Citigroup, on September 6, 2000, announced a deal to acquire a large,
scandal-plagued subprime (high interest rate) lender, Associates First
Capital Corporation.
Inner City Press / Community on the Move, along with over a hundred
community groups across the nation, opposed Citigroup's applications. It
was an uphill fight, not only in light of the political weight that
Citigroup throws around in Washington, but also because of a law passed
in 1999, primarily at Citigroup's request. When Citicorp and Travelers
merged in 1998, their combination was illegal, under the Glass-Steagall
Act. The Federal Reserve gave Citigroup two years to either sell off
Travelers' insurance operations, or to have the law changed. In November
1999, Congress passed, and President Clinton signed, a law repealing the
Glass-Steagall Act. This law, the Gramm-Leach-Bliley Act, also allowed
deals like Citi-Associates to take place without Federal Reserve review,
and without consideration of the Community Reinvestment Act, which
mandates fair lending in low income neighborhoods.
So, Citigroup's applications to acquire The Associates were not subject
to community reinvestment scrutiny. Inner City Press (ICP)filed comments
with
state insurance regulators as well; in Missouri, where ICP also has members,
the Insurance Department granted ICP "party" status, but denied ICP's
requests to depose (interview under oath) Citigroup CEO Sandy Weill and
others, about the deal.
The New York Banking Department granted ICP's and others' requests for a
public meeting. Citigroup then came up with some vague reforms of
Associates. At the public meeting, not only community groups, but also
environmental activists including the Rainforest Action Network and students
from Yale, Princeton, Columbia, and NYU testified against Citigroup, raising
such issues as Citigroup's Salomon Smith Barney's underwriting for
rainforest
destruction, the Three Gorges Dam project in China (which will displace 2
million
people, and destroy habitats), and for private prisons in the United States.
On November 29, the General Accounting Office released a report
documenting that Citibank was engaged in money laundering: in the cases
reviewed by the GAO, up to at least April 2000. The case has been referred
to the Justice Department.
On November 30, the two federal regulators (the Comptroller of the
Currency, who used to work for then-Treasury Secretary, now Citigroupie
Robert Rubin, and the FDIC) and the NYBD all approved the deal. And, an
hour later, Citigroup "consummated" its deal with The Associates. ICP has
filed suit in Missouri, seeking to vacate the Missouri Insurance
Department's approval. More broadly, on predatory lending and other issues,
groups are going to have to become even more active in bringing Citigroup to
accountability. The Citigroup Campaign -- is more needed that ever.
--Matthew Lee, Esq.
Executive Director
Inner City Press/Community on the Move
& Inner City Public Interest Law Center
1919 Washington Avenue
Bronx, NY 10457
Tel: 718-716-3540
Fax: 718-716-3161
Web: <www.innercitypress.org/citi.html>
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3) PRESS CLIPS
Copyright 2000 The Washington Post
The Washington Post
December 1, 2000, Friday, Final Edition
SECTION: FINANCIAL; Pg. E03
LENGTH: 805 words
HEADLINE: Citigroup Is Cleared To Buy Loan Firm; Associates First's Lending
Practices Drew Fire
BYLINE: Kathleen Day, Washington Post Staff Writer
Federal and state banking regulators cleared the way yesterday for
Citigroup,
the nation's largest financial services company, to buy Associates First
Inc., a large mortgage lender that consumer groups complain has one of the
worst records in the country for abusive lending practices.
The $ 31 billion stock swap merger closed last night, a few hours after it
won the regulatory green light.
The deal is the largest bank acquisition under new financial services law
passed by Congress last year. It's also a big disappointment to consumer
groups, which had pushed hard to persuade federal regulators to require
Citigroup to do a better job of protecting consumers from being sold loans
and other financial products that are unfairly priced or they can't afford.
Citigroup announced last month that, in response to consumer complaints, it
would voluntarily adopt policies to help guard against problems in its
subprime lending divisions.
Regulators at the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corp. didn't require such policies in approving the
merger,
though they welcome Citicorp's actions. New York state bank regulators,
however, required Citigroup to strengthen several of its voluntary proposals
as a condition of approving the transaction. But that didn't satisfy
consumer
groups.
"It's disheartening that with all the expressed concern about the abusive
practices that the Associates is engaged in, that the federal regulators
would approve it and without conditions," said Matthew Lee, executive
director of Inner-City/Community on the Move, a nonprofit consumer group in
New York City.
Associates First, based in Irving, Tex., is a major subprime mortgage
lender.
The Justice Department has accused it of violating fair-lending laws in
marketing credit cards to Hispanic customers. That case is pending.
The Justice Department and the Federal Trade Commission are also
investigating Associates First on allegations of predatory lending.
Subprime lenders focus on consumers who pose a higher risk of default
because
of troubled credit histories. These lenders charge higher interest rates on
loans to compensate for that higher risk.
Regulators and economists say subprime lending created a revolution in
finance over the past decade by providing credit to millions of consumers
who
in the past would have found it nearly impossible to borrow money. But they
also worry about abusive subprime practices, known as predatory lending,
where lenders use deceptive or confusing practices to push borrowers into
high-cost loans. These loans are often targeted at minority groups and the
elderly and often result in consumers defaulting on their loans and losing
their homes.
Citigroup contends policy lapses by Associates First are problems of the
past
and have been fixed.
Under a voluntary plan announced by Citigroup in November and strengthened
by
New York state regulators in the approval yesterday, the company will no
longer require subprime customers to buy single-premium life insurance but
will offer it as an option. Consumer groups say such insurance, which would
pay off the loan if the borrower dies, is an unnecessary expense for
consumers.
Citigroup also will give consumers the right to choose between a loan with a
higher interest rate but with no penalty fee if the mortgage is paid off
early, or a loan with a lower rate but with a prepayment penalty. Before,
the
company required consumers to accept prepayment penalties.
The company also will experiment in Maryland, Virginia, Missouri and New
York
with a program to steer consumers to lower-cost loans when appropriate.
"When we announced the Associates transaction, we indicated we hoped to use
this event as an opportunity to lead the market and set the highest
standards
in the consumer finance industry," said Citigroup spokesman Leah Johnson.
"We
look forward to swiftly and effectively implementing policy enhancements and
pilot programs."
The deal was especially frustrating to consumer advocates because, under the
new banking law, they lost the right to force regulators to take their
complaints into consideration before okaying a merger.
Instead, Citigroup merely had to notify federal regulators of the proposed
merger. Regulators could object only if they found the deal violated a
narrow
set of legal questions, including those relating to the "competence,
experience or integrity" of the acquiring company.
Finding no such violations, the OCC, which charters national banks, and the
FDIC, which insures bank deposits, notified the companies of "our intent not
to disapprove" the deal.
New York state regulators, by contrast, had to actively approve the
application, and did so only after Citigroup agreed to adopt stronger
consumer-protection policies.
---
November 30, 2000
FDIC Won't Block Citigroup Purchase
By THE ASSOCIATED PRESS
Filed at 9:03 p.m. ET
WASHINGTON (AP) -- Financial services giant Citigroup Inc. quickly announced
Thursday it had completed its $31.1 billion purchase of Associates First
Capital Corp. after federal and state banking regulators said they would not
block the deal.
The regulators' move followed a pledge by Citigroup in early November to
strengthen its consumer safeguards, especially for home equity loans and
other loans secured by real estate, as part of its plans to acquire
Associates.
Several community and activist groups have criticized lending practices at
Associates, based in Irving, Texas, whose business includes high-interest
loans to borrowers with inferior credit records.
One of the groups, Inner City Press/Community on the Move, said Thursday it
was ``disappointed in the banking regulators, so quickly allowing the
largest
bank to buy the most troubled (and troubling) subprime lender in the
country.''
The group said it planned to file suit in Cole County, Mo., seeking review
and a stay of the Missouri Insurance Department's previous approval of
Citigroup's application in that state.
The Federal Deposit Insurance Corp. released a letter from Michael Zamorski,
the acting director of its supervision division, to a Citigroup attorney
saying the acquisition ``may proceed immediately.''
The Office of the Comptroller of the Currency, which is the Treasury
Department division that oversees nationally chartered banks, and the New
York State Banking Department also announced their approval.
Zamorski said the FDIC had investigated the ``competence, experience,
integrity and financial ability'' of New York-based Citigroup and found no
reason to block its acquisition of Associates.
Citigroup has said the combined consumer finance operations of the two
companies will be the largest in the United States.
^----
On the Net:
Citigroup: http://www.citigroup.com
FDIC: http://www.fdic.gov
Office of the Comptroller of the Currency: http://www.occ.treas.gov
New York State Banking Department: http://www.banking.state.ny.us
Inner City Press/Community on the Move: http://www.innercitypress.org