The pressure's not letting up on Citigroup. In the past month its corporate feet have been held to the fire once again.Despite its tendency to simply ignore critics, Citi recently was forced to respond, largely because its regulators, including the Federal Reserve, are beginning to react to increasing political pressure.The company said at the end of June that it would stop offering single-premium credit insurance on mortgage loans, a practice that had been under intense criticism.Around the same time, the New York State Banking Department issued an enforcement action against Citi, declaring that it had failed to meet the minimum dollar target in lending to underserved communities and to waive $1 million of fees on low-interest loans made in those communities. Citi's pledges were made to get approval for the merger that combined Citicorp and Travelers Group in 1998 to form Citigroup.In July, a California consumer group petitioned the Fed to hold hearings on Citi's plans to acquire Mexico's second largest bank, Group Financiero Banamex-Accival. The consumer group, California Reinvestment Committee, complained that Citi doesn't lend enough in Latino communities. California Reinvestment Committee is an umbrella organization for more than 200 non-profit groups.That's not all. A second former Citi employee, in a sworn statement to Inner City Press/Community on the Move, said in July that Citi had pressured employees in the Charleston, SC, branch of CitiFinancial to try to get clients to refinance loans at higher rates, a practice known as "flipping."The former employee, Steven Toomey, said that after Citi acquired subprime lender Associates First Capital Corp., it began compensating employees on the amount of loans they flipped. Citi, according to the American Banker, our sister publication, said a review had found the "alleged practices are in no way characteristic of how CitiFinancial employees treat their customers or offer and sell products." It described Toomey as a "disgruntled employee." Earlier that month, the Federal Trade Commission filed an affidavit that charged CitiFinancial with other unethical practices.
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