WASHINGTON — Capitol Hill sources said Thursday that a congressional inquiry is expected into allegations that employees at a Citigroup consumer lending subsidiary used deceptive practices to sell unnecessary insurance coverage to minority, elderly, and uneducated home equity borrowers.

An affidavit the Federal Trade Commission filed last month in federal court in Atlanta quoted Gail Kubiniec, a former assistant manager of a CitiFinancial branch in Tonawanda, N.Y., as saying that common practices at her branch included identifying vulnerable borrowers, adding insurance coverage to loans without their knowledge, and harassing and intimidating borrowers delinquent on their payments.

“If someone appeared uneducated, inarticulate, was a minority, or was particularly old or young, I would try to include all the coverages CitiFinancial offered,” she said. “The more gullible the consumer appeared, the more coverages I would try to include in the loan.”

The FTC, which has sued Citigroup for alleged predatory lending practices at the former Associates First Capital, filed the affidavit as part of a response to Citigroup’s request to have the suit thrown out.

The banking company reacted negatively.

“Ms. Kubiniec’s allegations are an affront to the tens of thousands of CitiFinancial employees who strive every day to act in their customers’ best interests. If true, the unethical sales tactics she describes would constitute serious violations of the company’s policies and standards. As soon as we learned of her allegations, we commenced a thorough review that has reassured us that these alleged practices are in no way characteristic of how CitiFinancial employees treat their customers or offer and sell products,” Citigroup spokeswoman Christina Pretto said.

The affidavit drew strong reaction from Rep. John J. LaFalce of New York, the top Democrat on the House Financial Services Committee and a strong consumer advocate whose congressional district includes Tonawanda.

“These allegations provide reason for concern about CitiFinancial’s own practices and draw into question Citigroup’s pledges to eliminate Associates’ predatory practices,” Rep. LaFalce said through a spokeswoman. “Citigroup officials have pledged to me personally, as they pledged to federal and state regulators and community groups, that the controversial practices of Associates would be remedied.”

Both Rep. LaFalce and the new Senate Banking Committee Chairman, Paul S. Sarbanes, D-Md., have made predatory lending issues a top priority.

The allegations “reinforce the need to address this issue, and the Banking Committee will be holding hearings on the issue of predatory lending in the near future,” a spokesman for Sen. Sarbanes said. Calls to the office of House Financial Services Committee Chairman Michael G. Oxley were not returned.

They could have ramifications beyond the lawsuit. Citigroup is facing questions from the Federal Reserve Board about Associates’ lending practices in connection with its application to acquire European American Bank, and community groups are pressing the Fed to extend its inquiry into Citigroup’s May deal for Mexico’s Grupo Financiero Banamex-Accival.

The affidavit “makes the Fed’s duty to get to the bottom of Citi’s practices higher than it was with the European American Bank,” said Matthew Lee, executive director of Inner City Press/Community on the Move who gave a copy to American Banker and posted it on his Web site.

Industry lawyers, however, did not want to speculate on how the affidavit will affect the FTC’s lawsuit against Citigroup. Even if the allegations are true, they said, it is unclear whether such practices — however unattractive or unethical — would violate any law.

“If these allegations are proven to be true, it raises concerns about going beyond acceptable marketing practices,” said Timothy R. McTaggart, a former Delaware banking commissioner and now a partner in the Washington law firm of Nixon Peabody. The legal implications, he said, “turn on whether there was forced placement of credit insurance and adherence to consumer protection laws and disclosure regulations.”

Ms. Kubiniec alleged, for example, that “in marketing loans some inexperienced employees would obtain and use new credit reports on customers without their permission.” Under the Fair Credit Reporting Act, lenders may gain access to a consumer’s credit report if they are making a firm offer of credit.

On delinquent accounts, the affidavit said, “I observed employees harass and intimidate borrowers. …I know of employees who would show up at a person’s house and refuse to leave until payment was received. … I am aware of employees who have disclosed information about borrowers’ debts to their family members without the borrower’s permission.”

The Fair Debt Collections Act, which prohibits intimidation, generally applies to debt collectors, not to a company collecting payments in its own name.

Ms. Kubiniec said in the affidavit that she observed “at the time of the Associates merger, my branch stopped selling credit life and disability insurance on real estate loans. My impression was that this was a temporary change to obtain approval for the merger.”

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