WASHINGTON — The Greenlining Institute has joined the list of consumer activists objecting to Citigroup Inc.’s proposed purchase of Associates First Capital Corp.

In a protest letter sent Monday, the group urged federal banking regulators to delay or block the deal until the companies clean up their lending practices and more than double their community reinvestment commitments nationwide. The letter pointed out that federal authorities and at least five states are investigating Associates’ lending to high-risk borrowers.

Robert L. Gnaizda, the institute’s policy director, wrote that Citigroup “will become the nation’s largest subprime lender and probably the nation’s foremost predatory lender” if the deal is approved without strings attached.

The letter also said that Citigroup chief executive officer Sanford I. Weill and Robert E. Rubin had failed to assume the same kind of leadership role on community reinvestment issues that they had demonstrated in the successful fight for financial reform last year.

“Citigroup, with $792 billion in assets, is a global leader, but not an inner city leader,” the letter said. “It is the only super-large financial institution that has failed to receive an ‘outstanding’ rating” from the OCC.

Echoing criticisms raised by consumer groups since the deal was announced last month, the institute urged regulators to require Citigroup to boost its Community Reinvestment Act rating by developing a community reinvestment program worth at least $350 billion, like Bank of America Corp.’s.

The San Francisco consumer group encouraged regulators to wait until a Justice Department investigation of Associates’ lending practices is completed, and to conduct their own investigation of Citigroup’s subprime lending.

The eight-page letter was sent to Federal Reserve Board Chairman Alan Greenspan, Comptroller of the Currency John D. Hawke Jr., and Federal Deposit Insurance Corp. Chairman Donna Tanoue. It also called on the agencies to hold hearings on the merger and to require Citigroup to develop an antipredatory lending code of responsibility that would include provisions for victim restitution.

Citigroup dismissed the group’s charges and said that it would act quickly to remedy any problems in Associates’ practices.

“We have a long history of successfully integrating companies with differing cultures and bringing these businesses to our standards and practices quickly,” said Leah C. Johnson, director of public affairs for Citigroup. “As the industry leader, we will operate the combined business according to our high standards.”

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.