WASHINGTON - Rep. Maxine Waters, D-Calif., is blasting federal regulators for approving Citigroup Inc.'s acquisition of the subprime lender Associates First Capital Corp.
In letters to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. that were released on Monday, Rep. Waters wrote that the agencies acted irresponsibly in signing off on the deal two weeks ago despite accusations of abusive lending practices.
"The OCC and FDIC were in possession of data submitted by individuals and organizations having considerable expertise and experience monitoring the practices of financial institutions," Rep. Waters wrote in the letters, dated Friday. "The recommendations received during the review period overwhelmingly and justifiably opposed the merger."
Consumer groups had criticized the deal since it was first announced in September, and were hoping that regulators would block it. But the agencies argued that under the Change in Bank Control Act, they had limited authority in reviewing the acquisition and were not allowed to look at Associates' alleged predatory practices.
Critics, including Rep. Waters, countered that Citigroup also engaged in abusive lending practices, such as the sale of single-premium credit life insurance, excessive prepayment penalties, and hidden costs and fees.
The "OCC and FDIC have ignored clear signals and knowledge in their possession that Citigroup has repeatedly been found to compromise the 'competence, integrity and public interests' standard," she wrote.