WASHINGTON - A community activist group filed petitions Monday with bank regulators in an effort to stop Citigroup Inc. from buying Associates First Capital Corp.
Inner City Press/Community on the Move asked the Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and several state banking and insurance regulators to block the transaction.
The petitions argue that the deal, announced Sept. 6, should not go through because one of Associates' banking subsidiaries got a "needs to improve" rating in its last Community Reinvestment Act examination.
Matt Lee, the community group's executive director, said the bank's poor CRA rating should keep Citigroup from exercising new powers granted by the Gramm-Leach-Bliley Act, which allows financial holding companies to engage in or acquire new business lines only if their banks have a CRA rating of "satisfactory" or better.
Because the Citigroup/Associates transaction is pending under the Change in Bank Control Act, it is up to the OCC and the FDIC to approve or block it, Mr. Lee said. In reviewing applications for acquisitions, the two agencies must consider integrity, resources, and financial activities, he said.
"We are submitting a letter to the Fed to cover all the bases," Mr. Lee said.
Under Gramm-Leach-Bliley, if the transaction were to win approval by the OCC and the FDIC, the Fed could still stop the company from engaging in new lines of business.