FEDERAL RESERVE FINES CITIFINANCIAL $70 MILLION FOR CHEATING CONSUMERS

May 28, 2004

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I just laugh when big banks and other big-money interests try to tell Congress that people that file bankruptcy are “crooks” in an attempt to have our bankruptcy laws changed; what hypocrisy. The money lenders are some of the biggest crooks in the world.

Yesterday, the Federal Reserve announced a cease-and-desist enforcement action against Citigroup’s subprime CitiFinancial unit, calling for $20 million in restitution, a $50 million fine, and some “remedial” actions — including revising its conpensation structure and its practice of misleading examiners and destroying or hiding documents.

The practices the Fed describes in the order — illegal requiring of co-applicants in order to sell more joint credit insurance, and shifting personal unsecured loan customers into high-cost mortgage loans — are only a few of CitiFinancial’s problematic and predatory practices, the tip of the proverbial iceberg. CitiFinancial’s business model is based on the sale of credit insurance that is neither asked for by, nor in most cases beneficial to, the customer, and on “upselling” customers from unsecured to home-secured loans.

To read the Federal Reserve’s press release, go to:

http://www.federalreserve.gov/boarddocs/press/enforcement/2004/20040527/default.htm