Citigroup, CitiBank


"..Citigroup operations systematically overcharge and underfund poor and minority communities" (Greg Palast. The Best Democracy Money Can Buy. NY: Plume, 2003: 338).


"...Citigroup, the largest and most flagrant of Wall Street offenders, agreed to provide $2 billion to the injured investors in Enron, the colossal corporate hoax whose ingenioius balance-sheet deceptions were engineered by financiers at Citigroup and other leading banks. Another major culprit, JP Morgan Chase, settled a few days later for $2.2 billion. This sounds like a lot of money, but it's trivial alongside the $40 billion or more that shareholders and pension funds lost in the Enron swindle. Citigroup had already paid even more--$2.65 billion--for its role in the WorldCom swindle. No contrition required; pay out some money, get on with business.

"We might at least pause to marvel at what the modern bankerly imagination has created: a huge, all-service, guilt-free money machine. Criminal behavior is defined downward into a manageable cost of doing business. For its part in numerous reckless scandals, Citigroup has set aside (or already expended) an astonishing total of $9.8 billion. But since its quarterly earnings run around $5 billion, these costs are easily spread over years (and reduced by one-third after tax deductions). Some financial experts argue that this new beast of megabanking would become still more profitable if it decided to obey the laws...

"In addition to Enron and WorldCom, Citi was implicated in fraudulent collaborations with Global Crossing, Dynegy, Adelphia and a bunch of other corporations. Its high-flying stock touts--most infamously Jack Grubman of it Saloman Smith Barney subsidiary--took care of the corporate insiders by guling the sheeplike investors and awarding lucrative IPO shares to favored customers and friends. The SEC investigation noted lawsuits alleging that Citi analysts' research reports on campanies were "without a reasonable basis in fact." Citi paid $400 milion for forgiveness, then paid additional apologies for allowing mutual funds and other institutions to harves under-the-table profits...

"In China two Citigroup investment executives were suspended for providing false information to regulators. In Britain securities regulators investigated when Citi engineered a huge, $13.5 billion bond sale, then bought back the bonds at depressed prices (the bank apologized to Europeans burned in the transaction). In Argentina the US SEC went after Citi's accounting irregularities. In Japan Citigroup was forced to close down its private banking operations in 2004... for allowing employees to engage in fraudulent transactions.

"The ugliest dimension of Citi's profitability... involves "predatory lending to poor people trying to buy homes. Its consumer finance division, CitiFinancial, and subsidiaries jacked up interest rates and gouged buyers with inflated up-front fees and un-needed insurance coverage, thus setting up unwitting borrowers for default and loss of their homes... Citigroup keeps buying up low-end finance companies...

"Citigroup is a monstrosity created in its current state wholly by the Democrats, not right-wing Republicans, just as the original financial deregulation enacted in 1980 was achieved by a Democratic President and Democratic Congress, not Reaganites. That legislation abolished interest-rate controls, and decriminalized usury... The 1998 legislation that created all-purpose megabanks was achieved by Bill Clinton...

"Faced with a crime spree on Wall Street, Democrats looked the other way... Grassroots Democrats who believe getting Republicans out of power will restore an equitable system need to understand this. After they defeat the right, they will then have to take on the Democratic Party's own "Citigroup caucus"" (William Greider. "Sins & the Citi." The Nation, July 4, 2005: 4-6).


Colby Glass, MLIS