Mega-Bank Hall of Shame: First Inductee Citigroup
We have many Halls of Fame in the US: every sport has one and there’s one for rock and roll. However, sometimes we need to “honor” those who are the worst of the worst, to call attention to their abuses and hopefully get them to change course while getting people to consider alternative. In those cases, we need a Hall of Shame. Based on its proven capacity to do harm to the United States and the world, we think no industry deserves a Hall of Shame more than banking.
As part of Green America’s Break Up With Your Mega-Bank Campaign, we’re now launching the Mega-Bank Hall of Shame. We’ll be periodically adding financial institutions to the list and taking nominees from readers. We’re launching the Hall of Shame with Citigroup, one of the largest banks in the world.
What qualifies Citigroup for the Hall of Shame? Here’s a partial list of their actions that we think merits their inclusion.
Predatory Lending Practices. For the past decade, there have been multiple allegations of predatory lending practices by Citigroup. Predatory lending is financing that saddles borrowers with exorbitant interest rates and fees and unfair terms. The result is the stripping of wealth from low-income communities. In 2001, Green America and the Social Investment Forum called attention to Citigroup’s predatory lending practices a decade ago and an outcry from thousands of consumers got Citigroup to clean up some of its worse practices. In addition, the Federal Trade Commission sued Citigroup for predatory lending practices and settled with the banking giant in 2002 for $215 million. However, as late as 2009, data analyzed by Fair Finance Watch found that Citi, and three other major lenders (JP Morgan Chase, Wells Fargo and Bank of America) were still saddling minority borrowers with higher cost loans, while also turning them down for loans more frequently.
High Fees. Citigroup and other major banks keep coming up with new fees for many of its account holders. Most recently, in December 2011, Citigroup raised its fees on a basic checking account.
Illegitimate Foreclosures. Citigroup is one of the banks that is being sued by Massachusetts and other states for engaging in improper foreclosures against homeowners. A key claim of the lawsuit is that Citigroup and other banks used “robo-signers” in foreclosing on homeowners and failed to perform due diligence. In addition, Citigroup and other banks are alleged to be improperly foreclosing on US Service Members.
Abusing Investors. The Securities and Exchange Commission (SEC) sued Citigroup for lying to investors about the soundness of its investment products. Citigroup was allegedly telling investors that the investments were sound, while betting against the same investments. According to the filed complaint, Citigroup made $160 million, while investors lost $700 million. The SEC recently tried to settle this case, but the presiding judge refused to sign off on the settlement, essentially saying that the SEC was letting Citigroup off too easily. The Federal Housing Financing Agency is also suing Citigroup and 16 other lenders for misleading Fannie Mae and Freddie Mac about the safety and soundness of mortgages the entities purchased from Citigroup.
Gender Discrimination. A group of woman plaintiffs is suing Citigroup for allegedly laying off female employees disproportionately, retaining men with lower performance evaluations, and/or treating women to a hostile environment.
Fostering Climate Change. As I wrote in a previous post, Citigroup is one of our major banks that claims to screen its lending for climate change issues, but continues to be a major supporter of sources of climate change.
The bottom line: if you are a person of color, a woman, a moderate-income account holder, an investor, or someone who cares about people and the planet, then Citigroup is not the bank for you. If you bank with Citigroup, check out Green America’s Guide to Community Investing to find financial institutions that build communities and treat their customers well. If you need help in breaking up with Citigroup, you can download our free kit.
If you break up with Citigroup, please share your experience on our blog. And, if you have more to say about Citigroup than what you see above, please share it.