Citigroup Has Made a Sap of the Fed: It’s Borrowing at 0.35 % from the Fed While Charging Struggling Consumers 27.4 % on Credit Cards
(Pam Martens and Russ Martens)The first thing you need to know about Citibank and its parent, Citigroup, is that they have an extensive rap sheet. (See here). The second thing you need to know is that Citigroup is a serial predator that perpetually promises its regulators that it’s going to reform, but never does.
The third thing you need to know is that Citigroup has made a sap out of the Federal Reserve – not once, but twice. During the last financial crisis of 2007 to 2010, Citigroup somehow induced the Fed to secretly give it $2.5 trillion cumulatively in below-market rate loans for 2-1/2 years to prop up its sinking carcass. Citi got the cheap loans (often at below one-half of one percent) and then went right on charging its struggling credit card customers high double-digit interest rates.
Citi played a major role in creating the financial crisis, according to the official report from the Financial Crisis Inquiry Commission (FCIC). Three of Citigroup’s executives were referred by the FCIC to the Justice Department for potential criminal prosecution but zero criminal action was taken against them.
Today, the Fed has quietly reimbursed Citibank $3.077 billion under its Paycheck Protection Program Liquidity Facility, a program that reimburses banks for the loans they made under the CARES Act PPP program, which are guaranteed by the Small Business Administration. The Fed accepts the PPP loan as collateral and charges the bank a paltry interest on the loan of 0.35 percent.
Is Citigroup using that insanely cheap money to help struggling consumers during the worst economic crisis since the Great Depression? Despite its grand promises to be a beacon of light during the pandemic, customers are spilling their guts to the Consumer Financial Protection Bureau’s complaint database with horror stories of what Citi has put them through during this crisis. (Being able to report abuses by the Wall Street banks in a database shared with the public is one of the reasons that corporate-friendly Republicans in Congress are trying to kill the CFPB’s independence. The Trump administration has thus far gutted its funding and staff and the U.S. Supreme Court just handed down a decision on Monday indicating that the President has the power to fire its Director without cause.)
We perused the database yesterday. Citibank had 452 complaints in just the month of June. Assuming that a small fraction of consumers know that the CFPB complaint database exists and will take the time to file a complaint, 452 complaints in a 30-day period strongly suggests a very large pattern and practice of abuse at Citibank. (Not to mention the rap sheet we linked to above.)
One Citibank customer wrote as follows:
“I have two CitiCard accounts…I applied for Covid-19 assistance to defer my minimum payments…At that time, my minimum payments were around {$200.00} for each card. (FYI I am being charged a ludicrous 27.4 % interest on the balance for the Advantage Citicard account and 15.24 % on the Costco Citicard account.) At the time I applied for assistance, I understood that interest would accrue on these accounts. I was NOT told that I would be responsible for paying – in full – the entire amount of interest that accrued and pushed me over my credit limit. Consequently, I received a minimum payment due for the AAdvantage card for {$850.00}… and {$310.00} for the Costco account! This is not helpful for someone who is struggling at the moment due to the pandemic…”
Another Citi customer wrote this to the CFPB:
“I have a {$10000.00} Credit limit with Citi Costco card. I used the card more than usual this past month to purchase material for a remodel as well as a large doctor bill. Since I was reaching my credit limit, I made 3 payments…I could have waited until my billing due date but instead I thought I was doing a good thing by paying my balance off. Instead they have locked my account out for 12 days as punishment for making multiple payments in one month! I am shocked & dismayed that making multiple payments in one month to pay my balance off is a negative in their minds.”
Then there was this harrowing tale from a customer, which sounds so familiar to the last financial crisis: (The redacted information, indicated by X’s, has been done by the CFPB.)
“We signed on for a home mortgage with Citibank in…2019. Our mortgage contract specifically allows us to prepay our loan with no penalty. We have 2 complaints 1) Citibank transferred our mortgage to XXXX without informing us. XXXX is not allowing us to prepay our mortgage. Weve followed up with XXXX and Citibank multiple times. Citi responded saying XXXX is extremely delayed on email and phone responses. But they are not offering us any options. 2 ) Citi didnt inform us on our mortgage getting transferred to XXXX. We had an auto/pay option linked to our citi account for our mortgage. XXXX removed our auto-payment option. We were on vacation overseas in XXXX and XXXX and didnt realize any of this had happened. We got a call from XXXX on our mortgage – we thought it was a scam as they asked us for personal information. Our credit score dropped 100 points as XXXX reported our mortgage in default. All citi and XXXX say is sorry – they cant do anything.”
If you think these complaints might be an aberration, we suggest you read our related articles on Citigroup’s past behavior below. The only real question is, why haven’t regulators shut this bank down?
