U.S. Sen. Elizabeth Warren (D-MA) raised regulatory concerns about Citigroup’s potential acquisition plans.
In late March, Bloomberg reported that Citi executives were hopeful to complete a major transaction. However, the bank has not made any concrete plans to move forward with any acquisition as of now. But Warren said that such a move could violate the Bank Merger Act and Bank Holding Company Act.
In a letter to Citigroup CEO Jane Fraser, Warren outlined three ways that regulators must consider the risk posed by the transaction to the stability of the U.S. banking system.
“Between 1995 and 2007, Citi grew from $559 billion in assets to $2.1 trillion,” wrote Warren in the letter. “After its risk-taking blew up during the 2008 financial crisis, and when the U.S. economy was on the brink of collapse, Citi received $476.2 billion in taxpayer-funded bailouts – more than any of its other peers on Wall Street. Further growth through mergers and acquisitions would almost certainly exacerbate Citi’s systemic riskiness and increase threats to financial stability.”
Warren added that regulators must consider the managerial resources of the existing and proposed institutions.
“Citi’s payment software system was so confusing that it reportedly “almost encouraged bank personnel to make huge mistakes” and contributed to one of the “biggest blunders in banking history” in August 2020 when Citi mistakenly wired $900 million to the creditors of the makeup company Revlon, instead of a small interest payment,” wrote Warren. “Citi is clearly unable to safely manage its sprawling financial empire as it stands today, and any acquisition would exacerbate these risks.”
Also, Warren said that regulators must consider whether the transaction would benefit the public, including by meeting the convenience and needs of the community.
“Citi’s sprawling financial empire has led to continued consumer harm. In 2023, for example, Citi violated the Equal Credit Opportunity Act, by discriminating against Armenian American credit card applicants. It was fined more than $24 million by the Consumer Financial Protection Bureau (CFPB)…” Warren wrote. “In 2016, the CFPB also took two actions against Citi, for illegal debt sales and debt collection practices, ordering Citi to pay nearly $5 million million in consumer relief and a $3 million penalty.”
Warren ended the letter by requesting that Citi answer a series of related questions by July 22.