Return to Current Issue

Remember the hit at NPA in April on the National Association of Mortgage Brokers? This action was against the worst "loan shark" predatory lenders in the country . . . or so we thought.

In September, Citigroup announced their plan to become the world's largest predatory lender by buying The Associates for $31 billion.

The Associates has been the subject of countless news stories where they ripped-off homeowners and has been forced to defend their predatory lending practices in 700 lawsuits. Even the government has taken notice- the U.S. Department of Justice and the Federal Trade Commission are currently investigating The Associates for predatory lending practices.

Citigroup is no saint either. They already own five high-interest, subprime lenders-CitiFinancial (formerly Commercial Credit), IMC, Source One, Primerica, and Travelers Bank & Trust, FSB. IMC is known for setting borrowers up for loans they cannot pay back and setting folks up for foreclosure. Citibank officials have been known to tell lower-income folks who want a home loan that they have to talk to Source One-which mainly pushes high-interest loans.

CitiFinancial is best known for opening 1,150 branches in communities across the country over the past couple of years. CitiFinancial has branches in 48 states. Each of these branches pushes high-interest loans, but fails to offer good, prime-rate loans. NTIC research has shown that more than 70 percent of these loans go to lower-income and minority borrowers.

Citibank, on the other hand, offers low-interest prime-rate loans. However, Citibank with $791 billion in assets only has branches in 10 states and Washington, D.C.

By buying The Associates, Citigroup will add 1,300 branches to its high-interest loan empire. In a November meeting called by NPA leadership on this issue, a top Citigroup official stated that the company created by combining CitiFinancial and The Associates will increase the number of high-interest loans in the neighborhoods without increasing access to prime-rate loans.

In effect, Citigroup plans to create a two-tiered banking system where the poorer and working-class neighborhoods will only get high-interest loans and wealthier areas and suburbs will get good, low-interest loans.

Related Article: Rubin Stiffs Groups