No. 15 of The Subprime 25: CitiFinancial / Citigroup Inc.

Introduction

Total high-interest loans 2005-2007:

At least $26.3 billion

Federal bailout money received:

Citigroup has received federal guarantees on $306 billion in assets as well as $45 billion in direct investment and a $5 billion Treasury backstop on losses in the asset pool.

Company overview

• Status: ACTIVE
• History: CitiFinancial was created as Commercial Credit in 1912. The company is the subprime lending unit of the global banking giant Citigroup Inc., which was created with the $140 billion merger of Citicorp and insurance firm Travelers Group in 1998. The deal was contingent on the elimination of Depression-era restrictions on one firm owning insurance companies, investment banks, and commercial banks. Congress complied with the passage of the Financial Services Modernization Act in 1999, a law pushed hard by Citigroup’s creator, Sandy Weill. Citigroup purchased Associates First Capital in November 2000, a company often accused of predatory lending practices. Citigroup was involved in virtually every aspect of the subprime business, including supplying funding for other mortgage companies. CitiFinancial did not, however, sell its loans to be used as securities, according to the company. The crash of the market hit the bank harder than most and its share of government assistance has been considerable. It includes a $306 billion government guarantee against losses on shaky mortgage assets.
• Parent/subsidiary companies: Parent company Citigroup Inc. bought Argent Mortgage Co. LLC and AMC Mortgage Services on August 31, 2007. The companies were subsidiaries of ACC Holdings, which owned Ameriquest, one of the nation’s largest and most criticized subprime lenders.
• CEO: CEO: Vikram Pandit (Citigroup Inc., still in that position as of May 2009)
  • Most recent salary: 2008 – salary, $958,333; total compensation, $10,815,263
• Location: Baltimore
• Year founded: 1912
• Backers: Citigroup originated its own subprime loans, bought loans from other subprime lenders and created mortgage-backed securities for sale on Wall Street.

Lobbying overview

• Lobbying: 1999-2008: Citigroup and its subsidiaries reported $57,760,000 in lobbying expenditures. **
• Total Contributions: At least $16,150,379 *
• Top Recipients:
  1. Democratic Senatorial Campaign Committee $1,088,877
  2. Republican Governors Association $940,000
  3. Republican National Committee $875,546
  4. Democratic Governors Association $732,094
  5. Barack Obama $592,136

Investigations

• Settlements:
  • In 2002, Citigroup agreed to pay $215 million to resolve Federal Trade Commission charges that Associates First Capital Corp., prior to being acquired by Citigroup in 2000, had engaged in “systematic and widespread deceptive and abusive lending practices.”
  • In 2004, the Federal Reserve levied a $70 million civil penalty against CitiFinancial for subprime lending abuses committed from 2000 through 2002.

** Lobbying totals calculated by the Center for Public Integrity using data from the Senate Office of Public Records.

* Contribution grand total includes employee and soft money contributions from the lender and its subsidiaries. Top recipient totals include employee and political action committee contributions. Data provided by CQ Money Line, analysis by the Center for Public Integrity.