Citigroup is the third largest bank in the United States, just behind first-ranked Bank of America and second-ranked JPMorgan Chase. Based in New York City, it has $1.9 trillion in assets and $845 billion in deposits. Citicorp is divided into to sections: Citicorp and Citi Holdings. Citicorp handles regional consumer banking and credit cards, as well as a number of services for institutional clients. Citi Holdings has broker and asset management in conjunction with Morgan Stanley Smith Barney, and engages in consumer lending that includes mortgages, auto loans, student loans, personal loans and credit cards. According to Citigroup’s 2010 Annual Report, the financial institution’s strategy is to get rid of the businesses and assets that make up Citi Holdings. Citigroup reported that it had divested Smith Barney, Nikko Cordial Securities, Primerica Financial Services, Diners Club, and The Student Loan Corporation. Although they’re trying to get rid of the companies in Citi Holdings, those companies still accounted for a third of Citigroup’s “risk-weighted assets” at the end of 2010. Citigroup trades on the New York Stock Exchange under the symbol “C.”
The financial behemoth boasts 200 million customer accounts in over 100 countries. It grew as a result of a series of mergers and acquisitions, but began when City Bank of New York was founded in 1812. Over the past 200 years, it has subsumed dozens and dozens of other financial institutions, including Bank Handlowy, European American Bank, Golden State Bancorp, Banamex, Salomon Brothers, Schroder & Co., Smith Barney. But it only moved into the stratosphere in 1998, when Citicorp merged with Travelers Group.
During the financial crisis of 2008, Citigroup was a giant on the verge of collapse. It was the largest bank on the world, but required a huge stimulus by the U.S. government to keep it afloat. In return, the federal government owned 36% of the company, and was only able to sell its remaining shares back to the financial institution in December 2010.
Citigroup’s Board of Directors includes a significant number of former chairpersons from other financial institutions, as well as a former dean of the Stanford University Graduate School of Business, a former president of the Federal Reserve Bank of Philadelphia, and the president of the Rockefeller Foundation.
Citigroup’s Lending Activities
In its 2010 Annual Report, Citigroup crows about its credit card arm, saying, “Citi Cards is one of the industry’s largest providers of credit cards with more than 21 million accounts generating more than $77 billion in receivables in North America.” Indeed, the financial giant’s revenues for credit card fees alone (not including interest) were $3.7 billion in 2010.
At the end of 2010, Citigroup also held $102 billion in first mortgages and $49 billion in second mortgages. When consumers obtained their first mortgages, 15% had FICO scores (credit scores) lower than 620; by the end of 2010, 28% of those same borrowers had FICO scores lower than 620 – a telling statement about the impact of the Great Recession. For those with second mortgages, 3% of borrowers had FICO scores lower than 620 at the time the loan was originated, while 17% of the same borrowers had FICO scores lower than 620 at the end of 2010. As a side note, FICO scores range from a high of 850 to a low of 300.
Citigroup also lends to consumers through their Ready Credit and Checking Plus products, as well as through auto loans and student loans. At the end of 2010, the financial institution held $26 billion in installment loans and another $0.9 billion in what they call their “Other Revolving” portfolio.
How Citigroup Handles Past Due Credit Card Debt
According to the financial institution’s 2010 Annual Report, Citigroup seems to think that the best defense is a good offense. The report says, “Beginning as early as 2008, Citi actively pursued loss mitigation measures, such as stricter underwriting standards for new accounts and closing high-risk accounts.” Nonetheless, at the end of 2010, Citigroup had $3.2 billion in North American credit card accounts that were 30-89 days past due, and another $3.2 billion in North American credit card accounts that were 90+ days past due. The financial institution noted that 90+ days past due balances continue to accrue interest until they are 180 days past due.
Citigroup outlines a number of short-term and long-term modification programs for borrowers who aren’t able to pay their credit card debt. For consumers who have a long-term disability, medical issues, or whose income is permanently reduced, Citigroup offers a “Paydown” program, whereby consumers can pay off the balance over 60 months. Interest rates are reduced to 0% or 9.9%, fees are discontinued, and the consumer can no longer use the credit card. The financial institution has a similar program for consumers working with consumer credit counselors. Called the Credit Counseling Group, its provisions are the same as the Paydown program, except that interest rates are reduced to 9.9%. Their Interest Reversal Paydown program also lasts 60 months, and is for consumers with a long-term hardship. Previous interest and fees are reversed, and future interest and fees are discontinued. As with the other programs, the consumer can no longer use the credit card.
In 2010, Citigroup carried $2.5 billion in the Paydown program, $1.8 billion in the Credit Counseling Group Program, and $328 million in the Interest Reversal Paydown program. However, the financial institution changed the criteria for entering into these modification programs, and cut the number of new participants by half in the fourth quarter of 2010.
Citigroup writes off credit card debt as a loss when they reach 180 days past due. For personal loans, Citigroup writes off the debt as a loss when it’s 180 days past due if there haven’t been any payments in six months; it must write them off by the time they’re 360 days past due. If a consumer has filed bankruptcy, the financial institution writes off the credit card debt within 60 days and personal loans within 30 days.
Citigroup and Debt Collection
Citigroup’s 2010 Annual Report appears to lump credit card “loans held-for-sale” (charged off debt they the company intends to sell to debt buyers) in with all of the other types of loans they have for sale, an amount totaling $87 billion. Citigroup does cite $5.9 billion in credit card “impaired consumer loans,” so perhaps that’s the amount that’s available to debt buyers. Complicating matters still is that Citigroup has a “retail partner program” where Citigroup holds the credit cards that have retailers’ names on them. For example, Citigroup might issue a card for a Home Depot account.
In April 2011, Citibank was all over the news in Indonesia, when a consumer was allegedly beaten to death in the company’s office by a debt collector trying to collect $12,000 in credit card debt. On the Internet, consumers have reported that West Asset Management and Worldwide Asset Purchasing have collected Citi debt. Back in the fall of 2010, Citi Holdings sold $1.6 billion of credit card debt to General Electric. Citi Holdings also sold The Student Loan Corporation and Diner’s Club to Discover.
Along this long and winding road, the consumer often gets lost. As debts and parts of the company are bought and sold – whether to another financial institution like Discover or to a debt buyer – the documentation supporting the debt and any payments that have been made can get lost in the shuffle. As a result, consumers may hear from a Citi employee trying to collect one month, from an outside collector another month, and from a debt buyer the following month.
How to Stop the Harassment Now
Complete the form to the right for a FREE evaluation, or call Toll-Free . The legal team at Lemberg & Associates is committed to holding banks accountable, and will fight for your rights under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.
If you have been the victim of harassment or illegal or unfair debt collection practices, contact the Fair Debt Attorneys at Lemberg & Associates immediately to discuss your options and protect your rights. When you owe creditors money, you are protected by the Fair Debt Collection Practices Act, as well as other federal and state laws. If a debt collector has violated your rights, you may be entitled to up to $1000 in damages, and they may even have to pay your attorney fees. Sergei Lemberg, and the attorneys at Lemberg & Associates have helped countless people to assert their legal rights with debt collectors. Don't be intimidated by illegal debt collection practices. For more information, contact Lemberg & Associates today at .
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