Fed Fines Citi Subprime Unit

The Federal Reserve Board has fined Citigroup's subprime lending unit $70 million for abusive lending practices, which were discovered during examinations in 2000 and 2001.The Fed order alleges that CitiFinancial Credit Co., Baltimore, engaged in "unsafe and unsound" practices in originating high-cost loans that are subject to the Home Ownership and Equity Protection Act. The consumer finance company required co-signers on loans in violation of the Equal Credit Opportunity Act to increase sales of credit insurance. And CitiFinancial employees misled Fed examiners. CitiFinancial did not admit to any wrongdoing in agreeing to the settlement, and it agreed to take remedial actions, the Fed said. "Not only am I confident that the matters raised by the Federal Reserve have been properly addressed, I also believe that CitiFinancial has the best consumer protection programs and policies in the entire consumer finance industry," said Harry Goff, CitiFinancial's president and chief financial officer. The company noted that it stopped making HOEPA loans in January 2003.