Fed Terminates Citi Order

The Federal Reserve Board has terminated an enforcement order against Citigroup's subprime lending unit that was imposed two years ago for lending violations and for "misleading" examiners during an investigation of the company's lending practices.In May 2004, CitiFinancial Credit Co., Baltimore, agreed to pay a $70 million civil money penalty to the Fed for alleged violations of the Equal Credit Opportunity Act and the Home Owners and Equity Protection Act. The Fed also cited the subsidiary of the giant New York banking company for "alleged actions to mislead examiners in connection with their interview of CitiFinancial employees." The Fed examiners found that CitiFinancial required co-signers on loans to increase sales of joint insurance. The Fed also alleged that CitiFinancial engaged in unsafe and unsound underwriting and lending practices with respect to high-cost HOEPA loans. CitiFinancial agreed to take corrective actions and to pay restitution to borrowers who were harmed by its lending practices.