Inner City Press Bank Beat - December 19, 2005

During Citigroup’s acquisition of the subprime lender Washington Mutual Finance Group, Inner City Press asked Citigroup’s Robert Rubin if he was aware that the unit was subject to a $70 million predatory lending verdict.  He responded that subprime lending “is not really [in his] aegis.”  Now, in an interview in Business Week of December 19, Rubin states: “We did two [in-depth] reviews [of our businesses] at the end of last year...one in fixed income, the other in the consumer business. I was part of both of those. It was [CEO] Chuck [Prince] and me and a few others. Right now we're looking at a possible acquisition abroad. I have no idea whether we'll do it, but a group of us went over it. It involves complicated questions, so they asked me to think it through.”  So: Rubin was part of a review of “the consumer business,” and can no longer disclaim responsibility for CitiFinancial’s practices. As to the alluded-to “acquisition abroad,” watch this space.

            Meanwhile, the Federal Reserve last week hauled off and approved Cathay’s application to exercise options on 41% of Great Eastern’s stock. Strangely, the Fed claims that it was okay to constrain over 40% of a target’s stock, even before Cathay had applied to the Fed. Beyond this dubious precedent, the Fed sent a letter to Inner City Press extending its time under the Freedom of Information Act, stating that “we are extending the period of our response until December 21, 2005, in order to consult with another agency or with two or more components of the Board having a substantial interest in the determination of the request.” How can the Fed legitimately extend its time to respond past that required in FOIA, and then approve the application during the extension? The Fed’s reasoning on CRA issues is ludicrous: presumptive mis-reporting of HMDA mortgage data (100% approval rate) doesn’t matter because the mortgage lending is “by accommodation” – and nor does small business lending matter, since no particular product is required by CRA.  Then what does the law mean, if neither mortgages nor small business lending matter? 

   From the mailbag:

Subject: Royal Bank of Scotland/Citizens Bank
Sent: Sat, 3 Dec 2005 12:55:07 -0500 From: Name withheld [see below]
To: RBS-Watch [at] innercitypress.com

  Thought you might be interested in recent developments at Citizens Bank/Charter One, the US arm of Royal Bank of Scotland. It's been kept very quiet, except for the Providence, Boston and Buffalo newspapers, but Citizens /Charter One has been laying off "colleagues" for the past week - to the tune of 250 to 300 people in Cleveland alone. I should know, because after 16+ years, I'm one of the affected "colleagues". I'm curious as to why nothing has been in the news here in Cleveland, since they promised a year ago to keep jobs in the Cleveland area when Citizens acquired Charter One. Articles have been in the Providence (RI) Journal the Wednesday before Thanksgiving… You have my email address, but I would prefer not to give my name, since I have to work there for another 2 weeks. My exit date, along with most of the other "Notified Colleagues" is December 16th...merry Christmas to us...

            Like the RBS ads put it, “Less talk, more action” – in this case, lay-offs / shredding... 

(Note: this item has subsequently been picked up by the Glasgow Herald, in RBS' Scotland).