Citi is "deeply sorry" for its discrimination against Armenian Americans, CEO Jane Fraser said today, December 6, during testimony before a Senate Banking Committee hearing.
On November 8, the Consumer Financial Protection Bureau (CFPB) fined Citi $25.9 million for targeting Armenian Americans who applied for certain credit cards from 2015 through 2021. The bank agreed to pay $1.4 million of the fine to the victims of the discrimination to settle the case and the remaining $24.5 million to CFPB’s victims relief fund and to stop the discrimination, taking measures to ensure compliance going forward.
"We are deeply sorry and apologize to the Armenian American community that we recently fell short of our fair lending expectations with respect to certain credit card applications," Fraser said in her opening remarks to the committee. "We found a small number of employees were not following Citi policy and have taken action to make things right and prevent any recurrence."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Banking Committee called Fraser, along with seven other banking and financial services executives, to testify during its annual oversight of Wall Street firms hearing.
According to CFPB's charges, Citi specifically singled out applicants whom it suspected were of Armenian descent based on their surnames. The bank targeted applicants with names ending in “-ian” and “-yan,” including those living in or around Glendale, California, which is home to about 15% of the Armenian-American population, the CFPB said.
Workers told to keep quiet about the practices
Citi also lied about why it denied the applicants and told employees not to discuss the discriminatory practices in writing or on recorded phone lines, CFPB said.
“Citi believed that Armenian Americans were prone to engage in criminal fraud,” CFPB Director Rohit Chopra said in a November 8 statement. “Citi often rejected these applicants outright. When Citi did not, the bank subjected those who may be of Armenian descent to additional scrutiny.”
Groups including the Consumer Federation of America (CFA) praised the action against Citi.
“It’s an open-and-shut example of intentional discrimination,” Adam Rust, CFA Financial Services director said in a November 13 statement. “Through a coordinated plan, Citi singled out a group of applicants for additional scrutiny based solely on their national origin and without any business justification. Financial institutions that exclude groups from getting credit solely because of their national origin by applying blunt-fisted, de-risking approaches should take note of this order."
Federal agencies are continuing a crackdown on banking operations. In recent months, for example, the CFPB has fined consumer finance company Tempoe, sued installment lending conglomerate Heights Finance Holding, reached settlements with credit repair firms Lexington Law and CreditRepair.com, and brought charges against Freedom Mortgage for illegal kickbacks.
If you have a problem with a financial product or service, the CFPB encourages you to visit its website to file a complaint. The consumer watchdog group said it sends more than 20,000 complaints about financial products and services each week to companies for responses and that most companies respond within 15 days.
Related Content
- Loan Lender Sued for 'Trapping' Borrowers
- CFPB Slams Credit Repair Companies
- CFPB Sues Snap Finance, Prehired for Allegedly Deceiving Consumers
- $725M Facebook Settlement Receives 'Largest Number of Claims Ever Filed'
-
Visa Is the Worst Dow Stock Wednesday. Here's WhyVisa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
-
Another Analyst Moves to the Sidelines on Tesla Stock After EarningsTesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
-
Best Banks for High-Net-Worth Clientswealth management Kiplinger's 2023 list of the best banks for higher-net-worth clients.
-
Best Cash Back Credit Cards July 2024Smart Buying Trying to compare the best cash back credit cards? Unlike most reviewers, we include cards from small banks and credit unions, as well as from large issuers.
-
The Best Balance Transfer Credit CardsBalance transfer credit cards have the power to drastically cut your payments with 0% APR. But there’s a cost, and rules to follow.
-
Should You Get a Loan From Your Credit Card?credit & debt The convenience can come at a steep cost. But there are options.
-
14 Little-Known Credit Card Perkscredit cards Rewards points and cash back aren’t the only benefits of paying with plastic.
-
The Best Bank for You, 2018savings We've identified the banks and credit unions that offer the best combination of high rates, low fees and a customer-friendly focus.
-
6 Most Rewarding New Rewards Credit Cards
credit & debt These cards are great for consumers who want cash back on purchases or points that can be redeemed for travel.
