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US Senator Warren asks regulator to impose growth curbs on Citi
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US Senator Warren asks regulator to impose growth curbs on Citi
Oct 3, 2024 5:24 AM

WASHINGTON (Reuters) - A prominent Democratic U.S. senator called on a top regulator on Wednesday to impose growth restrictions on Citigroup as the Wall Street bank struggles to fix ongoing regulatory problems.

In a letter to Acting Comptroller of the Currency Michael Hsu, Senator Elizabeth Warren said that Citi's years-long struggle to fix data, controls and other management problems show it has become "too big to manage" and should be curtailed.

A prominent bank critic who has previously taken aim at Wells Fargo, JPMorgan and others, Warren cannot force Hsu to take action but her letter can still put pressure on him to be tough on Citi, and draws more attention to the bank's problems.

Reuters was the first to report the letter. Spokespersons for Citi and the Office of the Comptroller of the Currency (OCC) declined to comment.

Citi CEO Jane Fraser and other executives have previously said that they are fully committed to complying with laws and regulations and to addressing the bank's regulatory issues.

In 2020, the OCC and Federal Reserve fined Citi $400 million and ordered the bank to draw up a plan to fix persistent risk management and operational problems that had led to multiple violations and penalties. The regulators again fined Citi in July for failing to make enough headway on those problems.

Warren cited those consent orders, Citi's botched 2020 Revlon payment, as well as a July Reuters report that Citi repeatedly breached a Fed rule that limits intercompany transactions, in calling for Hsu to implement restrictions he laid out in a 2023 speech about dealing with repeat offenders.

In that speech, Hsu said a restriction on growth, business activities, capital actions, or some combination may be warranted to incentivize a bank to fix its issues, although he noted that such action would be a significant escalation.

"According to your own framework, it is clearly time to protect the American financial system by imposing growth restrictions on Citi," Warren wrote.

Bank regulators sometimes bar lenders with unresolved regulatory and compliance issues from M&A deals and branch openings, but more dramatic restrictions such as an asset cap the Fed imposed on Wells Fargo for its lapses are unusual.

(Reporting by Pete Schroeder; Editing by Michelle Price and Muralikumar Anantharaman)

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