SOURCE: http://www.innercitypress.org/citimex.html

Opposition to Citigroup - Banamex

Updated June 4, 2001

On May 17, 2001, the chief executive of the largest bank in the
United States, Citigroup, appeared at a press conference in Mexico
City, to announced Citigroup's $12.5 billion proposed acquisition of
Banacci / Banamex, the second largest bank in Mexico. Combined with
Citigroup's Confia operation, Citigroup would control 26.4% of the
Mexican banking market, and over 21% of all Mexican bank accounts.
On June 1, Citigroup stated that it had already submitted its
required application to the U.S. Federal Reserve Board, and would
soon be applying to other agencies.

On June 4, 2001, Inner City Press / Community on the Move and
its affiliates (ICP) filed comments opposing Citigroup's
applications, with the Federal Reserve Board, the California
Commissioner of Financial Institutions, the Mexican National Banking
and Securities Commission, and regulators in Argentina, the Cayman
Islands, Bahamas and the United Kingdom. ICP's comment to the
Federal Reserve is summarized below; below that is ICP's initial
comment to the Mexican bank regulator, which has since been
supplemented. What promises to be a trend-setting proceeding has
begun (see, e.g., the American Banker's front-page article of May 31,
2001). We will be running updates in this space, weekly or more
frequently. For or with more information, contact us.

[ICP's June 4, 2001 comment to the Federal Reserve Board:]


June 4, 2001

Federal Reserve Bank of New York
Attn: Mr. James Beit, Bank Supervision Officer, et al.
33 Liberty Street
New York, NY 10045-0001
Via e-mail to comments.applications@...

RE: Timely comment in opposition to, and requesting a hearing on,
Citigroup's applications under Section 3 of the Bank Holding Company
Act, and under the Board's Regulation K, to acquire Grupo Financiero
Banamex Accival, S.A. de C.V., Banamex, California Commerce Bank and
their affiliates

Dear Mr. Beit, Governors:

On behalf of Inner City Press/Community on the Move and its
members and affiliates, including the Inner City Public Interest Law
Center (collectively, "ICP"), this is a timely comment opposing and
requesting hearings on the applications and notices of Citigroup,
Inc. (along with its affiliates, "Citigroup") to acquire Grupo
Financiero Banamex Accival, S.A. de C.V., and its affiliates,
including California Commerce Bank ("CCB") and Banamex
(collectively, "Banamex" or "Banacci").

Citigroup's proposal raises numerous policy and regulatory
issues, including under the Bank Holding Company Act (the "BHC Act")
and the Community Reinvestment Act (the "CRA"). The Federal Reserve
Board's (the "FRB's") duties go beyond reviewing Citigroup's proposed
acquisition of Banacci's bank in the U.S., CCB: if it acquires
Banacci, Citigroup would control over 25% of banking assets in
Mexico. The FRB enforces the cap of 10% of U.S. deposits that any one
institution can control. Here, a U.S.-based bank seeks to control
over 25% of the banking assets of the U.S.'s neighbor to the south,
Mexico.

The FRB should hold hearings -- this is particularly true in
light of the U.S. Federal Trade Commission's (the "FTC's") pending
lawsuit against Citigroup and CitiFinancial, f/k/a Associates First
Capital Corporation, for predatory lending (discussed below), and
Citigroup's statements that it would seek to offer, in Mexico and to
Latinos in the U.S. through the Banamex brand, the high interest rate
consumer finance lending product for which it is being sued. See,
e.g., Business Week of June 4, 2001: "In Mexico, says Victor Menezes,
Citi's head of emerging markets, the group hopes to build a consumer-
finance business -- which typically specializes in high-interest
lending to people with poor credit -- with the help of Keith Hughes,
the former Associates CEO, who will serve as a consultant."

As set forth below, the FRB has to date been lax in its
regulation of Citigroup, on issues including predatory lending and
money laundering. In 1998, the U.S. General Accounting Office found
that Citibank had violated its own supposed safeguards, in assisting
Raul Salinas de Gortari in whisking $90 to $100 million out of
Mexico. See, GAO/OSI-99-1, "Private Banking: Raul Salinas, Citibank
and Alleged Money Laundering." Citigroup suffered few to no
repercussions. In November 2000, a U.S. Senate investigation into
money laundering again found that Citigroup has insufficient controls
in place to prevent money laundering. See, e.g., New York Times of
March 3, 2001, Citibank Admits to Lapses in Dealings With Offshore
Shell Banks. Citigroup here proposes to acquire Banamex (subject to a
May 1998 FRB cease and desist order on money laundering) and its
affiliates in, among others, Bahamas and the Cayman Islands. This is
another reason for the requested hearings.

The $12.5 billion that Citigroup proposes to pay for Banacci
makes this the largest corporate acquisition proposal in Mexican
history. In 1998, Citigroup acquired Confia (which the FRB soon
forced to disgorge $12.2 million in money laundering-related funds);
Citigroup was granted by FOBOPROA what amounted to a subsidy of $120
million a year, in the form of interest payments on a $2.5 billion
high yield promissory note. Citigroup did not obtain a prepayment
penalty clause, which it had sought (analogous, ironically, to
Citigroup's predatory lending practices in the U.S., analyzed below).

As public outrage grew, FOBOPROA's successor, IPAB, paid off
this note in May 2000. Citigroup sued, and also threatened to pull
out of Mexico. Ernesto Zedillo, just before leaving office in
November 2000, agreed to continue (subsidy) payments to Citigroup.
Serious questions are being raised about this arrangement, about the
tax treatment of this proposal, about Citigroup's proposed continued
ownership interest in the telecommunications firm Avantel, and about
certain of the $3.6 billion of troubled loans that Banamex
transferred to FOBOPROA / IPAB. These are all issues that must be
inquired into and addressed, in proceedings before the FRB and other
agencies, before the FRB even considers acting on (other than deny)
these Citigroup - Banamex applications.

The FRB in November 2000 allowed Citigroup to acquire
Associates, a company which had already been sued for discrimination
against Latinos by the U.S. Justice Department, without even allowing
public comment on Citigroup's Regulation K applications to acquire
Associates' affiliates. Significantly, on March 6, 2001, the FTC sued
Citigroup, CitiFinancial, and Associates, alleging systematic
predatory practices in Citigroup's subprime lending, including
deception of consumers, "packing" of credit insurance, and "flipping"
of high-cost loans. See Federal Trade Commission v. Citigroup, Inc.,
et al., Civil No. 010 CV 0606 (U.S. District Court for the Northern
District of Georgia, Atlanta Division, filed March 6, 2001, and
incorporated herein by reference). Under its powers as "umbrella
regulator," enshrined in the Gramm-Leach-Bliley Act of 1999 ("GLBA"),
the FRB is Citigroup's primary supervisor. It is troubling that that
it was the FTC, and not the FRB, that took action on Citigroup's
questionable subprime lending; it is increasingly troubling that the
FRB refuses to conduct any on-site examination of CitiFinancial, even
as its practices would be exported to Mexico (see above). Under the
principles of the Foreign Bank Supervision Enhancement Act of 1991
("FBSEA"), and the principles promulgated by the Basel Committee on
Banking Supervision (the "BCBS"), the FRB is Citigroup's home country
supervisor. ICP contends that the FRB has a duty to fully inquire
into and act on Citigroup's subprime lending practices, which are
alleged by the FTC to be predatory, before acting on (other than to
deny) these Citigroup - Banamex applications. Citigroup's April 16,
2001, response to the FTC predatory lending complaint claims, as its
first argument, that "Citigroup Is Not Liable For the Acts of The
Associates" (Section I.A), and that "CitiFinancial Is Not a Successor
to The Associates and Is Not Liable for Its Acts" (Section I.B). When
Citigroup acquired The Associates in November 2000, it argued --
including to the FRB -- that its acquisition would be beneficial to
consumers, including Associates' customers. But in 2001, Citigroup
has argued that it "is not liable for the acts of The Associates,"
and even that CitiFinancial, into which The Associates was
purportedly merged, "is not a successor to The Associates and is not
liable for its acts." This corporate dodge is beyond distasteful: it
calls into question representations that Citigroup made to the FRB
and others last Fall. It is also another reason that Citigroup should
not be granted approvals to acquire Banamex, and to export
Associates' practices to Mexico.

When it acquired Associates in November 2000, Citigroup
announced certain purported reforms of the practices of
CitiFinancial. ICP found, and finds, these to be less than
meaningful, often misleading, and full of loopholes. ICP will amplify
on that at the requested hearing. In summary, Citigroup currently
charges up to nine percent -- nine hundred basis points -- in fees on
brokered loans, much higher even than other subprime lenders.
Citigroup's "reform"? To reduce it to eight percent.

Citigroup has continued selling single premium credit life
insurance, where this cost is rolled into the loan, and never
recouped by the borrower. Citigroup continues imposing pre-payment
penalties, so that people it traps into high cost loans cannot get
out from under them, by refinancing with another lender. Citigroup
continues imposing mandatory arbitration clauses on loans, so that
those wronged can't even sue, as a class, or seek punitive damages.
While a "referral-up" is purportedly being instituted, no explanation
has been given why prime loans can't simply be programmed into
CitiFinancial's "Maestro" computer system. Citigroup's November 7,
2000, commitment was and is illusory -- and furthermore, Citigroup
has yet to implement significant parts of it. ICP has submitted to
the FRB (and incorporates herein by reference) a six-page chart,
mailed to ICP by the New York Banking Department, dated May 11, 2001,
entitled "CitiFinancial Real Estate Lending Initiatives, Status of
Implementation," which reveals the following: "Referral-Up Program...
Remainder of states['] implementation T[o] B[e] D
[etermined]...;" "Sales Practices Compliance Programs...
TBD..."; "Foreclosure Review... 14,980 total foreclosures in
pipeline; 3,965 met criteria and have all been reviewed; 331
foreclosures suspended -- pending resolution"; etc..

It is material to this Citigroup - Banamex proceeding that the
above-referenced changes have not yet been implemented, and do not
even have a solid date for implementation (i.e., "TBD"). The volume
of pending foreclosures -- "14,980 total foreclosures in pipeline;
3,965 met criteria and have all been reviewed; 331 foreclosures
suspended -- pending resolution" -- is extraordinary, and should give
pause to the FRB even considering approving additional expansion by
Citigroup.

There are also numerous other Citigroup practices which evidence
a lack of social, environmental and even human rights standards,
which the FRB should inquire into and address before even considering
allowing Citigroup to acquire the second-largest bank in Mexico, and
to export these practices. See Section VI, below.

In a speech on August 25, 2000, at the FRB's symposium in
Jackson Hole, Wyoming, the FRB's chairman noted some "resonat[ing]
arguments" questioning the type of trade and investment regime
represented by this proposal, through which a U.S.-based bank would
come to control over 25% of banking assets in Mexico, and stated
that "those of us who support continued endeavors to extend market-
driven globalization need to understand and, if possible, address the
[se] concerns...". See,
http://www.federalreserve.gov/boarddocs/speeches/2000/20000825.htm;
and see, "Protesters' Concerns Should Be Addressed, Says Fed Chief,"
National Post, August 26, 2000, Pg. D3. Consistent with that, the FRB
should conduct a full-scope and transparent review of Citigroup's
proposal to acquire Banamex, including holding the requested
hearings. While Citigroup clearly "support[s and profits from]
continued endeavors to extend market-driven globalization," it does
not appear committed to transparency, or public participation. On May
17, Citigroup's senior officials bragged that Citi had already
presented the Banamex deal to the FRB and its chairman. See, e.g.,
Agence France Presse of May 17, 2001 ("Sanford Weill, chairman and
chief executive of New York-based Citigroup... said he discussed the
merger with... Federal Reserve Chairman Alan Greenspan. 'They had a
very favorable reaction,' Weill said at a news conference in Mexico
City"); see also, Newsday of May 18, 2001 ("Robert Rubin, former
treasury secretary under the Clinton administration who joined
Citigroup as a board member in 1999, said... the combination has been
received favorably by the Bush administration and Federal Reserve
Chairman Alan Greenspan"). As we noted in connection with the
Citicorp - Travelers merger in 1998 (see, e.g., American Banker of
May 29, 1998, at 2, "Citi Merger Protester Critical of Fed Counsel's
Role"), ICP believe that it is inappropriate for FRB staff to hold ex
parte discussions with corporations which will soon submit
applications, subject to public comment, for regulatory approval.
According to Citigroup's two most senior officials, such
communications have already taken place in this case. ICP has
requested a summary of, and all records reflecting or relating to,
these communications, under the Freedom of Information Act ("FOIA")
and otherwise, but has yet to receive any documents or summary from
the FRB. The documents and summary should be released forthwith, and
the FRB should schedule and hold hearing on this Citigroup - Banamex
proposal.

II. CITIGROUP'S APPLICATION SHOULD BE DENIED UNDER CRA, AND UNDER THE
BHCA'S "CONVENIENCE AND NEEDS" STANDARD

According to the Form S-4 that Citigroup filed with the
Securities and Exchange Commission on June 1, 2001, Citigroup has
already "filed two applications with the [FRB]. The first, under
Section 3 of the Bank Holding Company Act of 1956, seeks the Federal
Reserve Board's approval of our acquisition of Banacci's U.S. bank
subsidiary, California Commerce Bank. The second, under the Federal
Reserve Board's Regulation K, is a notice regarding the acquisition
of Banacci and its foreign subsidiaries and operations."

The FRB must consider the Community Reinvestment Act, 12 U.S.C.
§2901 et seq. ("CRA"), including Citigroup's record of fair service
to its communities, particularly low- and moderate-income ("LMI")
neighborhoods. Since Citigroup's subprime lending activities, alleged
to be predatory by the FTC and others, occur in every service area of
each of Citigroup's banks, these activities must be reviewed and
acted on by the FRB, under the CRA and otherwise. It is also
significant that Citigroup controls a bank with a rare Needs to
Improve CRA rating -- under the Gramm-Leach-Bliley Act of 1999, this
is supposed to preclude Citigroup from acquiring another bank in the
U.S. (in this case, CCB). In late 2000, after ICP asked the Board to
notify Citigroup, pursuant to 12 U.S.C. §1843(l)(2) and the then-
current version of 12 CFR 225.84(a), of its loss of GLB Act powers in
light of Associates National Bank's Needs to Improve CRA rating, the
Board issued a final regulation, "interpreting" (and ignoring) the
clear language of 12 U.S.C. §1843(l)(2), and changing, without public
notice, 12 CFR 225.84(a) -- a reinterpretation that benefited only
one company: Citigroup. Citigroup's ANB still has a Needs to Improve
CRA rating. In this context, ICP timely enters the information below
into the record before the Board on these applications, and requests
that the Board hold public hearings, and deny the applications.

Less than two percent of the banks in the United States have
less than satisfactory CRA ratings. The Board has historically denied
applications by holding companies which have subsidiary banks with
less than satisfactory CRA ratings. See, e.g., Totalbank Corporation
of Florida, Order Denying the Acquisition of a Bank, 81 Federal
Reserve Bulletin 876 (September, 1995); First Interstate BancSystem
of Montana, Inc., Order Denying Merger of Bank Holding Companies 77
Federal Reserve Bulletin 1007 (December, 1991). ICP urges such a CRA-
based denial, in this case.

While discriminatory and/or predatory lending are clearly CRA-
relevant, they also provides a separate ground for denial, even under
the Board's own precedents. For example, the Federal Reserve Board
denied a Shawmut Bank application in New Hampshire, while a
Department of Justice investigation of Shawmut's lending was pending.
Shawmut National Corporation, Order Disapproving Acquisition of a
Bank and Formation of a Bank Holding Company, 80 Federal Reserve
Bulletin 47 (January, 1994). Here, the allegations against
Citigroup's Associates are longer standing. ICP, for example, began
documenting Associates' practices to the regulators in early 1997:
see, e.g., "Activist Group Targets Ford Unit, Calling Its Card Rates
Excessive," American Banker, January 27, 1997, at 1; "Ford Unit on
Defensive Once Again Over Its Payments to Loan Brokers," American
Banker, January 29, 1997, at 1; "OTS Suspends Associates'
Application," National Mortgage News, February 16, 1998; "Law Denies
CRA Clout to Citi-Associates Foes; Federal Regulators Cannot Consider
the Issues," American Banker, November 27, 2000, Pg. 1. Under the
Board's Shawmut precedent (see above), prior to any final Board
action on the applications, the predatory lending issues documented
by the FTC and others must be fully investigated and addressed. In
the interim, the Board should schedule and hold public hearings.

Beyond the CRA and the above-cited FRB precedents, Section 3 of
the BHC Act provides that in "every case, the Board shall take into
consideration the financial and managerial resources and future
prospects of the company or companies and the banks concerned, and
the convenience and needs of the community to be served... The Board
shall disapprove any application under this section by any company
if... in the case of an application involving a foreign bank, the
foreign bank is not subject to comprehensive supervision or
regulation on a consolidated basis by the appropriate authorities in
the bank's home country."

As to the first part of the above-quoted, ICP contends that
the "communit[ies] to be served" for purposes of these application
are not only the market area of CCB, or of Citigroup's existing
banks. In 1998, Citigroup acquired Confia and its 400 branches. By
February 2001, Confia had only 197 branches left. See, e.g.,
LatinFinance, February, 2001, "Citibank's New Start." Banamex has
over 1,300 branches in Mexico (as well as, in the U.S., not only CCB,
but also agencies in New York and Texas). Citigroup's projected cost
savings rely on "rationalizing" (i.e., imposing its branch closing
axe to) Banamex's operations. ICP contends that an inquiry into
Citigroup's branch closing and service reduction practices, not only
in the U.S. (where Citigroup proposes to close 24 branches, in
connection with a proposed acquisition of 97 branches), but also in
Mexico, is necessary in this case.

On Citigroup's under-service with branches of low-income
neighborhoods, even in its headquarters city, an ICP representative
on April 17, 2001 asked Citigroup's CEO about the settlement
Citigroup reached earlier that month with the NYS Attorney General,
regarding Citigroup's lack of automatic teller machines in low-income
sections of New York, where Citigroup has the contract to distribute
public assistance and other government benefits. The ICP
representative asked Citigroup's CEO whether Citigroup now intends to
install new ATMs in these low-income neighborhoods, or simply
contract with other institutions to waive their fees. Citigroup's
CEO's response was not clear to ICP; for the record, Thomson
Financial's publication "CardLine," of April 13, 2001, reported that

Attorney General Eliot L. Spitzer found that Citigroup had few ATMs
in neighborhoods with high concentrations of beneficiaries, according
to a Wednesday announcement by Spitzer. The agreement gives Citigroup
the option of deploying new ATMs that impose no surcharges on EBT
cardholders or contract with local ATM deployers to provide surcharge-
free ATM access.

The FRB should inquire into this. The ICP representative also
asked Citigroup's CEO why, if Citigroup claims to be a leader, it is
seeking "confidential treatment" from the FRB for even the list of
subprime lenders with which it and SSB do business, in this
proceeding. Citigroup's CEO indicated that he was unaware of his
company's requests for confidential treatment for this information.

The ICP representative asked Citigroup's CEO why, despite his
claim that Citigroup is a "leader" in consumer protection, Citigroup
has expended significant funds lobbying against anti-predatory
lending legislation, most recently in Philadelphia and Chicago. No
response was proffered. Citigroup's initiatives to dominate the
legislative process would, needless to say, be further exported and
expanded if these applications were approved.

While the FRB in 1996 made a FRBSEA determination as to Banacci
(see, e.g., Grupo Financiero Banamex Accival, S.A. de C.V., Banco
National de Mexico, S.A., Banamex USA Bancorp, Order Approving the
Formation of a Bank Holding Company and a Proposal to Engage in
Certain Securities Activities, 82 FED. RES. BULL. 1047, 1049 (Nov.
1996), in the half-decade since then, Banamex, Citigroup's Confia and
at least four other institutions have been subject to money
laundering-related enforcement orders, and controversy has grown
around privatization and bail-out deals, including with respect to
Banamex and Citigroup's Confia. A detailed and updated inquiry into
the "comprehensive supervision or regulation on a consolidated basis"
statutory factor is needed -- frankly, the FRB's failure to take
action on Citigroup's questionable subprime lending (see above)
raises questions about the U.S. / FRB's compliance with this standard
of the BHC Act, and core principle of the Basel Committee on Banking
Supervision. It is imperative that the FRB hold public hearings on
Citigroup's proposal to acquire Banamex.

III. QUANTITATIVE EVIDENCE OF CITIGROUP'S DISPARATE LENDING IN ITS
U.S. COMMUNITIES

The analysis below uses the most recent Home Mortgage Disclosure
Act ("HMDA") data available from the Federal Financial Institution
Examination Council ("FFIEC"), 1999, and Citigroup's 2000 Loan
Application Register ("LAR") data.

In the New York City Metropolitan Statistical Area ("MSA") in
1999, Citicorp Mortgage made 1236 conventional home purchase loans to
whites, and only 56 such loans to African Americans, and only 58 to
Latinos. Meanwhile, Citicorp Mortgage denied 14.9% of applications
from African Americans, versus a 4.5% denial rate for whites.
Citicorp Mortgage denies African Americans 3.31 times more frequently
than whites (other lenders in New York deny African Americans 2.0
times more frequently than whites).

Adding Citicorp Mortgage and Citibank, N.A. together, Citigroup
is still worse than other lenders in the market. The industry
aggregate in the NYC MSA in 1999 made 5385 conventional home purchase
loans to African Americans, 4841 to Latinos, and 36,467 to whites.
Among these three groups, 11.5% of the industry aggregates loans were
to African Americans, and 10.4% to Latinos. The figures for Citicorp
Mortgage added with Citibank, N.A. are only 7.0% percent of loans to
African Americans, 8.0% to Latinos: both less than the industry
aggregate. Meanwhile Citigroup denied African Americans three times
more frequently than whites, versus the industry aggregates two-to-
one disparity.

* * *

The years of 1999 and 2000 (see below) are by no means the first
years in which Citi's lending has been disparate in New York. When
Citicorp and Travelers proposed to merge in 1998, ICP documented
Citicorp's disproportionate exclusion of communities of color,
including in New York's Bronx County. The New York Banking Department
(the "NYBD") required a commitment from Citigroup, to increase its
lending in majority-minority census tracts in New York State.
Specifically, Citi's regulatory counsel, Carl Howard, in a July 22,
1998 letter to the NYBD, committed inter alia that for all of
Citicorp's mortgage lenders, "the percentage of their HMDA-reportable
lending in 1998, 1999 and 2000 in the majority minority census tracts
in the following areas: 1. Nassau and Suffolk counties combined, 2.
Westchester and Rockland counties combined, 3. Queens County, 4.
Kings County, 5. Bronx County, 6. New York County and 7. Richmond
County, will equal or exceed the adjusted Aggregates' percentage of
such lending."

Citigroup claims to have increased its lending dramatically in
majority-minority census tracts, and to have complied with the 1998
commitment. However, a close review of Citigroup's 1999 Home Mortgage
Disclosure Act ("HMDA") data showed that the vast majority of these
purported improvements consist of loans, under $1,000, reported as
home improvement loans.

Citibank, N.A. reported making 1,931 HMDA-reportable loans in The
Bronx in 1999. But fully 1,751 (or over 90%) of these were home
improvement loans. These 1,751 home improvement loans in The Bronx
were generated off 1,805 applications, for a total dollar volume of
$4,064,000 -- an average of $2,252 per loan application, much lower
than other lenders' average home improvement loan in The Bronx.

It appears clear that Citigroup initiated this "micro-home
improvement loan" program in order to create the misleading
impression that it was complying with its 1998 commitment. This
becomes apparent, for example, when one considers the racial
demographics of Citigroup's marketing (mail solicitations) for these
loans. Of race-specific applications for home improvement loans in
The Bronx, based on Citibank's marketing, it reported in 1999 410
applications from African Americans, 590 applications from Latinos,
and only 66 applications from whites. This is entirely inconsistent
with the demographics of The Bronx, and with the marketing and
lending patterns in the Bronx of other lenders, including home
improvement lenders. This pattern would not have resulted from
obtaining credit history information for all of The Bronx's residents
and homeowners; this is clearly a program of "micro-loans" directed
as majority-minority census tracts, in order to purportedly comply
with Citigroup's 1999 commitment, in terms of number of loans, but
not dollar volume. The $4 million that Citibank lent in The Bronx
under this program in 1998, claiming thereon over 1,000 loans, is
dwarfed by Citigroup's (and Citibank's) "real" mortgage lending, in
Manhattan below 96th Street, for example. Even in The Bronx, note
that Citicorp Mortgage, with normal-size loans, made, in 1999, 44
loans to whites, and only six to Latinos, and only five to African
Americans.

ICP has obtained 2000 LAR data from Citigroup; ICP urges the FRB
to request and analyze 2001 data (and not simply Citigroup's
summaries thereof) as well. Consider:

Dozens of pages, 32 records / applications per page, consist
solely of $1,000 home improvement loans. While many of these "micro-
mortgages" are granted to applicants for whom no gross annual income
is reported, in a number of cases, applicants from the South Bronx,
African-Americans or Latinos, are in fact DENIED even these $1,000
loans, despite having a reported income. (Hereinbelow, "South Bronx"
is defined, as it is by the NYC Department of City Planning, as
Community Districts 1-6). For example, in South Bronx Census Tract
(CT) 233.02 (in the Tremont neighborhood), Citibank in 2000 denied a
Hispanic applicant a $3,000 home improvement loan (page 60 of
Citibank's LAR). The reason given is "debt-to-income ratio." But
what, then, of the approved non-minority applicants for whom no
income level is reported? Similarly, on page 79, an African-American
applicant in Bronx CT 16 is denied a $1,000 home improvement loan,
on "debt-to-income ratio" grounds. On page 90, an African-American
applicant in South Bronx CT 121.01 (Crotona Park East) is denied a
$1,000 home improvement loan, on "debt-to-income ratio" grounds. On
page 95, an applicant listed as "Race Not Available" is denied for a
$1,000 home improvement loan -- this in South Bronx CT 379, Bathgate
(a nearly entirely "minority" census tract). On page 96, a Latina
applicant in South Bronx CT 119 (Longwood) is denied for a $24,000
refinance loan -- despite having an income of $68,000. On page 101, a
Latino applicant in South Bronx CT 25 (Port Morris) is denied for a
$14,000 home improvement loan, despite having an income of $39,000.

On page 117, a Latino applicant in South Bronx CT 211
(Highbridge) is denied a $1,000 home improvement loan, despite having
an income of $43,000. Incredibly, the ground given for denial
was "debt-to-income ratio."

On page 121, an African American applicant in South Bronx CT 371
(Tremont / Belmont) is denied for a $5,000 home improvement loan,
despite an income of $32,000. The reason given is "debt-to-income
ratio."

On page 124, an applicant listed as "Race Not Available" in South
Bronx CT 175 (Morrisania, over 99% "minority") is denied for a $5,000
home improvement loan, despite an income of $26,000. On page 136, an
applicant listed as "Race Not Available" in South Bronx CT 75
(Melrose, nearly entirely "minority") is denied for a $20,000 home
improvement loan, despite an income of $32,000. The reasons given
were "debt-to-income ratio" and "other." On page 141, an applicant
listed as "Race Not Available," in South Bronx CT 381 (Bathgate) is
denied for a $20,000 home improvement loan, despite an income of
$52,000 -- here, the entire grounds for denial is listed as "other."
There is more; ICP urges the FRB to obtain this (and Citigroup's
2001) Loan Application Register, and to make appropriate inquiries.

Citigroup has proffered an "explanation" of the above-analyzed
micro-mortgages, claiming that in order to "re-enter" markets like
The Bronx, it began to offer small home improvement loans, to
establish "relationships." In an April 20, 2001, submission to the
FRB, Citigroup claimed 3,623 Citibank loans in "majority-minority"
census tracts in the New York City MSA in 2000 -- but the submission,
at page 10, showed that only 1,606 of those loans, less than half,
were home purchase or refinance loans. More than half, then, were the
misleading "micro-mortgages" analyzed above.

Of Citibank's / CitiMortgage's 150 LAR items in the South Bronx
that are NOT $1,000 home improvement loans, Citibank's main claim to
CRA credit consists of 25 home purchase loans made in a single census
tract of the South Bronx, CT 69 in Melrose. It appears clear that
this is a middle income, NYC Housing Partnership development, on
which Citibank was designated the preferred "end-lender." There
appears to have been pre-screening (in violation of the Equal Credit
Opportunity Act, ICP contends): of the 29 similarly-sized home
purchase applications from CT 29, 25 were approved, only one was
denied, four were reported as "incomplete." This is to be contrasted
with Citibank's high denial rate for home purchase and refinance
loans in all other South Bronx census tracts, and elsewhere in the
U.S. (that is, on actual retail, non-prescreened loan applications).

IV. WHILE CITICORP MORTGAGE DISPROPORTIONATELY DENIES AND EXCLUDES
PEOPLE OF COLOR FROM NORMAL RATE CREDIT, THE ASSOCIATES TARGETS
PEOPLE OF COLOR FOR HIGH COST LOANS WITH PREDATORY FEATURES

Beyond New York, Citigroup's conventional home purchase lending
is similarly disparate in other markets in which it has a CRA duty.
In the Chicago MSA in 1999, Citicorp Mortgage denied 29.2% of
applications from African Americans for conventional home purchase
loans, versus only 5.0% of applications from whites, meaning that
Citicorp Mortgage denies African Americans 5.84 times more frequently
than whites. In the Oakland MSA in 1999, Citicorp Mortgage's denial
rate disparity between African Americans and whites for conventional
home purchase loans was 4.04.

Most of the worst predatory lending practices take place in the
refinance mortgage and home equity loan markets. ICP's analysis,
below, comparing the refinance mortgage lending of Citigroup's normal
interest lenders, its banks and Citicorp Mortgage (at times, "CM"),
and of Citigroup's subsidiary Associates Financial Services (at
times, "AFS"), a high interest rate, "subprime" lender, finds that CM
disproportionately excludes people of color for its (normal interest
rate) lending, while AFS targets people of color with high-cost,
predatory loans. Following this quantitative analysis is a review,
including pending class actions and governmental investigations of
discrimination, of Citigroup's Associates' practices, which ICP (and
the FTC and others) contend are predatory.

For the record: in the Buffalo NY MSA in 1999, Citicorp Mortgage
made 61 refinance loans to whites, and only two to African Americans,
a ratio of 30.5 to one. Citigroup's subsidiary Citibank (New York
State) in this MSA in 1999 made 109 refinance loans to whites, and
only four to African Americans, a ratio of 27.25 to one. Citibank
(NYS) denied the applications of African Americans more than three
more frequently than those of whites -- essentially driving the
disproportionately denied African Americans to higher-cost lenders,
including one that Citigroup now controls. Associates Financial
Services in Buffalo in 1999 made 85 refinance loans to whites, and 31
to African Americans -- a ratio of 2.74 to one. This Citigroup-
controlled subprime lender is more than eleven times more likely to
target African Americans with its high cost loans than is Citicorp
Mortgage, and is over nine time more likely to target African
Americans with its high cost loans than is Citibank (NYS), with
normal interest rate loans. This is both discriminatory and
predatory; this merger should not be approved.

In 1999 in the Washington, DC MSA, Citicorp Mortgage made 159
refinance loans to whites, and only 22 to African Americans, a ratio
of 7.23 to one. Citicorp Mortgage denied the applications of African
Americans more than eight times more frequently than those of whites.
Associates Financial Services, the high cost lender, made 61
refinance loans to whites in Washington in 1999, and 84 to African
Americans -- a ratio of 0.72 to one. The subprime lender that
Citigroup now controls is more than ten times more likely to target
African Americans with its high cost loans than is Citicorp Mortgage,
with normal interest rate loans. Again, this is both discriminatory
and predatory.

In the Philadelphia MSA in 1999, Citicorp Mortgage made 89
refinance loans to whites, and only three to African Americans, a
ratio of 29.67 to one. Associates Financial Services, on the other
hand, made 64 refinance loans to whites, and 74 to African Americans -
- a ratio of 0.86 to one.

In the Newark, NJ MSA in 1999, Citicorp Mortgage made 68
refinance loans to whites, and only two to African Americans, a ratio
of 34 to one. Citicorp Mortgage denied the applications of African
Americans more than seven times more frequently than those of whites.
Associates Financial Services, the high cost lender, made 14
refinance loans to whites in Newark in 1999, and 15 to African
Americans -- a ratio of 0.93 to one.

In the Chicago MSA in 1999, Citicorp Mortgage made 361 refinance
loans to whites, and only 25 to African Americans (a ratio of 14.44
to one) and only 69 to Latinos (a ratio of 5.23 to one). On
applications for these loans, Citicorp Mortgage denied Latinos 4.48
times more frequently than whites, and denied African Americans 3.32
times more frequently than whites. Associates Financial Services, the
high cost lender, made 313 refinance loans to whites, and 203 to
African Americans -- a ratio of 1.54 to one. This Citigroup-
controlled subprime lender is more than nine times more likely to
target African Americans with its high cost loans than is Citicorp
Mortgage, with normal interest rate loans (for which CM denies
African Americans more than four times more frequently than whites).

In the Los Angeles MSA in 1999, Citicorp Mortgage made 138
refinance loans to whites, and only 10 to African Americans (a ratio
of 13.8 to one) and only 36 to Latinos (a ratio of 3.83 to one). On
applications for these loans, Citicorp Mortgage denied African
Americans 3.5 times more frequently than whites -- essentially
driving the disproportionately denied African Americans to higher-
cost lenders, including one that Citigroup now controls. Associates
Financial Services, the high cost lender, made 12 refinance loans to
whites, and 15 to African Americans (a ratio of 0.8 to one) and 25 to
Latinos (a ratio of 0.48 to one). This Citigroup-controlled subprime
lender is more than 17 times more likely to target African Americans,
and almost eight times more likely to target Latinos, with its high
cost loans than is Citicorp Mortgage, with normal interest rate loans
(for which CM denies African Americans more than three times more
frequently than whites). This is both discriminatory and predatory;
this merger should not be approved.

In the Phoenix MSA in 1999, Citicorp Mortgage made 36 refinance
loans to whites, and only one to a Latino, and NONE to African
Americans. Associates Financial Services, the higher cost lender, on
the other hand, made 307 refinance loans to whites, and 144 to
Latinos, 15 to African Americans, and 11 to Native Americans.
Similarly, in the Tampa, Florida MSA, Citicorp Mortgage in 1999 made
nine refinance loans to whites, and one each to Latinos and African
Americans. The higher cost Associates Financial Services made 173
refinance loans to whites, 28 to Latinos, and 83 to African
Americans. This merger should not be approved.

In the Oakland MSA in 1999, Citicorp Mortgage made 82 refinance
loans to whites, and only five to African Americans (a ratio of 16.4
to one) and only ten to Latinos (a ratio of 8.2 to one). On
applications for these loans, Citicorp Mortgage denied African
Americans 4.05 times more frequently than whites -- essentially
driving the disproportionately denied African Americans to higher-
cost lenders, including one that Citigroup now controls. Associates
Financial Services, the high cost lender, made 29 refinance loans to
whites, and 26 to African Americans (a ratio of 1.12 to one) and ten
to Latinos (a ratio of 2.9 to one). This Citigroup-controlled
subprime lender is more than 14 times more likely to target African
Americans, and over 2.8 times more likely to target Latinos, with its
high cost loans than is Citicorp Mortgage, with normal interest rate
loans (for which CM denies African Americans more than four times
more frequently than whites).

While ICP's data analysis has focused on Associates Financial
Services, the Board should inquire -- including in light of the FTC
enforcement action -- into the practices of all others Associates
subsidiaries, including The Associates (TX), Associates First Capital
Mortgage (TX), Associates Mortgage Group, Inc. (KY), Kentucky Finance
Company, TranSouth Financial Corporation, First Family Financial
Services, Associates' subprime auto lending business (including that
acquired with Arcadia Financial), and Associates Home Equity Service
(TX).

Beyond the above-cited March 6, 2001, Federal Trade Commission
lawsuit, the public record is replete with other examples of
Associates' predatory practices. See, e.g., "Loan Sharks, Inc.: High-
Interest Rate Loans Are Soaking the Poor From the South Bronx to
California -- And Wall Street Can't Get Enough," Village Voice, July
15, 1997, at 33 (reporting inter alia Associates' practice of loan
flipping, in Brooklyn, New York and elsewhere); "Cashing In On
Poverty," by Mike Hudson, The Nation, May 20, 1996, at 11 (reporting
inter alia that former Associates loan officer Philip White routinely
misled customers, at his employer's instructions, which he summarized
as "If you had to lie about the points we charged them, lie to 'em.
They're stupid anyway"); "A Man and His Loan: Why Bennie Roberts
Refinanced Ten Times," by Jeff Bailey, Wall Street Journal, April 23,
1997, at A1 (in this case, the effective number of points, taking
into account all refinancings, was 83: on an initial loan for $9,349,
Bennie Roberts came to owe Associates $45,000, after ten refinances
in four years, costing $19,000 in loan fees and points); and "Company
Says It Will Battle Any Bias Lawsuit," by Jim Fuquay, Fort Worth Star
Telegram, June 23, 2000.

The American Banker of March 13, 2001, at 11, reported that
among "policies that raise the interest rate on customers who pay a
bill late... [t]he highest such penalty rate, 29.99%, was charged
by... Associates National Bank, a subsidiary of Citigroup Inc....".

See also, "FTC SUES ASSOCIATES FIRST CAPITAL; PROBED LENDER HAS
POOR RECORD HERE," Madison (Wisc.) Capital-Times, March 9, 2001,
reporting that "Associates does significant business in Wisconsin
through a variety of subsidiaries, including credit insurance and
home equity lending. It has 37 offices statewide, including two in
Madison. Records filed with the state Department of Financial
Institutions show 87 complaints filed by Wisconsin consumers against
Associates since 1998. That is a high number of complaints compared
to other financial services firms doing business in the state, said
one regulator. 'They're one of the worst' said the regulator who
asked not to be named. Associates Financial Life also collected $1.31
million in premiums in 1999, making it the 16th largest credit
insurer in the state."

ICP has received a communication regarding practices at
CitiFinancial, in which it is alleged that

a former CitiFinancial branch manager... was fired for failing to
engage in predatory lending practices. Prior to being fired, he was
told that is RBO (Refinance Balance Only) volume had decreased from
the previous year. He was encouraged to increase the RBO's. An RBO is
what is sometimes called "flipping." The company actually keeps
records of the number of RBO's at each office. He knows of one case
where a personal loan made in August was flipped twice in three
months...

--Emphasis added.

While ICP is inquiring into the above-quoted communication,
the FRB should inquire with Citigroup whether, inter alia,
CitiFinancial "keeps records of the number of RBO's at each office,"
into the referenced "August" (that is, pre-Associates) doubled-
flipped loan, and any loans like it.

As to Citigroup's Primerica subsidiary, ICP recently received
the following complaint:

Dear Inner City Press

...We recently refinanced using someone in our church body who passed
themselves off as a "personal financial analyst," but was really a
salesman for Primerica / Travelers. The interest rate offered was
higher than the one we already had and we have a spotless credit
record. When we questioned this, the rep told us that "interest rates
don't matter," "it's all smoke and mirrors," and "this bank
calculates the interest differently." To make a long story short, we
have come to realize that this bank does nothing differently but scam
people, and if we want to get refinanced yet again, we are subject to
a stiff prepayment penalty...

Citigroup is already expanding Primerica into Spain; if these
applications are approved, it is foreseeable that these (and
Associates') practices would be further expanded in Mexico. The FRB
must inquire into and act on these issues, before even considering
(other than denying) these applications.

V. CITIGROUP'S INVESTMENT BANK IS ALSO INVOLVED IN PREDATORY LENDING

Citigroup, through its investment banking operation, is also
deeply involved in questionable subprime lending. For example, in
1999, Salomon Brothers Realty Corp. provided a $100 million
repurchase line of credit to Long Beach Mortgage -- a subprime lender
that was sued by the Department of Justice of race discrimination and
pricing disparity grounds. In 1998 Salomon Brothers Realty Corp.
provided warehouse lines of credit of $775 million to subprime lender
New Century Mortgage Corporation ("New Century"), requiring New
Century either to securitize $1 billion of loans through Salomon
Smith Barney as sole underwriter, or, in the alternative, to sell $1
billion in loans to Salomon Brothers Mortgage Securities VII for
their own securitization.

Salomon Smith Barney was the underwriter for the subprime
mortgage backed securities issuances Centex Home Equity 1999-4 and
2000-A, and well as Ameriquest Mortgage Securities 2000-1.

To document for the record that the Citigroup/SSB-underwritten
subprime lender Ameriquest disproportionately targets protected
classes with its (Citigroup-enabled) high-interest rate loans,
consider Ameriquest Mortgage Co.'s refinance mortgage lending in the
New York City MSA in 1998: 371 loans to African Americans, 214 loans
to whites, a ratio of 1.73 to one. The aggregate industry in this MSA
in 1998 had a ratio of 0.240 to one. In the NYC MSA, SSB-underwritten
Ameriquest targets African-Americans 7.21 times more frequently than
the aggregate with its high interest rate refinance loans. What
standards do SSB and Citigroup have for working with subprime
lenders? Apparently none. Most recently, Citigroup has
sought "confidential treatment" for even the names of the subprime
lenders with which it does business. The FRB should obtain and
release this list, and hold the requested hearings.

VI. CITIGROUP RUN AFOUL OF THE "MANAGERIAL RESOURCES" FACTOR IN
NUMEROUS OTHER WAYS

Under the explicit "managerial resources" factor of Section 3 of
the Bank Holding Company Act and Regulation K, and in light of the
FRB's duties under the principles promulgated by the Basel Committee
on Banking Supervision, ICP presents the following:

A recent Senate investigation into money laundering has found,
once again, that Citigroup has insufficient controls in place to
prevent money laundering. See,
<http://www.senate.gov/~gov_affairs/022801_psi_case_contents.htm>.
See also, New York Times of March 3, 2001, March 3, 2001, Citibank
Admits to Lapses in Dealings With Offshore Shell Banks. This follows
previous reports of similar deficiencies at Citigroup. See, e.g., the
General Accounting Office ("GAO") report issued on November 29, 2000
(GAO-01-120; "Possible Money Laundering Through U.S. Banks"), which
found that Citibank, until April, 2000, handled at least $270 million
for "Russian companies" as to which Citibank "did not conduct due
diligence...". Id. at 9, also citing GAO/OSI-99-1, "Private Banking:
Raul Salinas, Citibank and Alleged Money Laundering"). See also,
Money Laundering Alert, January 2000, and see the following, from
Mother Jones magazine's December 2000 article, "Tax Cheater's
Paradise:"

"Citibank's clients have included the family of Sani Abacha, the
former Nigerian general who plundered billions of dollars from his
nation's treasury, and dictator Omar Bongo of Gabon, for whom
Citibank established a Bahamian shell corporation to stash his looted
treasure. Citibank also helped Raul Salinas, brother of former
Mexican president Carlos Salinas, by transferring tens of millions of
dollars out of Mexico and depositing the money in European banks
under the names of untraceable companies registered in the Cayman
Islands. Citibank never used Salinas' name in bank communications,
referring to him instead as 'Confidential Client 2,' or 'CC-2.'

'CC-1' was the code used to refer to Carlos Hank Rhon, who is
currently facing civil charges by the Federal Reserve that he used
secret offshore accounts to illegally hide his controlling interest
in Laredo National Bank, the third-largest independent bank in Texas.
A Mother Jones review of Fed documents reveals that Citibank handled
more than $100 million for Hank Rhon, funneling his money through
accounts in New York, Mexico, London, Zurich, the Bahamas, and the
British Virgin Islands. According to one filing in the case, Citibank
not only decided what offshore entities to establish, but designated
its own employees as officers, directors, and trustees."

-emphasis added.

Since the above-quoted, the FRB on May 31, 2001, settled
enforcement proceedings with the above-referenced Carlos Hank Rhon.
Particularly in this light, and in light of the FRB's 1998 cease and
desist order against Citigroup's Confia, ICP explicitly requests that
the FRB act on a submission that Citigroup made to the California
Department of Insurance ("CDI") last fall, in connection with its
application(s) to acquire Associates First Capital and its
subsidiaries. In response to the CDI's Question 8 ("Provide a list,
and certified copies of all criminal, civil, regulatory and
administrative actions(s) taken against applicant and/or applicant's
ultimate controlling parent by any government body including actions
outside the United States (within the last ten (10) years"),
Citigroup stated:

California Certificate of Authority Application

Attachment C

Response to Item 8

To the best of Citigroup's knowledge, aside from certain
environmental issues, there have been no criminal, civil, regulatory
or administrative actions taken against Applicant (Citigroup Inc.) by
any governmental body including actions outside the United States
within the last ten years. From time to time, Applicant has come
within the regulatory scope of federal and state environmental
agencies through its acquisition or merger of companies previously
engaged in manufacturing activities. In the past, these environmental
agencies have required Applicant to undertake certain actions and all
such issues have been satisfactorily resolved. Additionally, the
direct and indirect subsidiaries of the Applicant are in regulated
businesses and as a result are subject to regulatory examinations and
actions in the ordinary course of business by the banking regulators,
Securities and Exchange Commission and the insurance departments of
the various states. Governmental bodies are also customers, account
holders and insureds of the subsidiaries of Application, which may be
involved in disputes or litigation regarding terms and coverage in
the ordinary course of business. To the best of our knowledge, there
have been no criminal proceedings brought against any subsidiary of
the Application while they were subsidiaries within the last 10
years. Information concerning major proceedings had been described in
the periodic reports filed by Citigroup and its predecessors with the
Securities and Exchange Commission. Citigroup's Annual Reports Form
10-K for the past two years are included with this Form A application.

ICP hereby formally asks the FRB, as Citigroup's primary
regulator, to consider the (in-) validity of Citigroup's above-quoted
answer, to another regulatory agency which, under the GLB Act, relies
on and defers to the FRB.

* * *

Finally, as matters concerning (and injuring) the public
interest, consider that Citigroup is extensively involved
in "resource extraction," much of it environmentally destructive,
through such units as Citicorp Ventures Philippines, Inc., Citicorp
Petrolease, Inc., Phibro Energy Production, and Phibro Commodities.
Since November, 2000, Australian "natural resources" company BHP Ltd.
has appointed Citi's Salomon Smith Barney to advise on its U.S. coal
operations, including possible mine acquisitions. BHP's possible
targets include U.S. steaming coal mines owned by the Peabody Group,
the world's largest coal company, and the No.2 U.S coal company, Arch
Coal Inc..

Citigroup's SSB has served as advisor and done underwriting for
problematic projects like the Three Gorges dam in China, for the
World Bank and controversial projects like the proposed Chad -
Cameroon oil pipeline, and for the genetic engineering firms
Deltagen, Orchid BioSciences, Genaissance Pharmaceuticals, and
Genecor International. Citigroup's SSB has acted as lead underwriter,
not only for presumptively predatory mortgage loans, but also for
Wackenhut Corrections Corp.'s initial public offering of the private
prison-based REIT, Correctional Properties Trust. Giving increasing
public awareness of, and opposition to, such practices, Citigroup's
involvement must be considered in connection with its applications
and notices to acquire Banamex, under not only the "managerial
resources" factor, but also (prospectively), the financial resources
and ability factors -- as does the potential financial ramifications
of the FTC's March 6, 2001, predatory lending lawsuit.

VII. CONCLUSION

For the reasons set forth above, the Board should schedule and
hold a public hearing on these applications, and, on the current
record, the Board must deny the applications.

If you have any questions, please immediately telephone the
undersigned, at (718) 716-3540.

Respectfully submitted,


Matthew Lee, Esq.
Executive Director
Inner City Press/Community on the Move
& Inner City Public Interest Law Center

NOTE: This page will be updated, when we receive the information
that Citigroup is seeking to withhold, in the face of Freedom of
Information requests from ICP and others, and Citigroup's responses
to the regulatory agencies. For or with more information, contact us.

(First) Report of May 29, 2001: On May 17, Citigroup's CEO Sandy
Weill appeared at a press conference in Mexico City, to announced
Citigroup's $12.5 billion deal to acquire Banacci / Banamex, the
second largest bank in Mexico... The questions asked at Citigroup's
May 17 teleconference with investment analysts were generally
superficial and congratulatory (from analysts from Merrill Lynch,
Morgan Stanley, among others). Asked about Banacci's 55% holding in
the telecommunications firm Avantel, and whether continued ownership
by Citigroup would be legal, Sandy Weill said "we're confident we can
handle that." A question asking for an elaboration on Citigroup's
planned use of Banamex in the United States was not answered. To a
final question about "regulatory and political risks," Weill said
Citi hopes to close in the third quarter of 2001, since "initial
reactions on both sides of the border have been positive," but the
closing has been set for the fourth quarter, since "you never know
what comes up... we hope not too many hurdles."

In an interview on May 17, Robert Rubin hinted that Citigroup
would move to open more branches in the United States under the
Banamex name, targeting Mexican-American communities. Whether this
targeting would include the allegedly predatory products of
Associates / CitiFinancial was not disclosed. Nor were specifics
given about branch closings in Mexico, as cost would be wrung out of
Confia's and Banamex's operations...

Here is a summary of ICP's initial comment to the Mexican bank
regulator, which has since been supplemented -- we'll appreciate from
readers of this Report any further information about the regulatory
process in Mexico (or, going forward, in other nations).


May 24, 2001
Comision Nacional Bancaria y de Valores
Attn: Federico Nunez Gonzalez, et al.
Insurgentes Sur 1871 Torre sur 10 piso
Colonia Guadalupe Inn
01020 Mexico DF

RE: The Proposal by Citigroup, Inc. to Acquire Banacci and Banamex
and their affiliates -- request for copies of all related
applications, timeline to submit comments, etc.

Dear Federico Nunez Gonzalez or to whom it may concern:

I am writing on behalf of Inner City Press/Community on the
Move and its affiliates (collectively, "ICP")... ICP desires to
submit formal comments to your agency regarding the proposal,
announced on May 17, 2001, for Citigroup, Inc. ("Citigroup") to
acquire Banacci, Banamex and their affiliates
(collectively, "Banacci"), but first desires to receive and review
all applications or notices that your agency receives concerning
Citigroup's proposal.

The first purpose of this letter, accordingly, is to request
that you send copies of all documents that are submitted to your
agency, related to Citigroup's proposal..

The second purpose of this letter is to request confirmation of
the Mexican statutory law, and regulations, applicable to Citigroup's
proposal... We would appreciate a copy, or Internet citation, to the
law and regulation that your agency will apply to Citigroup's
proposal, and thank you in advance in this regard.

We have previously commented to the U.S. Federal Reserve Board
concerning Banacci, and its affiliates Banamex USA Bancorp and
California Commerce Bank. See, e.g., Grupo Financiero Banamex
Accival, S.A. de C.V., Banco National de Mexico, S.A., Banamex USA
Bancorp, Order Approving the Formation of a Bank Holding Company and
a Proposal to Engage in Certain Securities Activities, 82 FED. RES.
BULL. 1047, 1049 (Nov. 1996). As noted above, we desire to comment to
your agency on Citigroup's proposal to acquire Banacci. You should be
aware, and we hereby formally enter into the record before you, that
Citigroup has been sued by the U.S. Federal Trade Commission ("FTC")
for so-called predatory lending (essentially, the gouging of
consumers in violation of law). See, e.g., Federal Trade Commission
v. Citigroup, Inc., et al., Civil No. 010 CV 0606 (U.S. District
Court for the Northern District of Georgia, Atlanta Division, filed
March 6, 2001; available on <www.ftc.gov>. We have also noted
troubling disparities in Citigroup's lending in New York
to "Hispanics," a category encompasses the vibrant Mexican-American
community here. In the New York City Metropolitan Statistical Area
("MSA") in 1999, Citicorp Mortgage made 1236 conventional home
purchase mortgage loans to whites, and only 58 to Hispanics. The
industry aggregate of conventional home purchase loans in the NYC MSA
in 1999 was 4841 to Hispanics, and 36,467 to whites, along with 5385
to African Americans. Among these three groups, 10.4% of the industry
aggregate's loans were to Hispanics. The figure for Citicorp Mortgage
added with Citibank, N.A. was only 8.0% of loans to Hispanics: less
than the industry aggregate.

In the Chicago MSA in 1999, Citicorp Mortgage made 361 mortgage
refinance loans to whites, and only 69 to Hispanics (a ratio of 5.23
to one). On applications for these loans, Citicorp Mortgage denied
Hispanics' applications 4.48 times more frequently than whites' --
essentially driving the disproportionately denied Hispanics,
including Mexican-Americans, to higher-cost lenders, including one
that Citigroup now controls, that has been sued for predatory lending
by the U.S. FTC.

ICP desires to submit more extensive comments to your agency,
including on Citigroup's record in Mexico and elsewhere -- but first
desires to receive and review all applications or notices that your
agency receives concerning Citigroup's proposal to acquire Banacci...
We appreciate your prompt attention.

Very Truly Yours,


Matthew Lee, Esq.
Executive Director

Until our next update of this Report, for or with more
information, you can contact us.