Citigroup Growth Restrictions Recommended by Senator Warren

By Pete Schroeder
WASHINGTON (Reuters) – A prominent Democratic U.S. senator has urged a top regulator to enforce growth restrictions on Citigroup as the bank works to address persistent regulatory issues.

Call to Action
In a letter addressed to Acting Comptroller of the Currency Michael Hsu, Senator Elizabeth Warren stated that Citigroup’s prolonged difficulties with data management and controls suggest that it has become “too big to manage” and should face limitations.

Warren, known for her criticisms of major banks like Wells Fargo and JPMorgan, does not have direct power to compel Hsu but her letter aims to pressure him to take stringent measures against Citigroup and highlight the bank’s ongoing challenges.

Citi’s Response
Spokespersons from both Citigroup and the Office of the Comptroller of the Currency (OCC) opted not to comment. Citigroup CEO Jane Fraser and other executives have previously affirmed their commitment to adhere to regulations and resolve the bank’s compliance issues.

Past Penalties
In 2020, the OCC and Federal Reserve fined Citigroup $400 million, mandating the bank to develop a corrective plan for ongoing risk management deficiencies that resulted in multiple sanctions. They’ve faced additional fines for failing to make satisfactory progress on these issues.

Cited Concerns
Warren referenced Citigroup’s consent orders, an erroneous 2020 payment to Revlon, and breaches of a Federal Reserve rule concerning intercompany transactions as reasons for her recommendation for growth limitations outlined in Hsu’s 2023 speech, which suggested that such measures might be necessary for banks with recurring infractions.

Hsu acknowledged in his address that imposing restrictions on growth, business operations, or capital actions could incentivize banks to resolve their issues, though he mentioned that such actions represent a significant escalation.

Warren argued that according to Hsu’s framework, imposing growth restrictions on Citigroup is vital to safeguarding the American financial system.

Typically, regulators restrict banks with unresolved compliance issues from mergers, acquisitions, and expanding branch networks; however, more severe restrictions—such as asset caps previously placed on Wells Fargo—are rare.