US Senator Elizabeth Warren has called for action against Citigroup, urging financial regulators to impose growth restrictions on the bank due to regulatory failures, according to Reuters. In a letter to Acting Comptroller of the Currency Michael Hsu, Warren described Citi as “too big to manage” and cited ongoing issues with data management, controls, and other management problems.
Warren referenced Citigroup’s history of regulatory fines, highlighting a US$400 million penalty imposed by the Office of the Comptroller of the Currency (OCC) in 2020. The fine resulted from failure to meet regulatory standards on risk management, compliance, data governance, and internal controls within the bank. By 2024, it had incurred more fines of US$ 136 million. This time, they experienced fines from the Federal Reserve of 61 million US dollars and the OCC of 75 million US dollars for sustained standard deficiency in data quality management and risk control. While Citi’s CEO Jane Fraser has been trying to address these problems, regulators say they have not solved them adequately.
Warren Calls for Regulatory Measures
Warren pointed to several incidents illustrating Citi’s failures, including the infamous 2020 Revlon incident. In that case, Citi sent US$900 million to creditors while they should have paid only US$7.8 million in interest. She also mentioned a Reuters article published in July 2024, where the bank was alleged to have violated liquidity regulations that are implemented for banks to prevent failure.
In her letter, Warren criticized Hsu for not implementing prior promises to deal with the problem of ‘too big to manage’ banks. In a speech given in 2023, Hsu stated that banks could reach a size and level of complexity whereby control failures, risk breakdowns, and other adverse surprises become more likely. Warren argues that Citigroup has such problems to the present, which indicates that action must be taken.
Warren said to Hsu, ” Based on your own logic, it is high time to safeguard the US financial system by limiting Citi’s growth.” The senator’s letter expresses new concern over the systemic risks posed by banks of the current scale and complexity and calls for tightening the measures to maintain the financial system’s stability.
