A Secret Deal Between Wall Street and Washington Shines a Harsh Light on Federal Housing Agency | WHAT REALLY HAPPENED


A Secret Deal Between Wall Street and Washington Shines a Harsh Light on Federal Housing Agency

While the Federal Trade Commission was receiving gut-wrenching documentation of predatory lending abuses at a unit of Citigroup, the Federal agency mandated to level the playing field for low income homeowners, the U.S. Department of Housing and Urban Development, was quietly awarding 19,968 mortgages of homeowners in distress to Citigroup to dispose of as it saw fit. HUD legally became Citigroup’s joint venture partner in at least two of the deals, retaining a minority interest.

On March 6, 2001, the FTC brought suit against Citigroup, CitiFinancial Credit Company and two firms it had acquired (Associates First Capital Corporation and Associates Corporation of North America) charging them with engaging in deceptive and illegal lending practices.

The FTC had substantive evidence that a culture of incentivizing an aggressive sales force to pile predatory loans onto unsophisticated borrowers was an enshrined business model at Citigroup’s consumer lending unit.

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