Citibank: Your Friendly Racist, Anti-student Bank

Citibank’s record is characterized by anti-student policies, racism and union-busting.

In October 1995, the Campaign for an America that Works awarded Citibank its “Hog of the Month” award for the bank’s lobbying efforts to kill direct student lending—the federal program that allows the government to directly issue student loans without exorbitant fees or interest. Citibank lobbied against these loans because it wishes to force students to receive loans through commercial banks. That would allow the banks to gouge students with fees.
In 1989, Citibank tightened credit for students seeking to obtain US-guaranteed loans through the bank. According to the Wall Street Journal, Citibank drafted guidelines to deny loans to students at schools whose default rates topped 25%: “[The policy] would potentially hit hundreds of. . . colleges that cater to low-income students and minorities. Federal surveys have shown that several branches of the City University of New York. . . have default rates above 25%.” In other words, Citibank created a policy that discriminated against CUNY students.

But Citibank may now be looking to CUNY as a cash cow. Citibank, both directly and through its subsidiaries, is attempting to break into the poor-people market. Sixty million Americans are shut out of conventional banking venues. Those Americans must engage the services of pawn shops, check-cashing outlets, rent-to-own stores, and high-interest mortgage lenders. While credit card holders pay 6–20% annual interest, poor Americans can pony up to 240% for pawnbroker loans, 300% for finance company loan, or even 2000% for a quickie loan from a check-cashing place.

Citibank wants to tap into this $300 billion fringe economy, especially as more Americans are driven into bankruptcy or must rely on credit to remain afloat. According to CCNY’s Office of Institutional Research, as of 1995–96 70 percent of CCNY undergraduates received financial aid at an average of $4,559 per student.

Citibank’s Race Record

A federal report published in October 1997 showed Citibank three times more likely to reject Black loan applicants than white. Citibank has essentially argued back that Blacks for the most part are poorer than whites and that accounts for the difference. But the federal report also showed a 19% gap in rejection rates between Blacks and whites making over $54,960.

A study released just this September by ACORN, a community activist group, shows Citibank rejected Blacks at a rate twice the national average for Blacks in 1998. Citibank rejected Latinos a third more than the national Latino average.

In a May 1996 report, NYC Public Advocate Mark Green showed Citibank had closed a slew of branches in low-income neighborhoods, many of them in New York’s Black and Latino communities, including one right off City College’s campus on 145th St. Green accused Citibank of “financial segregation.” One Bronx councilwoman accused Citibank of “total insensitivity” to the neighborhood she represents.

Discrimination also characterizes the bank’s union-busting. In 1994, Citibank hired a new cleaning and maintenance firm. The new employer refused to rehire the janitors, many of them minority, who had previously cleaned Citibank branches. These workers, members of Local 32B-32J, earned $13.10 an hour with good benefits. Instead, the new firm hired non-union workers for $7 per hour. Citibank supported the arrangement, calling the halved wages “moderately less rich.” The union has accused Citibank of “destroy[ing] the living standards of minority workers” and “pitt[ing] two groups of minority workers against each other.”