According to an exclusive report published by Reuters, Citigroup Inc. may be penalized for possible Fair Lending violations by the Office of the Comptroller of the Currency (OCC). The regulators’ scrutiny is related to Citigroup’s “relationship pricing” program that offered discounts on mortgage interest rates to customers based on their deposit and investment balances held with the institution.
Such pricing programs are used by many financial institutions to promote deeper relationships with their customers. However, such pricing programs may increase exposure to Fair Lending risk if there is discretion in how these programs are applied.
The report indicates that the potential Fair Lending violations arose due to disparities in how these programs were applied. An internal review of the program conducted by Citigroup determined that minority borrowers did not receive discounts for which they qualified under this program. Citigroup shared its findings and remediation efforts with the OCC, which is examining the facts for any violations of Fair Lending laws. Citigroup faces fines and penalties if the OCC determines that Fair Lending discrimination occurred.