An investigation by the Consumer Financial Protection Bureau (CFPB) has uncovered the company wide use of illegal practises in dealing with student loans at Citibank. This is another damaging blow to the reputation of the banking industry, which took a major hit to its reputation during the housing crash in 2007. It’s disappointing that one of America’s largest financial institutions would be involved in a scheme targeting a group of people already struggling with their finances.
The CFPB found a number of irregularities during their investigation. According to their findings, Citibank had been charging late fees they weren’t entitled to, incorrect interest, they requested monthly payments that were too high, and withheld information about tax deduction benefits. The bank hasn’t had much to say publicly about the situation, but the fact that they are paying the fines without dispute speaks volumes.
Lessons Not Learned
What makes the decision of Citibank executives to allow these illegal practises so surprising is that it appears to be nothing but a policy of corporate greed. The bank was one of the hardest hit by the subprime mortgage crisis and it received one of the largest financial bailouts in American history in 2008 just to keep it afloat. That makes the use of misleading techniques with student borrowers so hard to understand. Clearly, Citibank didn’t learn the lessons of their past.