Citigroup has now had liquidity reporting errors in its latest scandal, due to repeatedly breaching a Federal Reserve rule.
Citigroup repeatedly breached a U.S. Federal Reserve rule that limits intercompany transactions, leading to errors in its internal liquidity reporting, according to a Citi document from December seen by Reuters.
Reuters is reporting the infractions for the first time.
Under so-called Regulation W, banks are required to restrict transactions like loans to the affiliates they control.
The rule is meant to protect depositors whose money is insured up to $250,000 by the government, the outlet reports.
The Regulation W infractions appear to be part of a broader set of problems Citigroup is working to address in its risk management and internal control systems.
In 2020, authorities deemed Citigroup’s risk practices to be “unsafe and unsound”.
Then in 2023, regulators rebuked the bank for how it was measuring risks related to its counterparties.
More recently, in 2024, regulators have continued to criticize Citigroup, this time focused on issues with the bank’s resolution planning.
As a result, Citigroup has now been hit with $136 million in fines for failing to make sufficient progress on regulatory compliance.
Overall, it seems Citigroup is grappling with significant deficiencies in its risk management, internal controls, and regulatory compliance.
The Regulation W infractions are just the latest in a series of regulatory actions against the bank as it struggles to remediate these underlying operational and governance problems.
The firm’s “subsequent reaction to the breaches resulted in liquidity reporting inaccuracies,” according to the document, which provides a 2023 year-end snapshot of some of Citi’s work on regulatory issues.
“We are fully committed to complying with laws and regulations and have a strong Regulation W framework in place to ensure prompt identification, escalation and remediation of issues in a timely manner,” a bank spokesperson said.
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Also Read: The US Treasury Direct is Now Freezing Customer Accounts
Other Banking News Today
Massive US banks now prepare for millions to default according to Q2 reports, as institutions increase capital to cover insolvencies.
Big banks such as JPMorgan Chase, Bank of America and Wells Fargo are boosting their financial defenses as they prepare for customer inflow to dwindle, affecting the ability for the average American to pay their bills.
According to the latest Q2 2024 financial reports from major banks, they are significantly increasing the amount of capital they are setting aside to cover potential losses from rising credit card and loan defaults.
Collectively, these banks are allocating billions of dollars into emergency provisions and loan loss reserves to prepare for an anticipated increase in insolvencies and non-performing loans.
This reflects the banks’ growing concerns about the potential for a rise in credit card delinquencies and loan defaults in the coming months.
By bolstering their loss-absorbing capital buffers, the banks are attempting to proactively mitigate the financial risks posed by a potential surge in credit-related delinquencies and insolvencies.
This suggests the banks foresee a deterioration in consumer credit quality and are taking prudent steps to strengthen their balance sheets and resilience against such adverse credit trends.
The significant increase in these emergency loan loss provisions across the banking sector signals that the institutions are bracing for a potential economic downturn that could lead to a rise in loan defaults and credit-related write-offs.
This move underscores the banks’ efforts to position themselves to better withstand any upcoming challenges in the credit markets.
JPMorgan Chase is leading the way, increasing its provisions from $1.88 billion in the first quarter of this year to $3.05 billion – a $1.17 billion jump.
Meanwhile, Bank of America has set aside $1.5 billion, up from $1.3 billion in the previous quarter, and Wells Fargo set aside $1.24 billion, up from $938 million in the previous quarter.
The increasing balances show banks are anticipating increasing economic risk in the months ahead as commercial real estate flounders and as consumers pile up a whopping $1.02 trillion in credit card balances, according to TransUnion.
Delinquency rates across various types of debt are already on the rise, and the New York Federal Reserve says total US household debt hit $17.69 trillion in the first quarter of this year, an increase of $184 billion from the previous quarter.
The number includes mortgage balances, which rose by $190 billion to $12.44 trillion, and auto loans, which increased by $9 billion to $1.62 trillion.
Also Read: A Massive US Bank is Now Closing Credit Cards
Also Read: A Massive Bank Now Freezes Money From Direct Deposits
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