Warren urges OCC to cap Citigroup's growth

Benjamin Girette/Bloomberg

Sen. Elizabeth Warren, D-Mass., is urging the Office of the Comptroller of the Currency to impose growth restrictions on Citigroup and consider forcing a breakup of the megabank if it doesn't adequately reform its long-troubled risk management and internal controls systems.

Warren argued in a letter to Acting Comptroller Michael Hsu this week that New York-based Citi has become "too big to manage." She accused the company of failing to "reform and modernize its operations despite being the subject of multiple enforcement actions" by both the OCC and the Federal Reserve.

In the letter, dated Oct. 2, Warren implored Hsu to follow the OCC's four-phase program to address repeat offenses by large banks, saying that so far, the regulator has taken the first two steps — giving private warnings and implementing public enforcement orders and fines — and now should move to the third phase, which would put restrictions on Citi's ability to get bigger.

The OCC is the primary regulator of Citibank, N.A., Citigroup's main banking subsidiary.

Warren criticized Citi for being "unable or unwilling to address its repeat and serious failures," referring to enforcement orders it has racked up over the years and millions of dollars in fines.

"According to your own framework, it is clearly time to protect the American financial system by imposing growth restrictions on Citi," Warren wrote. "If these growth restrictions do not result in the improved management of Citi's deficiencies, the OCC should consider breaking up this bank."

"It is time for the OCC to get serious about these failures," she added.

Citi declined to comment on Warren's letter.

An OCC spokesperson said the agency does not comment on congressional correspondence.

Warren's letter comes just days after the Fed freed Citi from an 11-year-old enforcement action, and nearly four years after the OCC and the Fed slapped Citi with enforcement orders, requiring the company to improve its risk management and internal controls system. The 2020 orders came in response to Citi's accidental $900 million payment to lenders of the cosmetics company Revlon. The OCC also levied a $400 million civil money penalty.

In July 2024, the OCC and the Fed imposed another $136 million of civil money penalties against Citi, saying it had not made enough progress in the years-old remediation plan that Citi crafted in response to the 2020 orders. Specifically, the company hadn't made sufficient improvements to its data quality management program, the agencies said.

CEO Jane Fraser, who was promoted to the top job shortly after the Revlon blunder, has repeatedly said that overhauling Citi's risk management infrastructure is the No. 1 priority of the $2.4 trillion-asset company.

Regulation and compliance

Citi freed from an 11-year-old Fed enforcement action

The Federal Reserve has lifted a 2013 order relating to anti-money-laundering compliance issues, including in the megabank's now-defunct Banamex USA unit.

By Allissa Kline

October 1

Between 2021 and 2023,Citi spent $7.4 billion on technology, consultants and compensation related to the overhaul, as well as on other efforts to modernize the firm, executives have said.

Regulators have imposed a cap on the growth of a big bank once before. Wells Fargo is still operating under a six-year-old cap imposed by the Fed, which prevents the company from growing beyond $1.9 trillion of assets.

That penalty came in response to Wells' fake-accounts scandal.

Last week, Warren sent a separate letter pressing the OCC and the Fed to more carefully scrutinize New York Community Bancorp, which experienced severe turmoil earlier this year and is undergoing a major strategy overhaul.

In that letter, Warren called on regulators to require the bank to maintain a higher capital ratio.