Activist seeks Nevada hearing

Tuesday, Oct. 24, 2000 | 10:59 a.m.

The New York-based consumer activist who asked the Federal Reserve to scrutinize Wells Fargo Bank's acquisition of First Security Corp. is now seeking a hearing in Nevada on Citigroup's proposed purchase of Associates First Capital.

Matthew Lee, executive director of the Inner City Press/Community on the Move and Inner City Public Interest Law Center in Bronx, N.Y., has asked Nevada Insurance Commissioner Alice Molasky-Arman for documents and a hearing on the lending and insurance practices of the two companies.

A representative of the Nevada Division of Insurance referred calls on the matter to the Attorney General's Office, which said no decision has been made on whether to hold a hearing.

The matter was directed to the Division of Insurance because the request in Nevada involves Citigroup's acquisition of the Associates Financial Life Insurance Co.

Lee has made similar requests on the Citigroup-Associates proposal to banking and insurance regulators in South Dakota and Missouri.

In a letter to Molasky-Arman, Lee said his organization is concerned about both companies' dealings with minority consumers.

"ICP (Inner City Press), along with many other community and consumers' organizations around the country, is troubled by the practices, including insurance practices, of the Associates and its subsidiaries," Lee wrote to Molasky-Arman. "ICP is not convinced that Citigroup would improve Associates' practices. In fact ... we are troubled by Citigroup's practices as well."

Lee is asking for the commissioner to release a copy of Citigroup's application and supporting documents, information about complaints the division has received on Associates and for a hearing on the request. He also forwarded information about the company's applications in South Dakota and Missouri to the commissioner.

As in his intervention in the Wells Fargo-First Security merger, Lee said Citigroup and Associates disproportionately deny minority consumers loans at favorable interest rates while targeting them with high interest rates, single premium credit insurance, balloon payments, mandatory arbitration clauses and punitive prepayment penalties.

In its appearance before the South Dakota State Banking Commission, Citigroup denied that it practiced discriminatory lending practices.

The Federal Reserve rejected Lee's charges in the Wells Fargo-First Security merger and praised the banks' lending records.