Spank the Bank

Students Challenge Citigroup’s Hand in Bad Lending and Environmental Devastation

In March, student activists from across the country gathered in Florida for the Ruckus Society’s second annual “Alternative Spring Break Direct Action Training Camp.” Instead of wet-T-shirt contests and drunken naked beach parties, “campers” role-played protest blockades, learned to rappel down buildings with huge banners in hand, and developed strategies for opposing one of the largest banks in the world— Citigroup. Some of their complaints against the bank: predatory lending in U.S. inner cities, environmental devastation in the third world, and buying influence in Washington.

Backing up some of these charges, on March 6, the Federal Trade Commission sued Citigroup, alleging that one of its subsidiaries was engaged in predatory lending that victimized low-income borrowers by misleading them into loans with hidden costs. On April 11 students will launch a national day of coordinated actions against Citigroup—cutting up credit cards, occupying branch offices, and pressuring college administrators to cancel exclusive contracts with the company. Several thousand students on over 50 campuses are expected to participate.

I was invited to the Ruckus camp as a guest trainer in guerrilla theater stunts. After a two-hour drive from the Tampa airport, our van pulled into a sprawling private campground filled with neat rows of snowbird trailer homes. We checked in at the Ruckus “office” (basically, an overhead tarp). A pool of cell phones was spread out on a folding table recharging like a litter of suckling pigs. I set up my tent in the dark and then strolled through the camp. Tents were strewn on patches of sand and grass. There was a medical tent and a vegan field kitchen that the next morning would serve up oatmeal and miso soup. A couple of local folks had come over with some beer, and we sat around talking, among us John Sellers, Ruckus’s director. Founded in 1995, Ruckus trains environmental and human rights organizations in nonviolent civil disobedience. Behind us, looming through the moonlight, was a towering scaffold hung with rappelling ropes. “So what are you guys protesting, anyway?” Half a beat. “Greed,” said Sellers.

With 240,000 employees, assets in excess of $700 billion, and annual revenue of $112 billion, Citigroup is sixth on the Fortune 500 list. In 1998 Citibank and Travelers Insurance (which also includes the investment bank Salomon Smith Barney) merged to create North America’s largest financial institution—Citigroup. The merger violated certain provisions of the Depression-era Glass-Steagall Act, but Citigroup successfully lobbied the Fed for a two-year grace period in which to operate. Then the bank successfully lobbied Congress to repeal Glass-Steagall, which was replaced by the Financial Services Modernization Act. Since 1977 Citigroup has tallied $17 million in lobbying expenses, and over the last two years it has made $2 million in campaign contributions to both Democrats and Republicans. When new legislation that would formally legalize the merger ran into resistance, Citigroup enlisted the support of then secretary of the treasury Robert Rubin. In November 1999, the Financial Services Modernization Act was signed by President Clinton. One month earlier, Rubin had left the Clinton administration to become a cochairman of the newly legalized Citigroup. Rubin’s year 2000 bonus amounted to $45.3 million in stock, cash, and options.

Citigroup operates in over 100 countries and, according to the Rainforest Action Network (RAN), which is spearheading the campaign against it, has a hand in some of the most destructive development projects in the world. In Africa, Citigroup acted as chief financial adviser for the Chad/Cameroon Oil and Pipeline Project, which will cut through a rainforest and indigenous lands. In China, Citigroup underwrote bonds for the Three Gorges Dam, which will displace around 2 million people and destroy a rare river ecosystem.


“There are 450,000 people in the South Bronx, but there are only three consumer- accessible Citigroup branches here.”


Leah Johnson, Citigroup’s director of public affairs, disputes these claims. “Citigroup is just a convenient target,” she says. “We’ve been singled out not because of our record but because of our size and large customer base.”

“As a target, Citigroup is the logical heir apparent to the WTO,” says Sellers, referring to the World Trade Organization, which brought the anticorporate movement into the streets of Seattle in November 1999. By targeting Citigroup, and trying to hold it accountable to socially and environmentally responsible guidelines, activists hope to have an impact on corporate business as usual across the globe. In 1999 RAN led a successful effort that pressured Home Depot to stop using old-growth timber. Soon after, a majority of the home-supply industry followed suit. “The difficulty is that this isn’t just another Home Depot,” says Sellers. “We’re taking on the global financial juggernaut. Not just one product at one company. To win will require a fundamental restructuring of the global economy.”

One immediate impact the campaign is seeking is an end to Citigroup’s alleged discriminatory lending practices. In November, Citigroup acquired Associates First Capital Corp., a Dallas-based consumer lending company that is now the focus of the FTC’s predatory-lending suit. Federal regulators charge that Associates routinely deceived and lied to customers, tricking them into costly loan refinancing and making hundreds of millions of dollars of profit in the process.

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