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Citigroup cuts loan brokers
April 25, 2001: 9:02 a.m. ET

'Integrity concerns' cited over 1,000 independent agents for Associates unit
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NEW YORK (CNNfn) - Citigroup Inc. has stopped doing business with about 1,000 independent loan agents at its Associates Home Equity Services unit, expressing concern over standards, according to a published report Wednesday.

In an internal memo reported in New York Times, Robert B. Willumstad, chairman and CEO of Citigroup's consumer business group, said the company had halted work with the loan brokers for having inadequate or suspended state licenses, failure to bring in regular, quality business, integrity concerns, and not meeting Citigroup's standards for conducting business.

But company officials said they will consider working again with brokers in those cases "where infractions are small," the paper said. graphicCitigroup acquired Associates First Capital (AFS: Research, Estimates) last year. In March, the Federal Trade Commission (FCC) sued Associates for alleged "predatory lending," or making deceptive and costly loans.

Citigroup has been working to convince federal regulators and consumer advocates that it is revamping Associates, settling some of the 700 lawsuits against the company, and establishing new rules to improve lending practices, the paper said.

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Consumer advocates, however, have questioned whether the move is a disguised attempt to weed out brokers who did not bring in profitable business, the report said. The brokers account for 20 percent of Associates' home-equity business. graphic