Senator Warren urges breakup of Citibank over ongoing failures

Senator Elizabeth Warren has called for stronger regulatory action against Citibank, citing the bank's persistent operational failures and regulatory missteps.

In a letter to Michael Hsu, the acting head of the Office of the Comptroller of the Currency (OCC), Warren expressed concerns that Citibank may have become "too-big-to-manage," given its continued failure to address key issues despite multiple enforcement actions.

Warren pointed out that Citibank, the fourth-largest bank in the United States, has faced numerous crises in recent years, including failing two Federal Reserve stress tests and mishandling its "living will," a crucial document required for managing bankruptcy.

The senator also criticised the bank's repeated violations of a Federal Reserve rule designed to protect customer deposits.

Despite these regulatory actions, Citibank has not made significant progress in reforming its operations.

Warren emphasised that the penalties imposed by regulators have been ineffective, as the bank continues to fall short of expectations.

"Citi has failed to reform and modernise its operations despite being the subject of multiple enforcement actions by the OCC and the Federal Reserve," she stated in her letter.

According to Warren, Citibank's ongoing failures warrant a more decisive response from regulators.

She highlighted Hsu's escalation framework, which includes potential actions such as warnings, enforcement measures, and ultimately, breaking up banks that consistently fail to improve.

"The evidence is clear: Citi has failed to make sufficient progress, despite being provided four years to do so. Following your own escalation framework, it may be time to break up Citi," Warren wrote.