Citigroup has made mistakes in reporting liquidity in its latest crisis because it broke a Federal Reserve rule over and over again.
A December Citi document seen by Reuters shows that Citigroup regularly broke a U.S. Federal Reserve rule that limits transactions between companies. This caused mistakes in its internal liquidity reporting.
The first news about the violations comes from Reuters.
Regulation W says that banks can only do certain things, like lend money to companies they control.
It is said that the rule is meant to protect savers whose money is up to $250,000 insured by the government.
The breach of Regulation W seems to be a part of a bigger set of issues that Citigroup is working to fix in its risk management and internal control systems.
In 2020, the government said that Citigroup’s risk management was “unsafe and unsound.”
Next, in 2023, officials told the bank it was wrong about how it was measuring the risks of doing business with other companies.
In 2024, officials continued to criticize Citigroup, this time focusing on problems with the bank’s plans for how to close down.
To make things worse, Citigroup has been fined $136 million for not making enough progress on following the rules.
Overall, it looks like Citigroup has big problems with how it handles risks, keeps its internal controls up to date, and follows the rules set by regulators.
The violations of Regulation W are the most recent in a long line of steps taken by regulators against the bank as it tries to fix these fundamental operational and governance issues.
