1,000 Brokers Lose Jobs After Citigroup Acquires Associates
About 1,000 brokers have lost their jobs following the Citigroup Inc., New York, acquisition of Associates First Capital Corporation, a Delaware company that was headquartered in Irving, Texas.
In a recent memo to the employees of Citigroups consumer-lending division, Robert Willumstad, chairman and CEO of CitiFinancial, announced that “relationships with nearly 1,000 brokers were suspended for various reasons.”
Associates was the parent company of Associates Corporation of North America, both of which were merged with Citigroup when the latter acquired the two in November, according to the Federal Trade Commissions Web site.
According to Willumstad, relationships with the brokers were suspended as part of the “implementation of policy enhancements that we announced last year when we purchased Associates.” The bulk of the memo is about the dropping of single-premium credit insurance, a product often attacked by consumer advocates (see story on page 30).
Associates has had trouble in the past. In March, the FTC filed a complaint in federal court charging both companies with “systematic and widespread abusive lending practices.”
The FTC charged Associates with violating several federal laws, including the Truth in Lending Act, Fair Credit Reporting Act, and Equal Credit Opportunity Act, and with using unfair tactics in collecting consumers payments on its loans, according to the Web site.
“What had made the alleged practices more egregious is that they primarily victimized consumers who were the most vulnerablehard-working homeowners who had to borrow to meet emergency needs and often had no other access to capital,” says Jodie Bernstein, director of the FTCs Bureau of Consumer Protection.
Citigroup officials would not release names of dropped brokers and were unavailable for comment.
Reproduced from National Underwriter Life & Health/Financial Services Edition, July 13, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.