Citigroup's $115 Billion Pledge Falls Short of Expectations

Citigroup's proposed $80 billion merger of Citicorp and Travelers Group Inc. has drawn attention to the company's promise of $115 billion in loans and investment for low- and moderate-income people over the next 10 years. However, this pledge has been met with disappointment from community groups, who had expected a much larger commitment. The combined company, to be called Citigroup, plans to expand access to financial services, including loans and mortgages, insurance, and community development programs.

Key Takeaways:

• Citigroup's pledge of $115 billion in loans and investment for low- and moderate-income people over the next 10 years falls short of community groups' expectations, which ranged from $200 billion to $400 billion.
• The company plans to sell loans and mortgages to small businesses and consumers, and provide loans and grants for community development.
• Citigroup aims to make commercial and home insurance more widely available, with special pricing for poor- and middle-income people.
• As a percentage of total assets, Citigroup's pledge is smaller than community reinvestment plans announced by other banks.
• Kenneth Thomas, a lecturer in finance at the Wharton School and author of The CRA Handbook, characterizes Citigroup's pledge as "a start, but they can do much better."
• The merger is subject to the Community Reinvestment Act (CRA), which requires U.S. banks to provide financial services to lower-income communities.
• Citicorp has a history of providing affordable mortgages to low- and moderate-income areas, with $1.2 billion in such mortgages made last year.

Statistics:

• $115 billion: Citigroup's pledge of loans and investment for low- and moderate-income people over the next 10 years
• $200 billion - $400 billion: Community groups' expected range of loan commitments
• 10 years: Duration of Citigroup's loan and investment commitment
• $80 billion: Proposed merger value of Citicorp and Travelers Group Inc.
• $1.2 billion: Citicorp's affordable mortgage commitment to low- and moderate-income areas in the last year

Sources:

• "Citicorp and Travelers Group Inc. promised $115 billion in loans and investment for low- and moderate-income people the next 10 years..." (no reference provided)
• "The combined company, to be called Citigroup, will sell loans and mortgages to small businesses and consumers and provide loans and grants for community development." (no reference provided)
• Kenneth Thomas, a lecturer in finance at the Wharton School and author of The CRA Handbook (exact reference not provided)