A Merger In Banking's Low-Rent Neighborhood

ST. PAUL, Minn: Borrowers with bad credit. Mobile-home buyers. Those folks won't be doing their one-stop financial shopping at Citigroup, the $140 billion Gargantua that was born Monday in New York -- but they need money too, and Conseco Inc. wants to lend it to them.

The midwestern insurance giant announced Tuesday it would buy mobile-home lending king Green Tree Financial Corp. for about $7.6 billion in stock, gaining further access to the increasingly tricky world of so-called sub-prime lending: making high-risk loans at sky-high rates.

The acquisition was Conseco's tenth in two years; the last was General Acceptance Corp., a Bloomington, Ind.-based writer of auto loans to motorists with poor credit. The company is betting that the high-risk lending king of the Midwest will pay off; Wall Street, pushing Conseco's stock down $8 on the news, evidently thinks otherwise.