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— The report noted that for each loan it makes, Citibank is twice as likely as any other New York bank to go to court for a default judgment against borrowers who fall behind in their payments. As a result, it ranks as the city's "No. 1 plaintiff." Bank officers do not dispute the Raiders' figures, but they point out that the bank makes more non-collateral loans, which require court action in the event of a default, than its four nearest competitors combined. >Other allegations focused on the bank's Master Charge credit-card service. While Citibank takes care to check on the credit rating of merchants who offer the plan, the report declared, it does not investigate a firm's advertising practices or the quality of its merchandise. The Nader group cited one example of a Master Charge merchant who sold sewing machines through phony advertising. Bank officials reply that they simply cannot patrol the ethics of every store owner who offers the plan, but that they investigate complaints from cardholders and have dropped merchants who were found to defraud. The Nader group also alleged that Citibank has violated the federal truth-in-lending law. On Master Charge bills, the report noted, Citibank gives special prominence to the minimum amount due for any given month, leaving the rest subject to interest charges. If the customer paid the amount of total charges, which is printed less conspicuously, he would incur no interest charge. As a result, the investigators contended, cardholders are often lured into paying credit charges that they might avoid. Citibank denies the charge without explanation.
Things Don't Work. Overall, the encounter between Nader's Raiders and the Citibankers was an instance of two cultures meeting and being unable to communicate. In making loans today, the American banker is under pressure to seek more than profit and security, but it is still unclear just how far society—and the stockholders—expect him to depart from those traditional goals. Should he favor the poor borrower over the rich one? The black over the white? The local community over the far-off one? And who is to decide? The Raiders believe that, for example, the bankers have an obligation to finance slum housing, even if they have to offer special mortgage rates so low that they lose money. When confronted with that argument, one Citibanker asked: "What does that do to the U.S. banking system?" Replied a Raider: "I'm worried primarily about the cities in the U.S."
Wriston acknowledged that there were some points in the report "which appear to have merit and which we will seriously consider," but he found that most of it was based "on serious misconceptions about the banking system." He believes, for instance, that the investigators think that banks are somehow not subject to ordinary market pressures and often control the day-to-day business of firms to which they lend funds. As for the experience of being investigated by a self-appointed commission, he says—a bit wearily—that he would be willing to undergo it again. Why? "We're all consumers, and a lot of things don't work." But for the most part, he maintains, Citibank is one that does.