Citigroup (NYSE:C) Fined $1.25 Million by Regulators

Citigroup (NYSE:C) was fined $1.25 million from accusations for 35 states that their CitiFinancial unit didn't report 91,127 residential mortgage loans to the federal government. A law requires all residential mortgage loans to be reported in the U.S.

Unfortunately, the Home Mortgage Disclosure Act forces banks to report data concerning all mortgage loans applied for, including the gender and race of the one attempting to borrow, and whether the loan was approved or not.

The pressure to loan to many people based on ethnicity and gender has arguably been one of the reason behind the mortgage crisis, and government pressure to keep that going makes banks vulnerable for it all to happen again.

"HMDA remains the primary tool we use to ensure compliance with fair lending laws and regulations," said Steven Antonakes, Massachusetts' commissioner of banks. "By failing to accurately report all required transactions, CitiFinancial hampered our ability to complete that assessment."

Citigroup said the error wasn't an intentional one and the reports have now been filed after the discovery was made by Massachusetts banking regulators.

Regulators seemed to agree that it was a systems failure which caused the situation and not an intentional breach of the law.

Yet at a time when the bank is under extreme financial pressure, they found it appropriate to confiscate money from Citigroup from an unintentional error. That doesnt make sense to me, but that's how the government has come to operate.