Fed Questions Citigroup on Loans

Citigroup Inc. was asked by federal regulators reviewing its proposed $5.8-billion purchase of Cal Fed parent Golden State Bancorp Inc. to provide information about how the New York-based bank makes loans to low-income families.

In a July 3 letter, a Federal Reserve senior counsel sought answers to 34 questions ranging from the way Citigroup monitors complaints about abusive loan practices to how it rewards loan managers. Responses are due Wednesday.

The questions stem from objections to the takeover raised by Inner City Press/Community on the Move, a New York-based nonprofit group, and the California Reinvestment Committee, which represents about 200 organizations and public agencies.

Citigroup said the questions are part of a routine review process and that it expects the inquiry to delay the transaction. Citigroup also said its lending policies are appropriate.

In Big Board trading, Citigroup rose 59 cents to $36.94 and San Francisco-based Golden State rose 7 cents to $34.85.wl