Citigroup (C)

Recent Legislative Actions

The Credit Card Accountability Responsibility and Disclosure Act of 2009

        On May 22, 2009, The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) was enacted into law. The CARD Act will affect various credit card practices of card issuers, including Citigroup, such as marketing, underwriting, pricing, billing and disclosure requirements, thus reshaping the way consumers have access to and use their credit cards. Many of the provisions in the CARD Act will take effect in February 2010, although some take effect earlier in August 2009 and some later in August 2010.

        Among other things, the CARD Act:

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prohibits a card issuer from increasing a customer's annual percentage rate ("APR") on an existing balance unless the customer has not made a minimum payment within 60 days after the due date for such payment, and requires the card issuer to terminate the increase no later than six months after the date on which it is imposed if the consumer makes the required minimum payment on time during that period;



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requires an issuer to provide a 45-day written notice of an APR increase, or any other significant change to account terms, which notice must include a statement of the customer's right to cancel the account prior to the effective date of the change;



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generally prohibits increasing the APR on new balances during the first year the card account is opened;



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requires that penalty fees (e.g., late payment and over-the-limit fees) be "reasonable and proportional" to the customer's violation of account terms;



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for accounts with different APRs on different balances, requires a card issuer to apply payments made by a customer in excess of the minimum payment to the card balance bearing the highest rate of interest; and



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generally prohibits interest rate increases on outstanding balances, with certain limited exceptions.

        Certain provisions of the CARD Act are consistent with Citigroup's existing practices and will not require any changes or modifications. Other provisions, however, such as those that restrict the ability of an issuer to increase APRs on outstanding balances or that establish standards for penalty fees and payment allocation will require Citigroup to make fundamental changes to its credit card business model. The impact of the CARD Act on Citigroup's credit businesses is not fully known at this time. Such impact will ultimately depend upon the successful implementation of changes to Citigroup's business model and the continued regulatory interpretations of the CARD Act, among other considerations.

Mortgage Modification Programs

        See "Citi Holdings—Local Consumer Lending" below for a description of the Obama administration's Home Affordable Modification Program (HAMP) and Citigroup's mortgage modification programs generally.

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