Expect significant new tariffs on Chinese imports and moderate levies on goods from other nations , as President-elect Donald Trump rolls out his protectionist agenda. However, with his preference for chaotic policymaking and sudden shifts , there’s uncertainty on how soon these import taxes will actually hit. Dubbed “ Tariff Man ,” Trump aims to use tariffs both strategically and tactically . He’s mentioned taxing all Chinese goods up to 60% and potentially setting 10%-20% tariffs on imports globally , but details on these plans remain vague . Key players within Trump’s team are divided: Robert Lighthizer , a staunch tariff advocate, sees permanent duties as crucial to balance US trade , while others, like billionaires John Paulson and Scott Bessent , view tariffs as temporary leverage. Trump’s previous administration had mixed feelings, especially on national security-related trade limits , which he sometimes dismissed, favoring an “open for business” approach. High-profile busin
Citigroup has repeatedly violated a US Federal Reserve rule that limits intercompany transactions, resulting in errors in its internal liquidity reporting, according to a Citi document from December reviewed by Reuters. This is the first time these infractions are being reported.
Regulation W Infractions
Under Regulation W, banks must restrict transactions like loans to the affiliates they control to protect depositors whose money is insured up to $250,000 by the government. These breaches have occurred as Citi works to address separate issues in its risk management and internal controls, which regulators criticized as "unsafe and unsound" in 2020. Citi was also rebuked over its counterparty risk measurements in 2023 and fined $136 million this year for insufficient progress on compliance.
The firm's response to the breaches led to inaccuracies in liquidity reporting, highlighting weaknesses in Citi's ability to identify, monitor, and prevent future Regulation W violations. The document indicated that proposed revisions to policies and procedures might not provide sufficient guidance for employees to ensure compliance with the regulation.
Regulatory Consequences
The Federal Reserve and the Office of the Comptroller of the Currency (OCC) declined to comment on Citi's specific breaches. Government examiners test banks for compliance with Regulation W, and violations can lead to increased scrutiny and potential fines. For Citi, already under regulatory focus for its risk management deficiencies since late 2020, further action could exacerbate its challenges.
Compliance and Risk Management
Earlier this month, the Fed and the OCC fined Citi for "insufficient progress" in addressing data management and risk control issues. CEO Jane Fraser has prioritized transforming the bank and meeting regulatory requirements, resulting in a 28% rise in Citi's stock this year, outperforming some competitors.
Conclusion
Citi's breaches of Regulation W underscore significant compliance and risk management challenges the bank faces. As Citi continues its efforts to rectify these issues and comply with regulatory standards, its ability to safeguard depositor funds and maintain accurate financial reporting remains critical.
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