By Donal Griffin
Feb. 17 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit said new U.S. banking rules may mean tighter credit and less access for borrowers because of costs imposed on lenders.
?Millions of people don?t have bank accounts,? Pandit, 54, said today during a speech in Chicago. ?Recent reforms could unintentionally make this problem worse.?
Citigroup, the third-largest U.S. bank by assets, supported legislation curbing payment-card fees and the Dodd-Frank law to prevent new financial shocks, Pandit said. The rules include limits on interchange and overdraft fees, which will mean tighter margins, he said. The result will be new fees and cost structures, and banks may have to trim branch networks, he said.
?Let?s be clear,? Pandit said. ?We could be heading for an environment in which less credit is available, access to financial services contracts, and the costs of such services, rise. All of that will have an impact on financial inclusion.?
In response to legislation passed last year, the Federal Reserve proposed a 12-cent cap on interchange or ?swipe? fees charged to merchants on each transaction. Under that plan, the largest U.S. banks stand to lose more than $12 billion in revenue. The cap was favored by retailers, who stand to benefit from lower fees.
Citigroup received a $45 billion bailout during the financial crisis, some of which the U.S. Treasury Department converted into a stake in the lender last year. The government sold its remaining common shares in December, contributing to an overall profit of about $12 billion for taxpayers.
--With assistance from Brian Louis in Chicago and Phil Mattingly in Washington. Editors: Rick Green, Dan Reichl
To contact the reporter on this story: Donal Griffin in New York at Dgriffin10@bloomberg.net;
To contact the editor responsible for this story: Rick Green in New York at rgreen18@bloomberg.net.
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