At the height of the COVID-19 disruption to the economy, Robert and Laurene Yurkovich obtained a loan from Citibank using stock in an oil company as collateral.
Soon, the price of oil was in free fall, and President Trump, who was trying to stabilize the market, got Saudi Arabia and Russia to agree to talks on production. On this news, Citibank decided to dump the 3 million shares of oil company stock at a loss of $6 million to the Yurkoviches.
Citibank claims the sale was legal, which may be true. However, consumers who had little knowledge of the bank’s thinking took a significant loss as a result of decisions the bank made without consulting the Yurkoviches. One would think there are consumer protections in place that would protect a consumer of loan products from a banking decision that dramatically affects the deal. On its face, this pattern screams for oversight.
Now the Yurkoviches are suing, which raises questions not only about the ethics and fiduciary duties of Citibank but about the role of regulators in protecting consumers in a financial system still tilted toward the powerful. Regulations are supposed to protect the public at large, yet sometimes they can protect powerful special interests to the detriment of typical investors. When it comes to loans and investing, the government officials who are supposed to protect are sometimes the ones who turn a blind eye when they see an obvious problem.
The Yurkovich case highlights a regulatory blind spot. Margin calls, discretionary account seizures, and rushed liquidations exist in a lightly policed zone where consumer protections are inconsistent at best. These gray areas deserve sunlight and structure.
The agency that is supposed to protect them, the Consumer Financial Protection Bureau (CFPB), has had problems and thus lacks the trust needed to function as an umpire. Created in the aftermath of the 2008 crash, the CFPB frequently has overreached, overregulated, or pursued headline cases that strained credulity. Although the agency is imperfect, the need to protect consumers remains. It’s time for thoughtful reform and smart reinforcement of the agency’s core purpose, protecting individuals and their families from systemic abuse.
It’s time to modernize and right-size the CFPB to meet today’s real-world risks. Discretionary asset liquidations should trigger automatic notifications and cooling-off periods. There should be a transparent appeals process and recordkeeping requirements. The agency doesn’t need to micromanage Wall Street; it does need the authority to investigate and respond when banks steamroll retail clients.
Beyond the CFPB, Congress and state regulators can help build a smarter framework. That might include an ombudsman office for contested margin calls, standardization of risk disclosures in brokerage agreements or new transparency rules when banks exercise contractual discretion.
Citibank, for its part, has a long track record of settlements and controversy, from misleading retail clients to failing internal controls. The Yurkovich case fits that pattern, but it’s more than just another data point. It’s a test of whether our regulatory system can respond to abuse that doesn’t legally qualify as fraud but still leaves families decimated.
If Washington is serious about financial fairness, it should treat the Yurkoviches’ experience as a case study. We need a more modern, proportionate and practical approach to financial regulation, one that respects market function but insists on basic decency. That balance is achievable but only if policymakers are willing to look past the headline and into the fine print.
The Yurkovich case isn’t some abstract policy problem. It’s what happens when careful, trusting retirees get chewed up by a system rigged for big corporations. The next administration, no matter its partisan makeup, should take a hard line on this kind of institutional betrayal.
Protecting Americans from the worst instincts of big finance is something everyone should rally behind. Whether it be the Consumer Financial Protection Bureau or state regulators, somebody needs to step up to protect the future Yurkoviches from history repeating itself.