A long time ago, before the turn of the century, subprime lending was a marginal business—economically, ethically, every way. The business was basically left to the hustlers. Financial carrion. Birds of prey.

Let’s face it, only the likes of Commercial Credit Corp., of Baltimore, would sell 40 percent loans to barely literate residents of Mississippi’s Noxubee and Lowndes* counties, tacking on credit insurance to bring the rate up to 70 percent. (Never mind what credit insurance is. Just don’t buy it.) Or maybe Primerica, of Atlanta, which Tennessee regulators accused of “seeking to deceive and confuse” customers through “a system of deliberate evasion.” Or maybe the truly rancid Associates First Capital Corp., of Irving, Texas, so corrupt that it employed a “designated forger,” an ex-employee told ABC’s Prime Time Live. I mean, who would go near a bunch like that?

Whoops! My bad. Sanford I. Weill, the former chairman and CEO of Citigroup Inc., Fortune’s third-most admired megabank last year, got his start buying Commercial Credit in 1986, then bought Primerica in 1988 before merging with Citicorp a decade later.

And Associates First Capital? Yup, Citi bought it in 2000. The Citi never sleeps.

But, surely, Citigroup is marginal in the subprime industry, and the subprime industry is marginal to Citi, by some measures the world’s largest bank. Right?

Actually:

Citigroup has established itself as perhaps the most powerful player in the subprime market by swallowing competitors and employing its vast capital resources and its name-brand respectability. CitiFinancial, its flagship subprime unit, claims 4.3 million customers and 1,600 plus branches in forty-eight states, including nearly 350 offices across the South.

Things don’t stop with CitiFinancial, however. The web of subprime is woven throughout Citigroup. Sandy Weill’s company has refashioned itself into a full-service subprime enterprise—one that makes high-cost loans and sells securities backed by the income streams from all these transactions. In 2000, one study calculated, nearly three of every four mortgages originated within Citigroup’s lending empire were made by one of its higher-interest subprime affiliates—nearly 180,000 loans out of a total of 240,000-plus mortgages for the year.

Yes, you read that right. Nearly three of four Citigroup mortgages in 2000 came from a subprime unit.

What’s the source? Surely, Audit Readers are familiar with Southern Exposure, published by the Institute for Southern Studies, based in Durham, North Carolina.

No?

And therein lies a problem.

The piece, by Michael Hudson, ran in the summer of 2003 under the headline: “Banking on Misery: Citigroup, Wall Street, and the Fleecing of the South.” Yes, I understand, the south exists to be fleeced by northerners. Just ask State Farm. But while Citi may indeed have been stiffing the South, it is not just a regional bank, unfortunately. And this issue goes far beyond predatory lending, as bad as that is.

Wasn’t it only a few weeks ago that global financial markets seized up precisely because of poorly underwritten loans made by lenders like CitiFinancial to people in Noxubee and Lowndes counties who patently couldn’t afford them? The Dow lost 8 percent of its value in a month, Audit Readers will recall, and was bailed out only through an unexpected rate cut of fifty basis points by the Federal Reserve. That drastic move renews inflation fears, hurts the already-weak dollar and bails out bad actors, like CitiFinancial. Even so, the economy still faces a 40 to 45 percent risk of recession due to the cratering housing market, according to the head of Freddie Mac, quoted in last Friday’s Financial Times.

So, somehow, an industry a couple of notches above pawn brokerage is allowed to metastasize into something that it threatens the global economy. And the story is broken by Southern Exposure? What?

I realize Southern Exposure is the alternative press, but does it really occupy an alternative universe from the one covered by the conventional business press? I think it does. Ours.

This troubling Tale of Two Citis shows how the business press, even as it produces oceans of copy, can lose its way. I don’t think the business press is lazy or lacks courage. I know the opposite to be largely true. I do think, though, that it is poorly led. An overemphasis by senior editors on deals and other scoops has forced reporters to give away far too much in the never-easy trade-off between access and arms-length scrutiny. A lack of investigative experience and overall editorial vision at the top has produced coverage that is too narrow, too incremental, and insufficiently confrontational, in my view.

It has also led to what I think is a fatal sense of disconnect between what readers read in the business press and the lives they lead day to day. I’ll have more on that in another post.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.