Citibank’s drumming up business

Previously, I posted about CitiGroup’s financial troubles, saying that it was a hallmark of misguided government oversight. After posting, I checked my e-mail and CitiCards had sent me an e-mail with the subject line: “A Great Reason to Use Your Citi Card this Holiday Season.”

It seems the more I use my card, the more likely I am to win “The Chance of a Lifetime” sweepstakes. Wow. So, as I dig myself more and more into high-interest, unsecured debt, I can have a chance to win it all? Well, sign me up!

Look, I, like most Americans, carry a balance on my credit cards. It’s the result of poor budgeting and satisfying wants. It is also, lately anyway, partly the result of $4 per gallon gasoline that ate into my cash-on-hand for things like groceries and utilities. So, now I’m paying interest on food or gasoline I consumed weeks or months ago.

The thing I like about credit cards is that they give me a cushion to fall back on in case my cash runs short. I’ve long held the belief that such a cushion is a necessary evil. However, I’ve moderated that opinion in recent years, and now realize that only a small cushion is necessary. I’m beginning to think that a $1,000 limit on any card is more than enough for me.

My hope for the future

Yet another bank is at the table looking for help from Uncle Sam: CitiGroup. It’s heartbreaking and angering.

As I was watching this segment of the CBS Evening News last night (something that puts me in league with septuagenarians, I know), I started thinking about the deregulation of the banking system. It’s not something I think much about, by the way, but deregulation has been blamed for part of the economic crisis.×3.swf
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My particular thought on this issue isn’t about deregulation so much as it is about oversight. I repeatedly hear the adjective “giant” used to modify these struggling firms: “banking giant,” “insurance giant,” “investment giant,” etc. These companies didn’t just get “giant” on their own. They got “giant” by buying up or merging not-so-much-smaller competitors. The key is that each merger or acquisition came with government approval.

I believe the focus of previous governmental reviews has been on one main issue: anti-trust; the idea that mega-mergers might create a monopoly, or near-monopoly, in certain markets. Usually, the anti-trust issue is skirted by forcing one or both of the firms to divest certain divisions, subsidiaries, or a percentage of branch offices.

That doesn’t address the overall issue of allowing companies to grow so large that their collapse could cripple the economy. That’s where we stand now, and we, the taxpayers, are being asked to rescue these companies.

Of course, this is America, and free-market capitalism reigns. I take no issue with that, but it has been proven over and over that laissez-faire policies only invite greed, abuse, and misuse.

My hope is that the lesson learned by regulators is this: that by allowing companies to grow and grow with only minor concessions of market share can lead us to near disaster, as we are now. Although I’m not advocating breaking up these companies, I believe there should be some kind of operating policy within the regulatory agencies that will insist upon closer scrutiny of mergers and acquisitons for reasons beyond anti-trust issues. I hope that the lesson learned is one of objectivity and sound decision. One can only hope.