Off-Topic: Why Citibank Should Vanish

citilogoAfter a long day, I returned home to find a mound of junk mail clogging my mailbox. Of note was a letter from Citibank informing me that it was jacking up the interest charged on my credit card, adding more fees for foreign transactions and other such issues that might result from an economic meltdown. Not much of this impacted me personally, but something bothered me about this letter dubbed a “notice of change in terms and right to opt out.”At a time when its customers need most help, Citibank is leaving them jilted. Well, since the bank doesn’t really respect its customers, how can one stay loyal to their brand? So I am going to just opt out totally and take my business to a bank that’s a tad less greedy and just a tad smarter. (Suggestions, people? I know the list is very short!)
But what’s really is shocking is the billions of dollars of taxpayer money that are being spent to prop up this enterprise. Why are we trying to save a company that Cody Willard, an outstanding blogger (and a TV show host) correctly identifies as criminal?
“These guys should be in prison for criminal incompetence if not for accounting fraud and lying to investors and lenders and regulators,” he says, pointing to lies, lies and more lies from Citibank CEO Vikram Pandit and his stooges. As Michael Lewis so eloquently writes in his obituary of Wall Street, “These people, whose job it was to allocate capital, apparently didn’t even know how to manage their own.”
How can an institution, which spends tens of billions of dollars on technology infrastructure, not know that all the risk associated with toxic financial products and bad loads were like TNT sticks strapped around its thighs? Technology is supposed to help keep tabs on when risk gets totally out of hand. In this era of Google, where instant information and its analysis are becoming strategic assets, how does a company as large as Citibank fail to read the tea leaves?
There can be two explanations — they are either dumb or lying. Saul Hansell, in a brilliant piece published earlier this fall pointed out that

… most Wall Street computer models radically underestimated the risk of the complex mortgage securities, they said… The people who ran the financial firms chose to program their risk-management systems with overly optimistic assumptions and to feed them oversimplified data. This kept them from sounding the alarm early enough…. Top bankers couldn’t simply ignore the computer models, because after the last round of big financial losses, regulators now require them to monitor their risk positions. Indeed, if the models say a firm’s risk has increased, the firm must either reduce its bets or set aside more capital as a cushion in case things go wrong…. Wall Street executives had lots of incentives to make sure their risk systems didn’t see much risk.

In other words, they were straight up lying. Pandit practically admitted as much last night in an interview with Charlie Rose last night. He blamed the previous management for not knowing what they were doing and taking on too much risk. What really was shocking was that Charlie didn’t wrestle this guy — who essentially got paid $165 million to just show up at work — to the moral mat.
Citibank, at the very core, is big, fat, greedy and incompetent. When I look at this bank, which has held my money for more than 20 years, I see an obese Roman Senator at a drunken orgy, waiting for Darwin to ring his number.
P.S.: Sorry for going off topic, but I can’t help it and I am angry about incompetence being bailed out in name of looking out for the little guy. Amidst this global economic meltdown it is hard for me to get excited about a new video portal or some mythical deal.