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I just cut up my CitiBank credit card because they jacked up interest reates....is it my fault....?
A terrible bunch, Citi is! I had close doings with them back around 2000 - 2002 courtesy of a large telecom provider that I won’t mention here. Their customers didn’t like them....their employees didn’t like them. Citi didn’t like their customers or employees either. The only thing Citi liked was money....as ironic as it is. :-)
Like Frankie said....Relax, Don’t do it.
Once the most merciful Barack Fitzgerald Obama takes office, the NY Slimes will change their tone.
The sun will shine, the birds will sing. He’ll get all the credit for the consumer confidence going up.
In the meantime....
The beatings will continue until morale improves.
Thanks for the ping.
I got a stupid question....
For a second, lets ignore the issue of whether government liquidity injections are helpful for overall stability and growth. Let’s assume for the purposes of this discussion that they are necessary. We know what the problems are with the bailouts:
1. Moral Hazard - not the “this isn’t fair, my feelings are hurt” kind, but the consequentialist perspective that they subsidize and incentivize systemic risk by rewarding those who pose risk to the overall financial system, and as a consequence punish those who do not threaten the financial system.
2. Regulatory Uncertainty - because the public is uncertain about what extreme actions the government might take, they reduce their risk exposure by withdrawing from the financial market - refusing to lend, spend & invest.
So riddle me this...
Why has there never been an emergency rescue program planned out that is wide-published, well-known, well-understood and that is designed from the bottom up to punish the risky and reward the prudent & solvent? One that is designed to tell financial institutions that if you become a systemmic risk your stockholders will be wiped out, but if you become part of the solutions your stockholders will inherit a windfall? For example:
* Instead of the govt buying bad assets from TooBigToFail Inc, under certain emergency conditions (Nov 2008 might be one emergency) the FDIC may agree that it will let TBTF go into bankruptcy & get acquired by one (or more) smaller, less risky, more solvent banks, and will then purchase those bad assets from the acquiring banks?
* Instead of the govt bailing out Citi, it spends the $$ to incentivize a group of regional insurers, banks, credit card issuers and/or investment firms to acquire & divide chunks of Citi’s assets. Just like with other bank acquisitions, over the weekend, your bank account gets transfered to a local bank (in Colorado, or New York, or wherever you happen to live), your Traveler’s policy gets transfered to some other insurer, your bank account gets transfered somewhere else. Citi’s bondholders get paid back, and their stockholders get stuck with worthless peices of paper.
Would this not be affective in saving the financial system from catastrophe? Would stockholders not demand that the company not pose systemic risk? Would there not emerge a market segment that is devoted to scooping up failing banks such as Citi during times of crisis?
