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July 10-17, 2008
editorial@boulderweekly.com
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Citigroup’s big deal
By Jim Hightower
A deal is a deal, right? That’s the promise that was made to credit card customers by Citigroup, the Wall Street financial conglomerate that even used the phrase last year as an advertising slogan to promote a new, consumer-friendly credit card policy. Citigroup said that if people took its card, the terms of the agreement would not change for two years.
Believe it or not, this minimal concession to commercial integrity was considered a big deal, because banks are notorious for jacking up customers’ credit card rates whenever they feel like it. Citigroup was pledging to forego the “any time, for any reason” clause that banks write into their fine-print agreements. It also abandoned the “universal default” clause that lenders commonly use to raise your credit card rates if you’re late paying a bill — any bill, even one not charged to your card.
Of course, this powerhouse bank was not making these moves out of the goodness of its corporate heart or because of some sudden discovery of business ethics. No, it was responding to consumer outrage that had reached all the way to Congress, where lawmakers were considering new regulations to stop these rip-off practices. Spouting its “deal is a deal” plan in a congressional hearing last year, Citigroup executives deflected the stricter regulations.
But that was then. Now that Congress has gone away, and now that Citigroup finds itself in a financial crunch due to bad executive decisions, the bank says that it didn’t literally mean that a deal is a deal. It was an advertising slogan, not a blood oath — so Citigroup is reneging.
To add insult to injury, Citigroup blames consumers for its abandonment of the “deal.” It was expecting that a flood of people would switch to its card — but, apparently, consumers are not as gullible as Congress is about promises from Wall Street bankers.
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