“Citigroup, U.S. in Talks to Create ‘Bad Bank'” (via WSJ)

“Citigroup Inc. is nearing agreement with U.S. government officials to create a structure that would house some of the financial giant’s risky assets, according to people familiar with the situation.” (source: WSJ)

Commentary: Wouldn’t it be nice if all businesses could restructure their bad assets to create a phony holding company to pretty up their books?  Will the government also be acquiring the bank’s legal liabilities, including the multi billion dollar merchant interchange antitrust class-action for which Citigroup is a named defendant?  As a part owner, will the U.S. demand that Citigroup’s ownership in Visa and MasterCard be used to leverage away the unfair credit card interchange fees?

“Citi Slides Again as Firm Weighs Options” (via WSJ)

Executives at Citigroup Inc., faced with a plunging stock price, began weighing the possibility of auctioning off pieces of the financial giant or even selling the company outright, according to people familiar with the matter.

Read more.

[source: WSJ]

CitiGroup Inc. to Fire Upwards of 50,000 Employees

In another sign of the baking industry’s dismal leadership and failed strategies, according to the Wall Street Journal, “Citigroup plans to announce job cuts of up to 50,000 through attrition and layoffs as Chief Executive Vikram Pandit addresses employees in a town hall-style meeting Monday morning. Citigroup’s head count would be cut to 300,000 from about 350,000 at the end of the third quarter.”

 

 

 

Visa and MasterCard: How to Profit Off a Devistating Natural Disaster

Visa and MasterCard profiting from a devastating natural disaster?

This is another image crisis for the two leading credit card associations and their thousands of member banks.  When the public understands that with each electronic payment donation to help the people affected by the Asian cyclone, Visa and Mastercard are doing more than clearing the charges.  They are reaping profits from a global tragedy.  There should be additional pressure placed on their continued profiteering – this time at the expense of vital aid needed for that region of the world, ratherthan to help fund the banks’ other fiscal missteps.

If you thought that Visa, MasterCard and thousands of banks were heartless by reaping windfall profits during our economic energy crisis and record fuel prices, just wait. Even more dismaying than forcing credit and debit card holders to pay upwards of $2.50 for merchant interchange fees when they pay at the pump, is the current Asian disaster.

The United Nations estimates 1.5 million people have been “severely affected” by the May 2nd cyclone that swept through Myanmar. The death toll in that Cyclone-ravaged region could hit hundreds of thousands of people. What are Visa and MasterCard doing? As far as we know, every time an electronic payment donation is sent to The American Red Cross and other relief efforts, the two leading credit card associations and their thousands of member banks make a profit. The interchange fee, which could be upwards of 2.0% from each donation is being delivered to financial institutions, rather than in direct aid to the people in need.

Even with this horrendously inappropriate level of profiteering, your help is needed. Our ScanMyPhotos.com blog: Tales from the World of Photo Scanning has more info on how you can help.

Even worse is that the American Red Cross is in violation of their credit card merchant agreement and is risking disqualification from Visa and MasterCard because nation’s premier emergency response organization demands a minimum electronic payment of $5.00.  Click here to read how they explain the merchant interchange fee issue.

Will Visa and MasterCard waive its interchange fees for American Red Cross and other related transactions? 

As the pressure grows for Citigroup Inc’s new CEO, Vikram Pandit to address the troubled bank’s missteps, I wonder whether he has the influence to make the call to Visa and MasterCard on behalf of all the card associations’ member banks? 

Are Visa and MasterCard Merchants Violating Their Rules?

“Tragedy of Dead and Survivors in Myanmar Grows Worse” (via Aung Hla Tun reporting for Reuters) 

Is Citigroup’s Credit Card Business Restructing an Attempt to Hedge Bank from Antitrust Liability?

Call it what you want, but the attempt by Citigroup Inc. to restructure it’s credit card business could be nothing more than a scheme to protect the bank from its multi-billion dollar merchant interchange credit card liability.  Just as MasterCard and Visa sought to distance itself from the interchange antitrust price-fixing complaint, the litigation is based on transgressions dating back years.

Just as with MasterCard and Visa’s new shareholders, the question for Citi is who will be left holding the interchange woes as part of the consumer restructuring?  Is the consolidation of its worldwide credit card businesses, run by Steven Freiberg, CEO of Global Cards, an attempt to distance the bank of its alleged liabilities?  If investors could pump billions into a questionable Visa Inc IPO, will anyone even notice what seems like a shell game to cast off what could end up drowning the bank?

This summer, the 1960’s television sitcom, “Get Smart” is making its theatrical release.  What might this have to do with Citi’s restructuring?  Everything.  To paraphrase the ongoing joke in “Get Smart,” ah, the old A, B, C way to spin off their business trick. Today’s news of the restructuring of its credit card business might be followed by similar attempted liability escapes by other banking giants.  From our prospective, this has more to do with the old adage of how to raise money and hedge your risks.  As the story goes, there are three types of investments for betting on new oil wells. “Type A” – a sure thing – is where you know that oil is in the ground, it is seeping out of the surface — you are swimming in the stuff and that is where you personally invest along with your closest friends and family members. “Type B” – we’ll, we’re in Texas and there’s just got to be oil here – is when there might be oil, but you have to drill and explore; this is where you get the neighbors and distant friends to go along.  And, “Type C” – throwing darts at a map – is where you haven’t a clue; this is where “investors” risk the capital. With a multi-billion dollar antitrust price-fixing class action threatening the core of Visa, MasterCard and its thousands of member banks’ merchant Interchange revenue stream, what better way to hedge your investment than to split off the impending liability? 

Citigroup’s New CEO: Encouraging

As a retailer and ecommerce business, we are encouraged that Citigroup Inc. has appointed Vikram Pandit as chief executive, because he doesn’t come with the hefty baggage that other, more well-known insiders have. Because he has never led a public company, let alone one facing billions in antitrust violations, this might be the turning point that merchants are seeking to regain credibility and question the bank’s (alleged) price-fixing allegations by setting merchant interchange fees by agreement.  According to Reuters, Mr. Pandit has “no experience leading a consumer business,” so we hope his first lesson will be to study WayTooHigh.com and the millions of other merchants’ disdain for the supracompetitive electronic payment fees. Citigroup is a member bank of both MasterCard and Visa’s shared cartel and as we assert, has conspired to collectively fix credit card interchange fees.

We wonder whether Mr. Pandit will shift direction and take responsibility for the bank’s violations?  Certainly, this would be a smart and prudent way to restore confidence in Citigroup.

[commentary: WayTooHigh.com]