Every now and again, it’s good for the little people to ask the big people for some help. Our inaugural “Open Letter Series” is inspired by a bank teller friend of mine at Citigroup who lost her job through no fault of her own. She recently found a new position at a private bank (congrats!) and wishes all her non-executive old colleagues to flourish again. If you have an open letter idea in mind, please let us know!
Dear Vik,
Tax Payers Bail Out, Tax Payers Buy Back, Repeat, Get Rich.
After collecting more than $45 billion in government support last year, Citigroup is considered by many as the true “Bank of America”. We the people own 34% of Citigroup, so we were quite disappointed when you decided to jack up our credit card interest rate from 7% to 14% earlier in the year. We’ve never been late, have always payed in full, and are fully aware the Fed Funds and 10 year treasury yields are at record lows. What happened to rewarding customer loyalty? What’s more, you let go of our favorite bank teller at the main branch we went to for the past 5 years.
We’re happy you went on record last Thursday in NYC saying, “Yes, $100,000,000 in bonus money for one of your employees is too much.” However, we’re then disappointed you proceed to say “all the noise will disappear” if you continue “executing your strategy.” Trust us, as long as our credit card rate along with millions of others is usurously high, and as long as we still own a large chunk of Citigroup, the noise will never go away.
Our advice to you is quite simple Vik. First, just pay Andrew Hall his $100,000,000 in stock that vests over a 10-year period. You know a contract is a contract and you’re going to pay him anyway despite what you were quoted earlier. Suddenly, his bonus “only” looks like $10 million a year and critics will be tricked into appeasment. In ten years, Andrew will probably ironically make more than $100 million given where you’re striking him today. Second, take Timothy Geithner, Head of the US Treasury Depart out to Smith & Wollensky’s (don’t expense it though) and tell him over a hard vodka tonic and medium-rare rib-eye to hurry up and put a syndication together to offload America’s 34% stake!
You know the stock markets are back to their risk-loving ways. As soon as the government offloads their stake, critics will have nothing to say. You win because Citigroup essentially gets a “free” 10 month survival loan since you state the government is not all up in your business. You’ve even been able to raise base salaries of thousands of executives by 50% this year as well. By selling the government stake back to the very public who helped bail you out, you’re just in time to implement attractive pay packages to you and and thousands of employees for 2009. You can even hire back our hard working friend, who never caused any trouble. Not sure if she wants to go back though!
Vik, by following our advice, you’ll be able to party like it’s 2007 again. You can even raise base pay for executives by another 50% while the rest of America struggles if you want to (that might cause a revolt, so better not). Given all this good advice, at the very least, can you tell your credit card department head to lower our interest rate down to 7% again? We’re on a fixed income and what you guys did crimps our style. Oh, and maybe you can give all the readers at Financial Samurai a reprieve as well. If you accept the people’s assistance, please also protect your own common employees who aren’t making the mega-millions. Thanks buddy. Long live America!
Related Posts:
“Government Employee Entitled to $100,000,000 Bonus!”
“Do Higher Taxes Lead To Socialism In America?”
Keigu,
Financial Samurai
“Slicing Through Money’s Mysteries”
Amen!! Thank goodness I don’t bank with Citi, otherwise I will cough up blood. By sadly I think everyone one of my mutual funds I own at one point also owned Citi, so I am still coughing up blood there…..
@Apprenticeoflife We’ve all gone through a lot of pain, and we think it’s important to note that 1) Not everyone at a big bank is “evil” and responsible for the downturn. What did our bank teller friend do that was so wrong for example? and 2) The people have the right to transparency, if government taxes are used for assistance. Just because the stock market is back to the good times, doesn’t mean we shouldn’t stop vigilantly trying to always understand what is going on.
We won’t let the wool be pulled over our eyes!
Financial Samurai
Besides how messed up Citigroup is, I find it ironic how much the government wants to “help” them out. My friend has this rationale that the Obama Administration simply won’t let them fail and because of that the stock is underpriced (what’s the risk? They won’t go bankrupt). Anyone think the stock can double in the next six months?
David – I actually think that if the government can offload its stake, it’ll get investors excited b/c 1) there’s no more overhang, and 2) Citigroup can start justifiably paying for talent again. Investment banks and many other type of firms rely on human capital. If they can retain and re-poach quality talent, profits may return, and investors will very well bid the stock up.
The government’s window to offload looks to be right now. Your friend is right though. Governments care about jobs first. And that is one of the good things for Citi employees, is that b/c the government is a stakeholder, they probably won’t allow a mass round of layoffs.
I have been appalled by the credit card company’s jacking up of credit card rates to customers who have been loyal, on time repayers. Every card I had was the same story, and I cancelled every one of them. In fact, currently I do not have a useable credit card. Not that that’s a bad thing. I can use savings. But its the principle that got me where it hurts. And I keep thinking about the ease and comfort people have in their lives who don’t pay their bills…you know, the ones who file for bankruptcy for example.
Hi Jim – Yeah, it’s frustrating. My rate is Prime + 7% vs. my HELOC at Prime + 0%. Why is it that Credit Card companies have to jack up rates by SO MUCH more than fair.
It’s actually very stressful going down the path of bankruptcy. I wouldn’t want it… but it’s true, it’s like getting a get out of jail free card that sticks with you for 7 years though. It’s tough.