Citigroup thinks US students aren't that bright

Dear old Citigroup.  The latest way they're spending their $45 billion bailout?  An email campaign to their student borrowers, trying to incite them to lobby Congress on Citigroup's behalf in opposition to President Obama's proposed student loan overhaul. 

 

The overhaul, which would eliminate the $15 million a day the banker-middlmen have been raking in on student loans by allowing students to borrow directly from the Federal govenrnment, is obviously bad news for Citibank.  But is it bad news for students? 

 

TPM has a full copy of the email sent to student borrowers here.  Here's my favorite part:

 

"Why Get Involved?
The government budget outline proposes offering federal student loans solely through the federal government's Direct Lending Program starting July of next year. While this proposal will not impact a borrower's ability to obtain a federal student loan, it will eliminate your ability to choose a student loan provider. It will also substantially increase the national debt since each and every federally-insured student loan will be funded by the Federal Treasury through the issuance of treasury securities. This proposal impacts you as a citizen - both as a taxpayer and as a borrower."

 

I will leave the argument about "choice" for another day; suffice to say it's the same tired old argument that private companies always make whenever the public sector threatens a favorite cash cow.  "Choice," in this case, is a complete fallacy: because the government already sets the terms for Federally-guaranteed Stafford loans, it doesn't matter to students who loans them the money.

 

No, the part I LOVE is the bit about how borrowing from the government will "increase the national debt," something that Citibank knows young people are (rightly) concerned about.  This is where it looks like Citigroup is hoping that America's students are a big bunch of dummies who apparently don't know the difference between a loan, which is repaid with interest, thus adding to the national coffers, and a gift.  A gift, like the $45 billion the Federal treasury, no, the American taxpayers, have given to Citibank, no strings attached.

 

 

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What subprime lenders gave Congress for free rein

The Center for Public Integrity has released a report on the $370 million spent on campaign donations and Washington lobbying by subprime lenders.

Most of the largest originators of subprime loans were owned or financed by (now) household names including Citigroup, Goldman Sachs, Wells Fargo, JPMorgan and Bank of America - yes, the same banks who have received the lion's share of the TARP bailout funds.

It is time to lock down rampant, destructive flows of money into politics.

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The US Treasury Secretary's industry links

A New York Times investigation explores whether Tim Geithner's handling of failing banks might reflect overly close ties to the sector.

 

A detailed account. Worth reading.

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Bank political donations fall

Perhaps for reasons of propriety, bank donations to politicians have fallen even as new regulatory constraints are being debated.

 

The Bloomberg article mentions Bank of America Corp. and Wells Fargo & Co in particular.

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Nationalized banks: wait your f@#king turn.

From Funny or Die, a glimpse of the new, DMV-like Nationalized Citibank. WARNING foul, filthy language ensues...

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Investors urge TARP recipient transparency on lobbying

A group of 23 investment institutions has called upon corporations receiving bailout funds to disclose details of their political spending.

The group argues that lobbying and political contributions lie at the heart of the causes of the current economic crisis.

According to the press release issued by the Center for Political Accountability, the advocacy organization coordinating the initiative:

"Only three financial services companies – Prudential Financial Services, American Express and Capital One -- have agreed to full reporting and board oversight of their political spending with corporate funds. This includes soft money contributions and payments to trade associations and other tax exempt organizations used for political purposes."

The letter has been sent to 19 Troubled Asset Relief Program (TARP) recipients who received more than $1 billion in taxpayer money, including: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, PNC Financial Services, Regions Financial Corp, SunTrust Banks, Fifth Third Bancorp, BB&T, Bank of New York Mellon, KeyCorp, CIT Group, Comerica, State Street, Marshall & Ilsley, Northern Trust, Zions Bancorporation and Huntington Bancshares.

"The letter called “disclosure of political spending … a key part of transparency and accountability. To help rebuild shareholder and public trust in financial services institutions,� it continued, “we are writing to urge your company to disclose and require board oversight of its political spending with corporate funds.�

The investor advocates who signed the letter include the CPA and Adrian Dominican Sisters, AFL-CIO Office of Investment, As You Sow, Boston Common Asset Management, Calvert Asset Management Co., Catholic Healthcare West, Congregation of St. Joseph, Domini Social Investments, Dominican Sisters of Hope, International Brotherhood of Teamsters, Mercy Investment Program, Midwest Coalition for Responsible Investments, Nathan Cummings Foundation, Newground Social Investment, Pax World Management Corporation, Sisters of Charity of the Blessed Virgin Mary, Sisters of Mercy Regional Community of Detroit Charitable Trust, Sisters of St. Joseph of Carondelet and Associates St. Louis Province, Socially Responsible Investment Committee of Congregation of St. Joseph, Trillium Asset Management Corporation, Ursuline Sisters of Tildonk, U.S. Province and Walden Asset Management.

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Pandit to receive $1 salary "I get the new reality"

While US, British and French governments are reviewing or capping bankers' remuneration, Citigroup's CEO has opted for a $1 salary.

In The Economic Times (India), CEO Vikram Pandit is quoted as saying:

"I get the new reality and I will make sure Citi gets it as well," Pandit said Wednesday as lawmakers grilled top executives from eight of America's largest financial institutions about their apparent lack of willingness to lend despite collectively receiving $165 billion in capital.

"We will hold ourselves accountable for what we do, and that starts with me," said Pandit, who collected a salary of $1 million last year. Citigroup has lost more than $20 billion in the last five quarters.

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Here's a shock: TARP recipients bought their bailout

It's nothing we didn't already know, but to see it in black and white like this is either disheartening or enraging, depending on one's preexisting mental state.

From the Center for Responsive Politics: "The companies that have been awarded taxpayers' money from Congress's bailout bill spent $77 million on lobbying and $37 million on federal campaign contributions, Center finds. The return on investment: 258,449 percent."

And:

""Even in the best economic times, you won't find an investment with a greater payoff than what these companies have been getting," said Sheila Krumholz, the Center's executive director. "Some of the companies and industries that have received payments may now consider their contributions and lobbying to be the smartest investments they've made in years."

While the Treasury Department, not Congress, doles out TARP funds to specific institutions, congressional lawmakers had to authorize that money in the first place, and lawmakers will determine in the future whether to release more funds to prop up the U.S. economy. During the bill-writing process, members of Congress were able to specify to some extent where the money should go, and they have lobbied regulators to urge them to inject funds into specific banks and financial institutions, including those in lawmakers' own districts.

"Taxpayers hope their money is being allocated entirely on the merits, but with Congress controlling how much money the Treasury gets to hand out, it will be impossible to completely exclude politics from this process," Krumholz said."

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Bailout banks not lending but drowning

Banks that received bailout funds have tended to be the ones who have then cut lending the sharpest. Not the desired result.

Are bailed out banks are making their own case that they should have been allowed to go under. They have been reducing their lending activity despite receiving funds intended to help bring liquidity back to the market not simply to keep alive institutions pummelled by their own poor judgement.

It turns out that the banks who have been receiving funds are those who needed it simply to stay afloat, rather than those who were in a position to channel it into lending straight away. Recipients have not been helped by a nationwide reduction in deposits; deposits are necessary to back lending.

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LTEC: Four old words take on new significance

"Let them eat cake", though not in fact the cynical uttering of a French royal, has become shorthand for a privileged indifference to suffering.

It is the sort of indifference, for example, that led former Citigroup chairman Sandy Weill to make use of the company jet - a privilege granted to him as a retirement perk - to fly his family down to Mexico for the new year. His timing was impeccable: just weeks after the firm he helped set up to fail took $45 billion in federal bailout funds, and at precisely the time the company announced plans to cutback the workforce by 75,000 people.

And it is the sort of indifference that led senior executives at a number of bailout-salvaged Wall Street firms to pay out $18 billion in bonuses to staff.

Its the kind of indifference that bruises your jaw on the desk in front of you. If we see any more examples we will simply tag them in the headline "LTEC".

Just so you know.

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