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December 04, 2004

Community Reinvestment Act.

Robert Rubin provides us today with an excellent example of exactly what is wrong with the modern day Democratic Party. I realise that being Treasury Secretary in the Clinton Administration did not exactly require huge and detailed knowledge of economics (it was people like this guy who had to know all that) but you would think that someone who held that position would know enough to spot the error in this:

Congress passed the Community Reinvestment Act in 1977 as a response to the practice of redlining - the refusal by banks to extend loans or banking services in poor, and predominantly minority, urban areas. Today, the law is equally important to distressed rural communities. In low-income areas throughout the United States, this law - which encourages banks to serve low-income communities in their markets - has increased homeownership and small-business growth, enabling the revitalization of entire communities. Under the act, regulators consider reinvestment performance when a bank seeks permission to expand or merge. Since its inception, the law has prompted banks to channel more than $1 trillion into reinvestment projects - without requiring a single dollar of Congressional spending.

Well, yes, that’s true. Regulations can always make the private sector pay for something that Congress doesn’t have the nerve to raise taxes to do. It’s called the burden of regulation and is variously estimated to cost the US between $800 billion and $2 trillion a year. It is a little odd to boast about it though.
The real error in logic comes here and makes, to my mind, Mr. Rubin look a touch dumb:

The capital made available under the act has helped to rebuild entire communities -  in rural Maine as well as in the South Bronx. At the same time, banks have learned that lending, investing and providing basic services in low-income communities can be good business.

Let’s, just for a moment, accept the basic premise of the Act, that there was a market or information failure. Banks were not lending in poor communities because, well, because why? They were racist scum? Indifferent to the plight of minorities? Misinformed perhaps? Thought that they would only lose money by lending in these areas? Whatever the truth of the matter 25 years ago they now, as pointed out above, know better. These activities are indeed profitable. So this is an argument in favour of keeping the law in what way? If we were, for example, to poll a few at Democratic Underground (shudder) or that portion of the Oliver Willis audience that does not go there to poke fun, we would find universal agreement, Yup, banks are just there to rip off the poor and huddled masses, eager for profit at any cost. OK, now they know they can make a profit this way we need to force them to do so for what reason?
However, this would be slightly shortsighted, this categorisation of Mr. Rubin as anything other than a very canny operator indeed. For:

Robert E. Rubin,a director of Citigroup

and what is it that he is really complaining about?

Under the law now, banks with assets of more than $250 million undergo full periodic reviews of their lending, services and investments in low-income communities. At smaller banks, examiners limit their review to lending practices only.The F.D.I.C. proposal would raise the asset level for this limited scrutiny to $1 billion, making many fewer banks fully accountable. The F.D.I.C. claims that the new rule is aimed at reducing the regulatory burden on banks.

Citigroup has untold $ squillions in assets and so however high the bar is set they are going to be caught in these rules. The effect of the rule change will be:

is proposing  to  relax enforcement of the law at almost 1,000  banks.

That’s another 1,000 competitors for Citigroup that don’t have to pay these regulatory costs. We might begin to suspect now that the CRA is not costless, has not actually provided banks with the knowledge that this is good business. For why would one of the major banks in the world want to make sure that its smaller competitors have to bear the same costs as it does?
Just another lesson, another example of the fact that big businesses love regulations and additional costs, as long as they apply to all their smaller competitors, those who are least able to bear that very cost burden.
No, I think one has to conclude that Mr. Rubin is a very smart man indeed. Wave the two flags of the poor and minorities to protect one of the largest capitalist enterprises in the world from competition. Pretty sharp if you ask me.
The problem with the Democratic Party this shows? They seem to let the smart ones like this go back into private life.

December 4, 2004 in Economics | Permalink

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Comments

Interesting, I had not heard about the proposal to relax CRA requirements. The FDIC generally doesn't go about trying to reduce regulatory burden. Since Chairman Powell spent most of his private banking career in banks between 250 million and one billion, I have reason to doubt his motivations as well.

Tim adds: If what you say is true then it makes sense to me as well. An argument against regulation then eh? Or at least regultors.

Posted by: Michael | Dec 6, 2004 10:00:02 PM

I spent time both as a regulator and as a regulated before leaving banking. The biggest problem with the CRA is that it tries to make things equal that are in no way equal. To boil the CRA down it starts with the assumption that if you divide a given community by race, that each division will have equal creditworthiness. This is simply not true in most communities for factors far outside the control of the bank. I believe as a result the cost of borrowing has increased for individuals. I remember my parents being able to go to the bank to get a short term small dollar loan at a rate a few points above prime. Today the bank would steer all of this type of small dollar unsecured lending to their credit card divisions, where semi-sophisticated metrics take the place of individual credit decisions and are therefore less offensive to the CRA enforcers. Of course as a result individual creditworthiness is largely irrelevant and everybody pays +10 or +12 to prime, in effect subsidizing people with poor personal financial habits. I have no sources or research on this, just personal observation from 10 years in the industry.

Posted by: Michael | Dec 7, 2004 2:51:30 PM

ON SATURDAY I RECEIVED A LETTER FROM CITIGROUP THANKING ME FOR MY FIVE YEARS OF SERVICE YET THEY JUST EXPLAINED TO THE DFEH WHY THEY FIRED ME
PLEASE HELP US GET TO THE TRUTH
GETTTING THIS LETTER WAS VERY DISTURBING SINCE I FEEL I WAS WRONGFULLY TERMINATED
I HAD NO PLANS TO LEAVE CITIBANK IN CARMEL
THE LETTER EVEN STATES TO ANOTHER 5 YEARS BUT THEY FIRED ME!!!!!

Subject: IS IT LEGAL TO LIE TO THE DFEH & US DEPT OF LABOR? CITIGROUP DID & THEY LIE TO CLIENTS IN CARMEL PLEASE READ THIS LETTER SENT TO THE MONTEREY HERALD
The Monterey County Herald
Attn: Herald Executive Editor, Carolina Garcia
8 Upper Ragsdale
Monterey, CA 93940
cgarcia@montereyherald.com
(831) 646-4306

Ms. Garcia,

I have attempted through several sources to clarify my
position regarding my unfair treatment by my previous
employer, Citibank. I had no previous plans to leave
my position as Head Teller at the Citibank branch in
Carmel. After 4 years of employment with the company,
the unfair and unequal treatment of employees led to
medically supervised work-related stress. The manager
of the branch then accused me of job abandonment which
led to my termination via UPS delivery on December 15,
2005, while I was at home on medical leave.

Subsequent to my termination, I received numerous
correspondences that referenced me as terminated, no
longer with the company, and as a former employee. My
401K and pension have both been forwarded to me.
However, when interviewed by the Department of Fair
Employment and Housing, Citibank representatives
reported that I was terminated due to not personally
reporting my absence, but rather having medical
documentation reported by my physician. When
interviewed by the U. S. Department Wage and Hours
Division, Citibank representatives reported on August
8, 2006, that I was still an employee of the company
and that a letter indicating such would be forwarded
to me. To date, this letter has not been received.

I have continued to be in contact with several clients
that have stated that Citibank representatives
indicated that I was either on vacation, or that I
voluntarily resigned in order to work with my husband
in his new business. This is absolutely untrue. It was
my intention to continue my employment as the benefits
were extremely important to me, as well as to my
family.

Clearly, there has been a gross misrepresentation by
Citibank, either to its clients or to the U. S.
Department Wage and Hours Division. It is my position
that I was unfairly terminated by Citibank. The
unscrupulous behavior of Citibank and its
representatives, locally and at the corporate level,
is unacceptable.

It is also my opinion that if a corporation as large
as Citibank is representing itself on a local level,
the local management and staff should act accordingly.
A large part of the attraction of the Monterey area is
the sense of community that is felt here on a day to
day basis. If Citibank is allowed to misrepresent its
actions to clients and government agencies, where will
the corporate takeover end?

Sincerely,




Damari Stratford
dcsbears@aol.com
dcsbears@aol.com wrote:

Subject: Re: Your message to the governor was received
THE GOVERNOR HAS WRITTEN ME TWICE AND SAID HE WOULD
HELP,, CITIBANK HAS LIED TO THE DFEH AND US LABOR DEPT
WAGE AND HOUR DIVISION AND TO THEIR CLIENTS ABOUT MY
STATUS, I NEED HELP, HOW CAN I FIGHT WHEN THIS
CORPORATION IS TELLING LIES AND HAS ALL THE LAWYERS
THEY NEED AND I CAN'T AFFORD ONE. HOW MANY TIMES ARE
THEY GOING TO GET AWAY WITH MISTREATING EMPLOYEES
ON 8/8/06 RONAN FROM THE US DEPT OF LABOR WAS TOLD BY
A CITIBANK ATTORNEY THAT THEY WOULD SEND ME A LETTER
EXPLAINING MY STATUS AS STILL AN EMPLOYEE, I HAVE YET
TO GET THIS LETTER, HOW LONG DOES IT TAKE TO PUT A
LETTER TOGETHER IF THEY ARE TELLING THE TRUTH?
YOUR OFFICE AS WELL AS THE FIRST LADY'S OFFICE HAS
CALLED ME BUT WE AREN'T GETTING ANYWHERE. IT HAS BEEN
7 MONTHS SINCE I FIRST WROTE THE GOVERNOR. CITIBANK
ATTORNEYS HAVE CANCELLED 2 DEPOSITIONS AT THE LAST
MINUTE THE LAST INE THEY CANCELLED WAS AFTER TALKING
TO THE US LABOR DEPARTMENT,WHY?
MY JOB WAS VERY IMPORTANT TO MY FAMILY AND I PLEASE
HELP ME AND MY FAMILY AND ALL THOSE BEFORE ME THAT
HAVE BEEN WRONGFULLY TERMINATED BY CITIBANK FOR NO
GOOD REASON
WHY IS EVERYONE SO AFRAID OF CITIGROUP? WHY CAN'T I
FIND AN ATTORNEY WILLING TO STAND UP TO THEM ON A
CONTINGENCY BASIS? I VOTED FOR THE GOVERNOR AND I NEED
HIM NOW
PLEASE CALL ANN FROM THE DFEH AT 408-277-1916 THEY
TOLD HER THAT I HAD CALLED IN ILL ON 11/15/05 AND THAT
I TOLD THEM I WOULDN'T BE IN, THIS IS A LIE I WORKED
THAT DAY AND I CAN PROVE THIS WITH MY IME CARD, THEN
THEY SAY THEY MADE AN ERROR
PLEASE CALL RONAN AT 415-744-5590 EXT 226 FROM THE US
LABOR DEPT TO VERIFY WHAT CITIBANK ATTORNEYS SAID. THE
ONLY REASON THEY OFFERED ME FMLA IS BECAUSE I FILED
FOR DISABILITY, BEFORE THAT THEY HAD PAID OUT MY FINAL
PAYCHECK, FIRED ME VIA UPS, SENT ME COBRA INFORMATION.
PLEASE HELP US PLEASE SEE THAT THE GOVERNOR GETS THIS
EMAIL AND ASK HIM TO MAKE A CALL ON MY BEHALF
CORPORATE AMERICA NEEDS TO TAKE BETTER CARE OF THEIR
GOOD EMPLOYEES AND NOT ALLOW A MANAGER WITH BAD SKILLS
TO FIRE SOMEONE JUST BECAUSE HE WANTS TO
SINCERELY DAMARI STARTFROD
MOTHER WIFE HUMAN BEING AND I VOTED FOR THE GOVERNOR
I MATTER TOO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


CITIBANK IN CARMEL LIES TO CLIENTS ABOUT WHY I AM NOT
THERE. THEY TELL PEOPLE THAT I AM ON VACATION OR THAT
I LEFT TO WORK FOR MY HUSBAND INSTEAD OF TELLING THEM
HAT THEY FIRED ME AFTER MY DOCTOR FAXED IN A NOTE AND
CALLED IN FOR ME TO PROTECT ME FROM HAVING MY BLOOD
PRESSRE RISE. JEFF URSINO AND KATHLEEN MUNOZ LIES TO
ANN AT THE DFEH AND THEIR LAWYERS LIED TO THE US DEPT
OF LABOR. KATHLEN WAS DOING THE OVERDRAFT ON HER
DAUGHTERS ACCOUNTS AND REFUNDED HER OWN DAUHGTER MONEY
WHILE THE MANAGER WAS ON VACATION. SHE LIES ABOUT
BEING FIRED FROM WELLS FARGO, SHE LIED TO THE WORKERS
COMP PEOPLE AND WILL LIE TO ANYONE. KATHLEEN HAD
INSTUCTED THE OTHER TELLERS TO COOK THE BOOKS BY
HAVING THEM PUT IN FALSE REFEERALS AND JEFF URSINO DID
NOTHING ABOUT IT BUT I GOT WRITTEN UP FOR MISSING WORK
WITH A DOCTORS NOTE. THEY STATE TO ONE AGENCY THAT I
WAS FIRED AND TO THE OTHER THAT I AM STILL EMPLOYED,
THEY STATE I WAS FIRED FOR NOT CALLING IN YET I WAS
RESPONSIBLE ENOUGH TO HAVE MY DOCTOEOR CALL IN AND FAX
MY NOTE IN DUE TO THE STRESS AND HARRASSMENT BROUGHT
ON BY JEFF AND CITIBANK, WHERE ARE THE ETHICS IN THIS
COMPANY


NOW THEY ARE TELLING MORE LIES TO THE DEPT OF FAIR
EMPLOYMENT AND HOUSING JEFF TELLS THEM WHY I WAS FIRED
AND THEIR LAWYERS TELL THE US DEPT OF LABOR THAT I AM
STILL EMPLOYEED
PLEASE HELP US GET THIS STORY OUT TO THE WORLD IF IT
ISN'T TOO MUCH TO ASK:) HOW DO YOU FIGHT LIARS, HOW DO
THEY SLEEP AT NIGHT
CITIBANK IN CARMEL 831-624-8258 CALL AND ASK THEM
WHERE I AM ASK FOR KATHLEEN AND ASK HER WHY SHE LIES
THIS WOMAN WAS HAVING CITIBANK PAY FOR HER DAUGHTER
OVERDRAFTS AND HER A TELLER REFUND HER OWN DAUGHTER
MONEY WHILE THE MANAGER WAS OUT ON VACATION SO WHY
SHOULD ANYONE BELEIVE THIS UNETHICAL PERSON JUST AS
JEFF URSINO THE MANAGER OF THE CAPITOLA BRANCH LIES TO
HIS BOSSES TO MAKE HIMSELF LOOK BETTER PLEASE HELP US
WE ARE RUNNING OUT OF TIME
HOW DO YOU FIGHT A CORPORATION LIKE THIS
Extra! Extra! Read all about it!
DAMARI AND CITIBANK HERE IS THE TRUTH!!
To set the record straight!
Damari was fired by Citibank in Carmel!
Damari did not leave the bank to go work for her
husband!!!!
DAMARI HAD NO PLANS TO LEAVE CITIBANK!
DAMARI PLANNED ON STAYING FOR ANOTHER 16YRS.
THE BENEFITS WERE VERY IMPORTANT TO HER FAMILY!!
DAMARI WAS FIRED VIA UPS WHILE AT HOME ILL DUE TO WORK
RELATED STRESS BROUGHT ON BY THE MANAGER AND THE
UNFAIR AND UNEQUAL TREATMENT OF EMPLOYEES
ALONG WITH BEING THREATEN AND HARASSED
BY THE MANAGER FOR JOB ABANDOMENT.
SEVERAL OF
Citibank clients have TOLD HER that they have been
told by the staff at the Carmel branch :
THAT SHE LEFT TO GO WORK FOR HER HUSBAND!
THIS IS AN OUTRIGHT LIE!!!!
What else will they lie about?
Are they ashamed of what was done??
WHY DO THEY FEEL THEY NEED TO SAY SHE LEFT TO GO WORK
WITH HER HUSBAND
( I DO NOT WORK FOR MY HUSBAND)
( I DO NOT WORK FOR JND PLUMBING)
(NOR AM I ON VACATION)
INSTEAD OF JUST TELLING THE TRUTH ?
IS THERE ANYONE IN THE CARMEL BRANCH THAT COULD SWEAR
TO THIS? NO!
You can reach Damari at dcsbears@aol.com
ENOUGH WITH THE LIES CITIBANK!!!
IF YOU HAVE BEEN TOLD THIS PLEASE SEND HER AN EMAIL
CITIBANK TOLD
THE US LABOR DEPT WAGE AND HOUR DIVISION ,
ON 08/08/06
THAT I AM STILL AN EMPLOYEE
YET I HAVE LETTERS AND DOCUMENTS
THAT CLEARLY USE THE WORDS
TERMINATED
NO LONGER WITH THE COMPANY
FORMER EMPLOYEE
AND MY 401K AND PENSION HAVE BEEN SENT TO ME AS OF
8/24/06 I HAVE YET TO GET THE LETTER FROM CITIBANK
WHICH EXPLAINS HOW I AM STILL AN EMPLOYEE! HOW LONG
DOES IT TAKE TO WRITE A LETTER IF YOU ARE TELLING THE
TRUTH HOW CAN THEY SAY TO THE US DEPT OF LABOR THAT I
AM STILL AN EMPLOYEE YET THEY TELL THE DFEH THAT THEY
FIRED ME FOR NOT CALLING IN, WHAT IS THE TRUTH
CITIBANK??????????
CITIBANK STATES THAT I WAS FIRED FOR NOT CALLING IN
YET MY DOCTOR CALLED IN FOR ME THE DAY BEFORE AND ALSO
FAXED IN A NOTE FOR ME WHICH THE MANAGER RETURNED TO
ME WITH MY LETTER OF TERMINATION. THEY KNEW THE DAY
BEFORE THAT I WASN'T COMING IN SO WHY WOULD HE CALL TO
ASK IF I WAS COMING IN IF IT WAS CLEARLY STATED ON THE
NOTE AND TOLD TO THEM BY MY DOCTOR TO PROTECT MY
HEALTH
JUST MORE LIES BY THE CITIBANK STAFF IN CARMEL

DCSbears...

I whole heartedly understand you delemma, and my heart goes

out to you.

a few years back, I worked for citibank/corp. for one full year.

It was without doubt the worst job, and the worst nightmare I have

ever lived. The treatment of employees was abominable, among many

other things. .

I worked with people that had been there for years. They were not treated
any better, than I was.

I quit in the middle of the day. I sat in my car for a good twenty minutes

breathing in what was for me, the most fresh air I had in one year.

In the following year, at least six people I had worked with, and had been there

for years, were let go, with the very worst excuses ever. Of course the lost all

benifits, and retirments.

Needless to say, I have never again banked with them, or used one of their credit

cards, or have done any other business with them, whatsoever, and when asked I inform orher companies why.

I have always...and to this day, informed everyone within earshot, of that disgusting thing, know as "citibank/corp.

I am sorry they got you. I hope you get them.

FROM AOL BLOG THANK YOU FOR YOU THOUGHTS
CITIBANK FIRES ME FOR NOT "FOLLOWING POLICY " YET THEY DIDN'T FOLLOW THEIR OWN POLICY CITIBANK IS UN FAIR AND UNEQUAL TREATMENT OF EMPLOYEES
WHAT KIND OF MAN FIRES YOU WHILE YOU ARE ILL KNOWING THAT YOU HAVE WORK RELATED STRESS AND YOUR BLOOD PRESSURE IS UP? HOW HEARTLESS IS THIS CITIBANK MANAGER WHO COULDN'T WAIT FOR ME TO GET WELL?
CITIBANK MADE THE LIST OF THE 100 BEST COMPANIES FOR WORKING MOTHERS BUT AS I WAS ATTEMPTING TO PUT MY DAUGHTER FIRST THEY FIRED ME!!!
I WASN'T GIVEN AN EXIT INTERVIEW NOR WERE MY KEYS ASK FOR BUT THAT IS THEIR POLICY! HE DIDN'T EVEN HAVE MY FINAL PAYCHECK WITH MY LETTER OF TERMINATION AND THEY DEPOSITED IT INTO MY ACCOUNT WHICH IS NOT CALIF CODE

My heart goes out for you, just know that things happen for a resound and what go around must come around!! I myself am having my own issue with Citibank!!! I was approved for a lone and used my car as collateral which later I contacted them to hand me over the Title for renewal and it’s been now 3 ½ months I have been waiting for it and now have to deal with my vehicle parked without insurance and Citibank’s excuse is that Motor Vehicle can not locate my title and the most frustrating thing is that all the time I call I must have gave my # over 20 times and never get a call back regarding the status of my situation I would have to repeat myself all over again to a new rep…….How frustrating!!! Well that is the story of life………………Drama……………….Good Luck.

Posted by: DAMARI | Oct 17, 2006 2:52:18 PM


Good day to you:
I am Mrs Jenice the owner of jenice oil plc,i am a certified loan lender,that offers loan to people who are in need of loans.i give out loans for project, business,taxes,bills, and so many others reasons.so contact us now and get the loan that you need with a low insterest rate of 5%, if you get a loan from us you will be glad you did, because the terms and conditions are very simple.
There is more to gain by geting a loan from this company,so any insterested person or persons should via jenice_fastloan@yahoo.co.uk so that the transaction can begins.

BORROWERS DATA FORM
1)YOUR NAME.........................................
2)YOUR COUNTRY...................................
3)YOUR OCCUPATION.............................
4)YOUR MARITAL STATUS......................
5)PHONE NUMBER..................................
6)MONTHLY INCOME..............................
7)ADRESS...............................................
8)PURPOSE............................................
9)LOAN REQUEST...................................
10)TELEPHONE........................................
11)LOAN DURATION.................................

Thanks for your co-operation
Mrs Jenice

Your loan will be transfered to you,depending on your early response.

Posted by: Mrs Jenice | Nov 9, 2006 12:30:16 AM


Good day to you:
I am Mrs Jenice the owner of jenice oil plc,i am a certified loan lender,that offers loan to people who are in need of loans.i give out loans for project, business,taxes,bills, and so many others reasons.so contact us now and get the loan that you need with a low insterest rate of 5%, if you get a loan from us you will be glad you did, because the terms and conditions are very simple.
There is more to gain by geting a loan from this company,so any insterested person or persons should via jenice_fastloan@yahoo.co.uk so that the transaction can begins.

BORROWERS DATA FORM
1)YOUR NAME.........................................
2)YOUR COUNTRY...................................
3)YOUR OCCUPATION.............................
4)YOUR MARITAL STATUS......................
5)PHONE NUMBER..................................
6)MONTHLY INCOME..............................
7)ADRESS...............................................
8)PURPOSE............................................
9)LOAN REQUEST...................................
10)TELEPHONE........................................
11)LOAN DURATION.................................

Thanks for your co-operation
Mrs Jenice

Your loan will be transfered to you,depending on your early response.

Posted by: Mrs Jenice | Nov 9, 2006 12:30:43 AM