Citigroup's Spending Indefensible and Unacceptable

After reading yesterday morning that Citigroup--which has already received $25 billion in bailout money--is adamant in maintaining its $400 million naming rights to the new New York Mets stadium, I was shocked to learn that the company came to the federal government asking for an additional multi-billion dollar lifeline. Surely, if the company has the funds to paste its name to a recreational facility, it has the money to maintain its operations and keep the 52,000 jobs it announced last week it would be eliminating.

While I understand that Citi is under a contractual obligation with the Mets, I cannot understand why the organization seems to be refusing at the very least to explore options out of that contract. This type of spending is indefensible and unacceptable to Citigroup's new partner and largest investor: the American taxpayer. My constituents in Maryland did not turn over their hard-earned wages to fund a baseball stadium in New York.

One would think that the Mets would be open to finding a new sponsor, as well. Why would any team want its new stadium, the symbol of a new era of victories, to be named after and symbolized by a company claiming to be on the brink of collapse?

I strongly urge Citigroup to find a way out of this contract and instead spend that $400 million on retaining its employees and restoring confidence in its operations. Furthermore, I encourage Citigroup and every other corporation depending on taxpayer dollars to stop the reckless spending, and I again insist that Secretary Paulson and Chairman Bernanke start holding these companies accountable. We cannot continue to pour taxpayer dollars into buckets with holes.

Comments

[cylindar]

I would simply say that they should not be bailed out period!

[Peter007]

The " Bailout" is completed. The vote is over. Now its a waiting game to see if the taxpayer will get their money back.

[MatoSka]

Thank you Rep. Cummings for your observations.

I have a sincere question here. How do we "fix" multi-national corporations and major financial institutions without getting into the business of micro-managing them? Everyone has proposals for what Citigroup should be forced to do in return for governmental assistance.

Is it true that: "If we fix it, we own it"? What does oversight and re-regulation mean in this context?

I was always against the TARP and other bailouts. I am FOR temporarily increasing SSI for those in dire need.

Personally, I would NOT have been opposed to the Federal Government stepping in and buying out and taking control of CitiGroup. From there it could work as an independent market force in the financial markets. The governments of Japan and Great Britain have already intervened in this manner. It is impossible to just dangle money in front of corporations and banks with a laundry list of provisos and conditions without ultimately defeating the intended purpose of increasing credit access and stabilizing the banking industry.

Such an action can increase higher risk investments that are currently anaethema to existing banks. Such a bank could "seed" other local financial institutions. Credit unions were a strong institutionalization of local banking that resulted from the Great Depression.

Like they say: "In for a penny, in for a pound".

[Rockerbabe]

Refuse to give them money upfront or later; they made most of this mess, let them clean up the mess. If employees get hurt, then let the government step in and demand changes. All of these top executives all graduated from mostly ivy league schools - makes one wonder what they are teaching them or failing to teach, ie. ethics and budgeting math.

Rep. Cummings, thanks for the info, much appreciated.

[Peter007]

The government can not come in and run Citi. Citibank is a huge company that needs experts in every aspect of their business. The company has to work in a competitive world. They have to recruit the best people available. Having politicians run Citi would be like having a lawyer fix your transmission in your car. They can't do it. Also, the bail out is not being done because the congress has any sympathy for the Cit management. It is being done because politicians always promise more jobs when they run for re-election. Congress doesn't want unemployment to go up. Also, the bailout is not a gift. It is an "investment" in the company. Since "normal investors" don't think Citi is a good investment, our government is going take your tax dollars and buy Citi stock whether you want it to or not.

[MatoSka]

I agree with your observations but suggest that if not Citigroup, who? If not a Federal bank, what?

A federal bank becomes a competitor on the market that establishes a new framework for investment. When the funny paper was being marketed, it was next to impossible for commercial banks to resist it because of the competitive edge that it gave to others.

The incompetent and corrupt Congressional oversight of Fannie Mae and Freddie Mac is an indication that this is not just a matter of regulation. After all, who regulates the regulators.

The bailout does NOT even touch the structural inequities of the existing banking and financial industries. It continues to pump them up without introducing new elements that can create a new and creative investment force.

Better to get Citi at its lowest price and use federal monies to stablize it and invest where it will address the needs of the real economy.

How can the housing market be stabilized when the risk is greater than the reward? How can there be a floor established on housing price declines, as some advocate, without a financial institution being able to provide it?

[sjk1]

welcome to Sucka Field

[Paz3]

Rep. Cummings, how about taking the lead in changing the tax code so that these excesses by large corporations cannot occur any longer? The momentum is there to do this now, in light of the current and ongoing fiscal crisis, so what will be holding the next Congress back?

Can you answer that in honesty?

[Peter007]

What changes in the tax code are you talking about?

[Edzero]

What the Wall Street and Detroit Masters of the Universe do not get is: "Perception defines reality" for
the average person on Main Street.

The elite exist in the bubble that comes with wealth and privilege. They have lived this way all their lives or became members of the elite sub-culture after college. This is the norm; so comprehending and understanding the norms that "the rest of us live by " is not something they have had direct experience with.

That is why such events and actions as the following shock the man in the street, but generated puzzled looks from the elite who carry them out. Some examples: The Big Three CEOs taking three separate jet planes from Detroit to DC and expecting union workers to accept cut backs on benefits while the executive perks remain unchanged or increase, , Citi Bank paying for the company name and logo on a sports stadium, basic pay several hundred percent larger than the rank and file employees, huge bonsus. . .this is their reality. Their Boards of Directors, consisting of members of the same subculture do not raise questions about company performance being linked
to executive compensation.

If the Main Street taxpayers are becoming part owners in these companies and industries, the norms
and rules of the Main Street culture needs to be the ones that these organizations follow.

[Peter007]

I think its presumptuous that you believe that you can make better decisions than the management of GM or Citibank. If you could, you'd be sitting in one of those positions. The use of a private jet to move top executives around has to be vetted before shareholders. The shareholders obviously agree with that decission. Does anyone complain when politician ( Obama ) fly around the country in his own private jet in search of a new job. The jet plane issue is a perception. Its not a relative fact. GM management has to be competitive with other car companies. Conversely, Detroit workers have to be competitive with workers in Alabama and Texas.

[cmilburn]

Thank you, sir, for showing some common sense. If we HAVE to bailout these companies, let's put some caveats onto the bill, i.e. naming rights, executive perks, executive pay (to include stock options), coherent leadership plans, etc.

This is my money.

[Peter007]

Do you believe that you are smart enough to run Citbank? How about Boeing aircraft? Merck Pharmaceuticals ?. If you are, please send your resume to the appropriate personal department.

[LeonBNJ]

Perhaps we need to change the tax laws to limit corporations from spending monies on stadium/arena namings. "Citi Field" should have had the original proposed name: Jackie Robinson Ballpark, a true honorable name for a true American and sports hero.
We also need to change the tax laws to put in much higher tax rates - on the order of 60% or more on incomes over $500,000 as well as tax law changes that would basically end 'golden parachutes' and extreme pensions for CEO's.

[Peter007]

Citi bank is paying the ball park owners lots of money to have their name on it. Who would pay the ball park to have the name Jackie Robinson? You? And the little league parks in your town. Would you make it a crime for Daves' hardware store to sponsor the team by having a sign places in right field? Could the kids t-shirts have the sponsors name on them? How will taxing people at 60% help you. Do you think you would pay less in taxes or are you just bitter that someone is making more money than you and you are envious?

[belltor]

The revolving door that spins from Wall St to Washington has got to stop.

Citigroup board member Robert Rubin was former Treasury Sec under Clinton.

There is no difference between Paulsons' motives or Rubins' motives.

They take care of their own.

[DanmaxKL]

No matter what Obama does, the era of supply side economics is over . The Reagan legacy is in permanent tatters and like it or not .. America will NO LONGER be calling the economic shots from here on . And just as well!!

[Peter007]

What is supply side economics? What is going to replace it? Demand side economics? Could you please explain?

[DanmaxKL]

Help.!! I feel sick . I mean,when will corporate America stop taking advantage of tax payer money like this .
Citigroup should be allowd to a fall,it's that simple.This is a learning curve and sometimes they are painful. All this bollocks about too big to fail. Well, that seems to be a catch all phrase now. Soon, I 'll be able to say tell you what I owe about $200k on my various credit cards but I'm too important a member of my community to go bankrupt. Get real!!

[doublels]

I've often wondered...does ANYONE use a company because of a venue name? I certainly don't.

[Peter007]

Doublels, You probable do use products and services due to the fact that you recognize the name. If you are a normal consumer, you do it subconsciously. When you shop, do you buy Coke Cola or Jim's Cola? When you vote in the election, do you vote for the name you recognize or do you choose someone you never heard of. In selling products and services, name recognition works. I'm not much of a consumer so they don't make money off of me but the general public buys things based upon name recognition. It gives them confidence. Citi bank doesn't like to advertise. They do because they have to in order to make money. I don't buy a car because of a television ad but obviously the ads work.

[Peter007]

Why would you want a company to fail? It would cause massive economic problems. There would be lose of wealth in the country and major job loses. If there was a way to avoid all that and it didn't cost anything, would you be in favor of it?

[steve12]

Citi was under contract for the naming of the stadium and would have probably incurred a hefty fine on the $400 million if they reneged on the agreement, This contract will cost them $20 million per year, which is less than a third of what they paid their failed top executives for the year. Also, keep in mind that Citi had annual sales of over $83 billion

I don't know if it's a good marketing move to name the stadium after itself; however, Citi needs to continue to sell its products and services and that means advertising and marketing its brand. I have a feeling that they got a lot more than a name on the building for this $400 mil.

I seem to remember that this is not the first time the feds have bailed out Citi. I think it was in the 90s that we bailed out various American banks for their failed loans to South American countries; however, perhaps someone else will recall the details.

[Peter007]

I agree with you Steve. Companies trying to make sales have direct and indirect marketing plans. I don't understand marketing so I guess thats why no one would pay me big bucks to do their marketing. Cit paid to have their name on the stadium because they felt they would get a return for their dollar. Good or bad idea, I don't think the Congress has the expertise to make that decission.

[doublels]

Couldn't agree with you more, Rep. Cummings. Keep pushing for this in the House.

Folks--write to your Senators & Reps about this. Business needs to come down off its high horse of luxury conference sites, private jets, huge bonuses & CEO's who not only make a lot of money while they are working, and then obscene amounts when they depart. And that's whether they did a good job OR a bad job.

Might consider also writing in regard to cowardly GW's sneaky passage of permission for oil companies to drill at Nat'l Parks, Historic sites....ON NOVEMBER 4TH. On election day when no one was paying attention. What unbelievable arrogance this administration has.

[jcwtts1]

This is why Obama won. In two months we can actually try and do something about this mess, but Obama is NOT president yet. He isn't. Before the constitutional changes in 1933, the transition for Pres took until April, and the transition for congress took until December of the following year. Seriously, the electoral college hasn't even voted yet folks. Until we take over the average American will continue to get screwed. 52,000 jobs, plus, a 50 million bailout, plus guaranteeing 300 billion in bad loans. But oh, lets teach those auto makers a lesson. Madness.

J

[Elderlady]

So, we are going to let this stand? And, we are going to demand concessions from men and women who make about $70K per year, standing and working all day on an automobile assembly line?

John Edwards was right. There are two Americas.

White collar and Blue collar.

[army193]

Wait, I hear that the Union workers must take cuts and the retirees from the Auto Makers...But yet Citigroup can get 25 Billion and then another 20 Billion for a total of 45 Billion now look at the Citi CEO,s pay for 2007
Sir Winfried Bischoff Chairman 2007 pay= $ 6,130,390.00
Vikram Pandit CEO (bew member to the company)2007 pay= $ 573,813.00
Gary Crittenden Chief Financial Officer 2007 pay= $ 19,369,506
Sallie Krawcheck Chair and CEO 2007 pay= $ 7,139,792
Lewis Kaden Vice Chairman 2007 pay= $ 6,771,307
Michael Klein CEO"Global Banking 2007 pay= $ 7,861,438
Stephen Volk Vice Chairman 2007 pay= $ 7,597,847
Charles Prince Former Chairman and CEO 2007 pay= $ 15,105,376

Total paid out in 2007 is $ 70,549,469.00

[Peter007]

I too am envious of those salaries. But Citibank did make 24 billion in 2006. And 23 Billion in 2005 . I' m also envious of Derick Jeters $20 million dollar contract. I think I could hit over .300 if only I had the chance. And Bill Clinton gets $150,000 for a 1 hour speech. I'd do it for $10,000. They need to pass some sort of law. Its not fair.