CitiBank Loan Sharks

Citibank sent out letters this week notifying credit card holders that they were raising their interest rate to 30% (I exaggerate, its really only 29.99%, aren’t they clever?). Citi has 92 million card accounts outstanding. Never mind that this violates usury laws of most states, there is no enforcement of federal laws except when people attack the government.

The average cardholder was paying $3,600/yr in interest but will now be paying over $5,200 in interest. The net effects of this are obvious. First, people will cease spending via credit. Secondly, increasing the interest rate by 50% will remove that much more from consumer spending even by cash. Both consumers and retailers will take a big slap in the face from Citi.

In raw dollar terms, this means $113 billion in less disposable income exclusive of lost credit purchasing. [1]

I would be remiss if I didn’t point out that Citi is a ward of the taxpayers, partly owned by government, so folks, it is your dear government, directed by Saint Obama, who is giving you the royal shaft. Economic recovery? Who the hell do they think they’re kidding!

Welcome to government of the banks, by the banks and for the banks. The rest of you can go pound salt.

[1] Data obtained from Market Ticker