September 22, 2009
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News: Citigroup Degenerates to New Annual Fees
The world's largest credit cart issuer seems to be crumbling from the weight. Having watched their stock fall from $6.50 six months ago to only $4.40 today (a 32% loss), they must wonder what they're doing wrong. After all, BofA have come from $6.45 a share all the way up to $16.50 (a 256% gain) and DFS have seen their $7.94 shares jump to $15.40 (a 195% gain). Doesn't Citigroup get it? They're doing something wrong. Have they closely examined the effect of indiscriminately slashing millions of credit card limits without regard to trustworthy vs. abusive borrowers? Just because it's only a small percentage or their credit card account profile, does this really fly? Perhaps they're just too big for their britches. Now their further punishing their faithful with annual fees of around $30. This is not a good fit for a "Chevy" kind of credit card lender. Do they think they can just switch to "BMW" prestige by putting a sticker on the side and calling themselves American Express? It just doesn't fit.
Even more shameful are the reports that Citigroup just doing this in retaliation for the new government regulations coming into effect in February. Do they really think they can punish the government by taking it out on the credit card customers? Who's the boss here; the government, the bank or the customer? THE CUSTOMER! Stockholders -- that's us. We're the boss too. The problem there is that we're not very smart bosses. We've just allowed the Board of Directors permission to quadruple the number of outstanding shares from 15 gig to 60 gig. Common shareholders have waived our rights on matters concerning preferred stock and we've even given the directors permission to reverse-split our stocks any time they want. Talk about a way to run an airline business. Our credit card behemoth could rename it self Highjack Airlines (highjack referring to jacking our fees so high).
The fat's already in the fire. BofA have no intention of introducing any new annual credit card fees. Buy their stock. Discover? Same thing. Cap one -- doing fine. Chase/Morgan -- watch 'em. Amex -- they've earned the right to expect annual fees. They provide BMW service and have a loyal and happy following. They don't act out of retaliation, they're out to please their faithful customers. Meanwhile, as low as the "C" stock is now, I have no intention of buying any more.