Citibank Folly

From the E-Desk Of Peter Welch

2009-10-01T17:13:00.003-07:00

Another canned response from Washington DC. I do have to say that I am quite thrilled that Bernie Sanders will be at the 6:50 showing of Capitlism: A Love Story tomorrow night. I wonder what he will have to say about all of the looting that is taking place by corporate America with full cooperation from the US government.

September 30, 2009

Dear Ms. Hanson,

Thank you for contacting me about the fair treatment of credit card holders by major banks and credit card companies and for sharing your story with me. I am working hard in Congress to protect consumers and small business owners against the abusive practices of credit card companies.

I cosponsored and voted for H.R. 627, the Credit Cardholders' Bill of Rights Act of 2009, which passed the House of Representatives on April 30, 2009 and was signed into law on May 22, 2009. This new law will regulate interest rate increases and require transparency in credit card rules in order to protect consumers from gimmicks and exploitation.

I offered two amendments to H.R. 627. The first amendment would have established a cap on credit card interest rates of 18 percent. I have heard from many Vermonters about the arbitrary and unfair practice of hiking interest rates as high as 35 or 40 percent due to just one missed payment. My second amendment, which was supported by a bipartisan coalition, tackled the growing problem of "merchant interchange fees." Banks and credit card companies collect interchange fees from small businesses every time a customer uses a credit card to pay the bill. These fees continue to go up, leaving merchants no choice but to pass them on to consumers. In addition, small businesses are charged a higher fee if a customer uses a rewards card thereby forcing the merchant to pay for the customer's rewards rather than the credit card company. My amendment would have ensured transparency in the interchange fee system, eliminated many of the current unfair practices, and empowered the Federal Trade Commission to scrutinize interchange fees.

The Credit Cardholders' Bill of Rights is an important step in the right direction. But Congress cannot stop there in its effort to protect credit card customers. Although my amendments were not included in the final version of the bill, I intend to continue my effort to have them enacted into law to provide further protections for consumers and small businesses.

Thank you again for contacting me. Please stay in touch and I hope to see you in Vermont soon.

Sincerely,

PETER WELCH

Member of Congress

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To respond to this letter, please visit my website: www.welch.house.gov. Replies to this email address will not be received.

Senator Leahy Responds

2009-09-29T14:31:00.000-07:00

Senator Patrick Leahy responds. He has faith in the CARD Act - I am not sure that I do but we will see. I do like that he gave me a place to lodge my complaint. I do not need to complain now but Jody did warn me that they could increase my rate in the future.

Dear Ms. Hanson:

Thank you for contacting me about the credit card industry. I am pleased that President Obama has signed legislation enacting major reforms to clean up many bad credit card practices.

Hundreds and hundreds of Vermonters have contacted my office voicing concerns about deceptive practices by the credit card industry. People have shared stories about credit card companies raising interest rates arbitrarily, charging usurious fees, and refusing to work cooperatively with their clients. Most troubling, the biggest offenders appear to be large, national banks that gladly accepted the mercy of taxpayer bailout money when they were in trouble yet show little compassion now when their customers are struggling.

In today's economy, Americans need credit that is accessible, affordable, and dependable. Unfortunately, our current credit card system disadvantages many Americans and makes it harder for them to pay off their debt. Credit card contracts have become increasingly complicated, deceptively worded, and unfairly stacked against consumers. The time is long overdue for more transparent and equitable credit card practices - which is why I was an early cosponsor of S. 414, the Credit Card Accountability Responsibility and Disclosure (CARD) Act.

Congress passed H.R. 627, the Credit Cardholder's Bill of Rights, which incorporated many provisions of the CARD Act. This bill puts fairness and common sense back into the credit card system by changing several unfair billing, marketing, and disclosure practices. Among its many important provisions, the bill prohibits interest charges on credit card debt that is paid on time; requires a 45-day notice of any fee or interest rate changes; prohibits interest charges on credit card transaction fees such as late fees; prohibits overlimit fees unless a consumer opts-into the program; requires enhanced disclosure to consumers regarding the consequences of making only minimum payments; protects younger consumers from alluring and usurious credit card offers; and requires promotional rates to last at least six months.

These significant credit card reforms will protect consumers from excessive penalties, ever-changing interest rates, and complex contracts. I believe it will go a long way toward relieving Vermonters who, like Americans everywhere, have had to endure the dictates of credit card issuers when it comes to the onerous and unfair terms in these contracts.

To file a complaint and discuss actions you can take against your credit card company, I invite you to contact:

Consumer Assistance Program

104 Morrill Hall, UVM

Burlington, VT 05405

(802) 656-3183 or (800) 649-2424

Thank you again for contacting me. Please keep in touch.

Subscribe to Senator Patrick Leahy's periodic newsletter at the following address:

http://leahy.senate.gov/NwsLtr/indexSub.cfm

PATRICK LEAHY
United States Senator

Subscribe to the Senator Patrick Leahy's periodic newsletter at the following address:
http://leahy.senate.gov/NwsLtr/indexSub.cfm

Citibank Responds.........positively?

2009-09-21T16:23:00.000-07:00

Jody Lang Executive Assistant to the President of CitiCard called on Tuesday to share with me the news - my interest rate has been restored to my pre-usury rate. After careful review by Citibank - they could not find evidence to support that I had been mailed a "Change in Terms" notice. A little oversight on their part.

She forewarned that this change was no indication that my account would not be subject to future interest rate hikes. Citibank is preparing for the "NEW CONSUMER PROTECTION LAWS" - I still think they are "BANK PROTECTION LAWS" but none the less they are preparing.

I originally referred to Jody as ~~sing-songy-sweet~~
. I am retracting that statement - my original intent was to portray Ms. Lang as a phony hack who is paid the big bucks to shut me up. She may be paid to appease me but my follow up conversations with her changed my original impression.

Jody shared with me that my letter was "powerful" and "widely read" by many Citibank Executives - including the board members. I shared with Jody that I still planned on following up with Citibank as originally stated in my letter. She agreed that I should do that but also reassured me that my letter had not gone unnoticed. For the sake of all of us I do hope it has been widely read. I doubt my one letter will change Citibank's business model but maybe it will plant a seed? Who knows. I do have to believe on some level that these people are just normal human beings with family, friends, and neighbors.

I needed to call Jody back on Thursday because my interest rate was unchanged on the website. Apparently they do not update that until the next billing cycle. Citi does not operate in "real time". While I had Jody on the phone I also clarified that this rate change was going to be retroactive to the date it was increased. This had not crossed Jody's mind - but since I had brought it to her attention she agreed to make the adjustment. That has been reflected on my account.

I view this interest rate reduction as a personal triumph but certainly not as a victory. A friend said to me the other day - I wonder what would happen if 1% of their card members took the time to do what you did? I would speculate that perhaps Citibank would vastly change the way they operate.

Card members and Non Card Members alike should speak up - and this is why - We the People of the United States of America are the largest shareholders in Citibank. Yes indeed - we the people own 36% of the bank. and guess what folks.....we the people have no representation, as stated in this hearing on TARP - One Year Later. Not only does the US Government not exercise any rights as majority owner in Citibank, according to the oversight committee no one is particularly sure that dumping a bucket load of cash on Citibank's doorstep has been successful. Nor is there any positive feeling on the part of the members that our financial system is stable. Okay - so we own a bank but we allow the bank to operate independently of the majority owner...because why? Maybe because we don't care? I don't buy that. I think it is because we do not know or we are just plain to busy to add another concern to our plates.

On another note - I did ask Jody how I was selected for a rate increase. She had some mumbo jumbo about credit limit and amount of credit used...blah blah...credit scoring system...gobbly gook....clear as mud answer - that I wish I had recorded because that was some of the best spin I have heard in a long time. I also asked the US Attorney General and Vermont Attorney General the same question in different language. How do they decide these things anyway? eeny, meeny, miny, moe? everyone who pays there bill on time for 5 years? initials HH through MM? I will be sure to post if the Card Companies are governed by any body for "fairness in lending" - I am fairly savvy researcher and I could not find anything. The card companies really do stand above the law.

I have certainly learned my lesson and will be completely divested of all major US Banks one year from now if not sooner. I shared that with Jody too - all banking is now done with a Credit Union and the mortgage and business line of credit will be moved there soon.

When I prepare my final letter with all of my various articles, statements, etc. I will add it to the blog. Until then...

I Did The Math Citibank

2009-09-19T13:18:00.000-07:00

I did the math on the balance with Citibank and their ridiculous new terms.

On my card balance if I paid the new interest rate at the minimum 3% payment it would take me 50 years to pay off the card and I would ultimately pay Citibank $50,000.00 in interest.

Under my old terms it would still take me 50 years but Citibank would only earn $7491.00 in interest.

I will be out of credit card debt in November 2010 - regardless of what Citibank charges me....but what if I could not do that. What if I had to make the minimum payment because that was all I could afford. What if I was living on the edge.

These bankers are really thieves dressed expensive suits.

Citibank Says Lowering Rates...

2009-09-17T15:41:00.001-07:00

Not for me though :)

Citibank says in a 9/10/2009 Washington Post article written by Nancy Trejos

"Samuel Wang, a spokesman for Citigroup, said the company provides a variety of programs for customers in financial distress, including modifying interest rates and matching payments to help retire the debt more quickly. "Citi is proactively reaching out to its customers who are not delinquent but who may be showing signs of financial stress," he said."

I guess I am not struggling enough.

So let me get this straight. I need to stop paying them for a few months.....and then tell them I am poor and struggling and then they will reduce my rates?

Really? Is that all I need to do? Just tell them I can not pay them and they will lower my rate?

Here is another ironic twist. My 22 year old daughter who has been late paying her card a few times with a marginal credit history has a 19.99% interest rate on her Citibank card. The first thing she did after reading my letter was check her rate.

Apparently I can be 22, occasionally forget to pay my bill on time, and my rate will be lower.

This whole not paying thing - does it really work that way? I wonder what Citibank will do if I stop paying my mortgage? Do you think they will restructure that loan? Maybe shave off some principal....lower my rate to below 5.75%?

Really - being irresponsible is sounding better and better with each passing day.

I am still waiting for Jody Lang - ~~sing songy sweet~~
- Executive Assistant to President of CitiCards to call me back. I guess this is a real headscratcher for them. I may have thrown a monkey wrench in their master plan to screw the responsible people who pay their bills.

Really it is genius on their part if you think about it. They know the deadbeats aren't going to pay - their credit is already screwed. So they have to take pennies on the dollar for people who have already defaulted. This really leaves them no other option then to stick it to the people who still care about protecting their credit ratings and fulfilling their moral obligations to pay what they owe.

Or maybe another option would be to not take bonuses and perhaps wait a bit before spending millions on brand new corporate suites. No - that would be very UnCorporate of them...after all what would their corporate neighbors think if they did that....my god they might start a trend of Corporate Morality....we can't have any of that...no that just won't do...........

Bernie Sent a Response.

2009-09-17T15:25:00.000-07:00

Senator Sanders responded to my letter. Although it is a canned letter I am glad he took the time to send something back.

Dear Heather:

Thank you for contacting me with your concerns about high credit card fees and unfair practices in the banking industry. I appreciate the opportunity to respond to you on this important issue.

Today, we are experiencing nothing less than a credit card crisis. Banks, trying to offset losses in other areas, are hiking interest rates and imposing all manner of fees and penalties making it even less likely consumers will be able to pay off their mounting debts. Unfortunately, under current law, credit card companies can charge whatever interest rates they desire no matter how high, and can turn low interest rates into high interest rates without giving any reason at all.

Worse yet, while taxpayers are spending hundreds of billions of dollars bailing out major financial institutions, and while these big banks are getting near-zero interest rate loans from the Federal Reserve, these very same financial institutions are now charging Americans 20 percent or 30 percent interest rates on their credit cards. The time is long past due for a national usury rate that will protect consumers from predatory lenders and put an end to loan sharking practices.

To that end, I recently introduced legislation in the Senate to cap interest rates on all credit cards and consumer loans at 15 percent. The Interest Rate Reduction Act (S. 582) would also limit bank fees that have been increased dramatically over the past decade. I chose fifteen percent because that is the same interest rate cap that Congress imposed on credit union loans almost 30 years ago when it amended the Federal Credit Union Act.

That approach has worked for credit unions, which unlike their counterparts at the big banks, are not lining up for hundreds of billions in bailouts. In fact, they're doing quite well. They are responding to the credit needs of the small businesses in their communities and to individuals. They have not only survived this regulation, they are functioning exactly the way they are supposed to function. In my view, the rules that have worked well for credit unions for decades can work for all financial institutions.

As you may know, the Senate recently took up a comprehensive credit card reform bill to help protect consumers from some of the most egregious practices in the industry. The Credit Card Accountability Responsibility and Disclosure (or CARD) Act, of which I was a co-sponsor, prevents unfair increases in interest rates and changes in terms, prohibits exorbitant and unnecessary fees, and requires lenders to post their credit card agreements online. The bill also establishes new protections for young consumers targeted by aggressive and irresponsible credit card marketing offers.

I am happy to report that this bill was recently passed by both the House and Senate, and on May 22, 2009 was signed into law by President Obama. While this legislation represents an important step forward in protecting consumers, it does not go far enough in putting an end to the abusive and deceptive practices employed by credit card companies. The CARD Act did not set a maximum interest rate for credit cards and the legislation itself does not go into affect until nine months from passage. I offered two amendments to address both of these issues, but unfortunately neither was included in the final bill.

Over the past few months, I have received many letters from Vermonters describing the difficulties they have been having with their banks and credit card companies. I thought these stories were so important that I recently went to the floor of the Senate and read a sampling of them to the nation. To watch a video of the Senate floor speech, click here: http://www.sanders.senate.gov/news/record.cfm?id=311950

Rest assured, I will continue to fight for a nationwide cap on interest rates and an end to abusive credit card practices. If we are going to turn this economy around, it is time that we stand up to these big banks, and say enough is enough.

Again, thank you for contacting me about this important issue. Feel free to contact me again in the future about this or any other subject of interest to you, or for up-to-date information on what my office is working on please visit http://www.sanders.senate.gov. While there, I invite you to sign up for my e-newsletter, the Bernie Buzz, at http://sanders.senate.gov/buzz/. Please be aware that due to security screening procedures, postal mail to my office experiences delays that will lengthen the time it takes me to get back to you. The fastest way to contact my office is by calling 1-800-339-9834.

Sincerely,

BERNARD SANDERS
United States Senator

Open Letter To Citibank President Vikram Pandit a.k.a Loan Shark Vik "the Ram" Bandit

2009-09-16T10:42:00.000-07:00

Here is a letter that I sent to Citibank today. I will continue to update you on a regular basis if I receive a response.....................or if I do not.................

September 16, 2009

Dear Mr. Pandit and Mr. Galant,

I am writing this morning to bring to your attention some serious concerns I have with your banking practices.

I have been a Citibank card holder since 2003. Between 2003 and today I have never
been late paying my Citibank account and I have never gone over my credit limit. In
addition to my Citibank card, my husband also has a mortgage, credit card, and HELOC
with your institution. Citibank is the largest holder of our joint debt and we have never been late on any of our Citibank accounts. I would further add that if you were to review our combined credit history you would not find a single collection account, late payment,or other blemish. The point I am trying to make Mr. Pandit and Mr. Galant is that we pay our bills and we pay them on time every month. No matter the circumstance we always manage to pay our bills.

In 2002 my husband was laid off from IBM and he decided to begin a new business – we
financed a great deal of the business start up with credit cards. In addition while we had periods of economic difficulty we sometimes relied on consumer credit to make ends meet. I will also admit that we made purchases on credit that we may not have otherwise made if we needed to pay cash.

My husband and I are paying for these decisions today. My husband works a full time job in addition to operating his business and I work outside of my field so that I have higher earning potential. This is not ideal for either of us and the reality is if we had not taken on so much consumer debt we could pay our living expenses solely off of the profits of my husband’s business.

We made a conscious decision to work harder to pay off the debt that we accumulated.
This decision was driven by a moral compass – that says we are responsible for the debts we incur. We share a common belief, that nothing in life is free. This was not a decision that we had to make – my husband did not have to get a 2nd full time job and I did not have to take a job in a field that is not my first choice – we did this because we are moral people and we do not shirk our responsibilities. Frankly Mr. Pandit and Mr. Galant we could have taken the easy way out and filed for bankruptcy. We did not.

In the Fall of 2008 during the “Economic Crisis” I watched the story unfold of how we got in to the financial mess we are in collectively as a nation. The largest culprits we were led to believe as a nation were those taking part in subprime lending. Mr. Pandit and Mr.Galant you and I both know this is only the tip of the iceberg and only a small part of the story. Mr. Pandit you sat in congress and requested my tax dollars to fix your mess. I can’t even get a tax write off to fix the mess I have with consumer credit debt. The irony is you are receiving my hard earned money to make up for your record losses based on grossly irresponsible business practices and I am paying higher income taxes because I earn more to pay off my debt.

During that same period of time I became the victim of the “Economic Crisis”. Receiving letters from creditors – not saying I was in default or late on a payment but letters cutting my credit limits, increasing my interest rates, and changing terms and conditions on accounts that I had for years, accounts, I might add, that were all in good standing. My husband and I felt the crushing grip of the economic conditions on a daily basis. Through out that period of time we again discussed filing for bankruptcy but we chose not to do that. We continued to work harder and felt even more determined to free of ourselves from being slaves to large banks whose only aim is to reap large profits off the backs of
hard working people.

I thought we had weathered the worst of the storm – we have managed to pay off a large amount of our debt in the last several months and have a plan to be out of credit card debt by November 2010. I set up a strategic plan that involved paying off the most morally corrupt banks first. Our plan was proving to be successful and in fact on September 15th I was able to make a final payment to another card. I was rejoicing in my personal success on my hour commute home only to open up my Citibank statement that came in the mail to feel completely and utterly defeated.

You see Mr. Pandit and Mr. Galant when I opened my Citibank statement it was only to
discover that you had raised my interest rate to 29.99%. This was shock and awe of the Consumer Credit kind. I was completely blindsided and devastated all at the same time. The reason why I was blindsided was because I never received any notification that you were raising my interest rate. I might chalk it up to careless oversight on my part but that is not even a remote possibility. As I mentioned before I have a strategic plan to get out of debt and I examine my financial situation daily. I would have never overlooked such an important piece of information. Your bank would have quickly moved to the top of the list of institutions to pay off in my plan.

I quickly got online to review my account – perhaps I had not paid it on time – perhaps I had debted the wrong payment account – perhaps there was something I was missing. This was not the case, you received your payment on time and there was nothing in the document section of my account notifying me of an interest rate hike.

I then called Citibank to find out what the issue could be. There was no issue with me – the issue as your overworked and underpaid call center operator explained was a rate increase because of the economic times. I tried my best to hold my temper because the last person I want to be angry with is some low wage worker who has to spend their days fielding calls from angry consumers because of your arbitrary decision making.

The people who have to answer your phone calls should be the ones receiving bonuses because they spend their days being abused because of your business decisions. In my mind it is no different then a Mafia boss sending out a teenage kid to be a hit man. No harm no foul right Mr. Pandit and Mr. Galant. As long as you stay far enough removed from the scene of the crime you can sleep at night. In fact you can sleep well because you get extra money from them doing the dirtiest of work for you.

I made 3 subsequent calls to Citibank – one to request every statement ever sent to me (so I could send them to you), the second to seek a reduction in my interest rate, and the third to find out what my Opt Out options were. I have not received the statements but I trust you have access to my account and can see that I have been a model consumer, there was no option for reducing my interest rate, and my Opt Out option expired on September 1st – 14 days prior to receiving my statement reflecting the new and quite frankly obscene interest rate.

Mr. Pandit and Mr. Galant this leaves me in quite the dilemma. As I previously
mentioned I have a strong moral obligation to pay my debt. However I also have another guiding moral principal and that is one of justness and fairness. What you have done is wholly unjust and unfair. What you have done is behaved no differently then your common loan shark. If you behaved this way to someone on the street chances are you would end up in jail or at the very least the person you were extorting for money would be told that they did not have to pay you.

Unfortunately we do not live in a time where consumers are protected from criminal
elements such as yourselves. We live in a time where my tax dollars go to paying your bonuses and build you new executive suites. We live in a time where you can hire people for not much more then minimum wage to shield you from the realities of your business decisions. We live in a time where you can send large amounts of money in political contributions so “Consumer Protection Laws’ passed look more like “Banker Protection Laws”. We live in a time where you can act outside of the law and reap record profits only to turn around and ask for my hard earned tax dollars to bail you out.

I am not sure which guiding moral principal will win out for me personally. I would like to give you an opportunity to address my concerns before I make any further decisions about how I handle my debt with Citibank. I would like for you to have an opportunity to examine your own moral compasses and reflect on what I have shared with you today. My hope is that you adjust my interest rate back to the original rate not because I am one consumer making a lot of noise but because you have some type of moral compass and you recognize from my one voice that you are potentially harming thousands if not hundreds of thousands of people by potentially bringing them to financial ruin in the worst case scenario and in the best case scenario causing them a great deal of mental anguish.

I am faxing this letter today to both of you and all of the people copied below because I believe this matter deserves immediate attention. I will be mailing this letter with supporting documentation when I receive the materials I have requested be mailed to me from Citibank – I will additionally provide you with a copy of my consumer credit report and additional media information related to the Banking Hearings and Citibank’s corporate and banking practices.

Sincerely,
HH

Cc: President Barack Obama, Senator Patrick Leahy, Senator Bernie Sanders, Senator
Christopher Dodd, Representative Peter Welch, Representative Barnie Franks, All
Members of the Citibank Board of Directors

Media Outlets – New York Times, Associated Press, Huffington Post, CNN, MSNBC,
Washington Post, Financial Times