Comments on: How Citigroup Used $45 Billion from the Government http://www.consumerismcommentary.com/2009/02/03/how-citigroup-used-45-billion-from-the-government/ A premiere personal finance blog, established 2003. Within, Flexo discusses his own experiences with money, and he and other authors comment on a wide range of personal finance topics. Sat, 21 Nov 2009 16:42:00 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Will http://www.consumerismcommentary.com/2009/02/03/how-citigroup-used-45-billion-from-the-government/#comment-187846 Will Wed, 04 Feb 2009 01:58:09 +0000 http://www.consumerismcommentary.com/?p=5227#comment-187846 While I applaud them giving us some numbers, in some ways this feels a bit like a dog and pony show to me. It doesn't get down to the main question we should be asking ourselves; "Is this infusion actually stimulating lending?" As a hypothetical, suppose that you give me $600. Now if I give you a statement that I put that $600 toward rent, that is essentially what this report is telling us. The thing is, that $600 expense was there the month before when you weren't giving me any money. Wouldn't it be more useful to know how my spending habits changed as a result of that infusion. Telling you what I spent your $600 on is really just a small piece of the puzzle. Did I do something useful with the $600 of my money that was freed up or spend it at my favorite watering hole (granted some would argue that this is useful :) ). Have I managed my total budget wisely to ensure that you will be seeing your $600 again? Will I have accomplished whatever you expected me to accomplish with that money? Back to Citibank, what seems useful to me in terms of answering the big question above would be three things. 1. The total spending in the areas provided in the report, not just the portion of the stimulus spent on them. 2. The average amount that they typically spend in those areas. 3. The average amount that they have typically spent during previous downturns in those areas. This would give me a much clearer picture of whether our money is being well spent. While I applaud them giving us some numbers, in some ways this feels a bit like a dog and pony show to me. It doesn’t get down to the main question we should be asking ourselves; “Is this infusion actually stimulating lending?”

As a hypothetical, suppose that you give me $600. Now if I give you a statement that I put that $600 toward rent, that is essentially what this report is telling us. The thing is, that $600 expense was there the month before when you weren’t giving me any money. Wouldn’t it be more useful to know how my spending habits changed as a result of that infusion. Telling you what I spent your $600 on is really just a small piece of the puzzle. Did I do something useful with the $600 of my money that was freed up or spend it at my favorite watering hole (granted some would argue that this is useful :) ). Have I managed my total budget wisely to ensure that you will be seeing your $600 again? Will I have accomplished whatever you expected me to accomplish with that money?

Back to Citibank, what seems useful to me in terms of answering the big question above would be three things.
1. The total spending in the areas provided in the report, not just the portion of the stimulus spent on them.
2. The average amount that they typically spend in those areas.
3. The average amount that they have typically spent during previous downturns in those areas.

This would give me a much clearer picture of whether our money is being well spent.

]]> By: Scot http://www.consumerismcommentary.com/2009/02/03/how-citigroup-used-45-billion-from-the-government/#comment-187826 Scot Tue, 03 Feb 2009 17:43:27 +0000 http://www.consumerismcommentary.com/?p=5227#comment-187826 It is amazing to see how our taxpayer dollars are going to be spent. The funny thing is the lifeblood of the American economy stands to get the smallest percentage of the money. Small businesses are going out everyday. Not that I really approve at all of bailouts but I guess the point that I am trying to make is.....The overall strategy if Citi.....Lets increase unsecured debt AKA credit cards but lets loan less to business owners that would be backed by assets??? It is amazing to see how our taxpayer dollars are going to be spent. The funny thing is the lifeblood of the American economy stands to get the smallest percentage of the money. Small businesses are going out everyday. Not that I really approve at all of bailouts but I guess the point that I am trying to make is…..The overall strategy if Citi…..Lets increase unsecured debt AKA credit cards but lets loan less to business owners that would be backed by assets???

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