The CEO of Citigroup, Vikram Pandit, delivered a speech to end the first day of the National Summit in Detroit. The reason of the summit is essentially just a meeting of the minds, business, economic and government leaders, to build strategies to keep America competitive in manufacturing, power, i.t. and the environment. Citigroup has been under loads of examination for the manner their business has been handled, careless loaning and collecting so much TARP funds, which has too arguably been mishandled.
In synopsis, Pandit told the mass that America needs to accept the fact that tighter credit is just going to be the standard now. He says we are in a new world where borrowing will be harder, loans will be harder to get, and tighter, more expensive, credit is just going to be the case, even after the financial market has recovered. ?U.S. consumption and credit creation were the two main drivers of growth. The world needs new drivers of growth ? and a new business model,? Pandit told the group at the meeting.
He said he expects loans to be more limited and costly. Those lesser APRs are a fixation of the past in his eyes and even as rally occurs, banks will be vigilant with paying out loans, almost to a burden. He also wants corporate reorganization over a quantity of industries. He agreed that Citigroup has received ample support from the state and praised ?strong state action? for the place they are growing themselves back to. He in addition talked about that Citigroup has updated its business plan, reducing costs by 25% and labor force by 20% as well as dwindling their confidence upon credit and utilization.
He also blamed the credit crisis on free-for-all banks that he accused of being a ?shady banking structure? that packaged wholesale money into student loans, housing mortgages and credit cards, a plan that was to blame for over half of credit through the preceding five years. Pandit also held responsible the ?shady banking organization? for a large credit opening when that marketplace fell apart and credit was reserved.
It is clear that we are in a new era of credit with more regulations on credit cards that will bring about credit issuers to put into practice new fees and intensify APRs and reduce credit, at least for a time, but are we actually to the point where we can no longer rely on credit? That may also fail, because you will see less consumers worrying concerning their credit scores and financial institutions will lose money from lack of credit issuing. Reorganize all you want, but no fiscal institution can rely so little on profit from borrowing that they will be able to squeeze credit that much. It sounds like another one of my notorious self fulfilling prophecies?, as the credit market will ?cut off its own nose to spite its face? and the financial institutions will forbid themselves from further growth. What do you think?
In synopsis, Pandit told the mass that America needs to accept the fact that tighter credit is just going to be the standard now. He says we are in a new world where borrowing will be harder, loans will be harder to get, and tighter, more expensive, credit is just going to be the case, even after the financial market has recovered. ?U.S. consumption and credit creation were the two main drivers of growth. The world needs new drivers of growth ? and a new business model,? Pandit told the group at the meeting.
He said he expects loans to be more limited and costly. Those lesser APRs are a fixation of the past in his eyes and even as rally occurs, banks will be vigilant with paying out loans, almost to a burden. He also wants corporate reorganization over a quantity of industries. He agreed that Citigroup has received ample support from the state and praised ?strong state action? for the place they are growing themselves back to. He in addition talked about that Citigroup has updated its business plan, reducing costs by 25% and labor force by 20% as well as dwindling their confidence upon credit and utilization.
He also blamed the credit crisis on free-for-all banks that he accused of being a ?shady banking structure? that packaged wholesale money into student loans, housing mortgages and credit cards, a plan that was to blame for over half of credit through the preceding five years. Pandit also held responsible the ?shady banking organization? for a large credit opening when that marketplace fell apart and credit was reserved.
It is clear that we are in a new era of credit with more regulations on credit cards that will bring about credit issuers to put into practice new fees and intensify APRs and reduce credit, at least for a time, but are we actually to the point where we can no longer rely on credit? That may also fail, because you will see less consumers worrying concerning their credit scores and financial institutions will lose money from lack of credit issuing. Reorganize all you want, but no fiscal institution can rely so little on profit from borrowing that they will be able to squeeze credit that much. It sounds like another one of my notorious self fulfilling prophecies?, as the credit market will ?cut off its own nose to spite its face? and the financial institutions will forbid themselves from further growth. What do you think?
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