The Hightower Report

CITIGROUP'S BIG DEAL

A deal is a deal, right?

That's the promise that was made to credit card customers by Citigroup, the Wall Street financial conglomerate that even used the phrase last year as an advertising slogan to promote a new, consumer-friendly credit card policy. Citigroup said that if people took its card, the terms of the agreement would not change for two years.

Believe it or not, this minimal concession to commercial integrity was considered a big deal, because banks are notorious for jacking up customers' credit card rates whenever they feel like it. Citigroup was pledging to forgo the "any time, for any reason" clause that banks write into their fine-print agreements. It also abandoned the "universal default" clause that lenders commonly use to raise your credit card rates if you're late paying a bill – any bill, even one not charged to your card.

Of course, this powerhouse bank was not making these moves out of the goodness of its corporate heart or because of some sudden discovery of business ethics. No, it was responding to consumer outrage that had reached all the way to Congress, where lawmakers were considering new regulations to stop these rip-off practices. Spouting its "deal is a deal" plan in a congressional hearing last year, Citigroup executives deflected the stricter regulations.

But that was then. Now that Congress has gone away, and now that Citigroup finds itself in a financial crunch due to bad executive decisions, the bank says that it didn't literally mean that a deal is a deal. It was an advertising slogan not a blood oath – so Citigroup is reneging.

To add insult to injury, Citigroup blames consumers for its abandonment of the "deal." It was expecting that a flood of people would switch to its card – but, apparently, consumers are not as gullible as Congress is about promises from Wall Street bankers.

THE FIGHT FOR CHANGE IN WASHINGTON

Woodrow Wilson said of Washington, "If you want to make enemies, try to change something."

Not long ago, lawmakers made an effort to change Medicare's system for purchasing walkers, wheelchairs, and other medical equipment for elderly and disabled patients. The idea was to make a simple and sensible cost-cutting move: Rather than keep paying an inflated set price to the closed club of corporations that supply these devices, open the system up to competitive bidding. Medicare embraced the change and ran a test program in 10 cities. Success! Instead of a few outfits like Invacare, Praxair, and the Scooter Store locking up the business, 325 companies won contracts, and prices paid by Medicare dropped 26%, for a projected savings of a billion dollars a year for taxpayers and some $200 million in co-payments made by the patients.

The change is scheduled to go nationwide this month – except that the enemies of change are on the move. Guess who they are. Of course! The firms that have been enjoying the billion-dollar annual overcharge for Medicare equipment prefer to keep enjoying it, so they goosed up their campaign donations to key lawmakers, hired some lobbyists, and are moving a bill through Congress to kill the open-bidding program. The House has already passed this blatant subsidy protection bill, and the Senate is heading in the same direction. Congress is killing its own change.

What we have here is but a small example of how hard it is going to be to produce the "change" that the American people are loudly demanding from Washington. This is why the change agenda – on everything from universal health care to Iraq policy – cannot be left to the insiders. Political will is easily suffocated in Washington. Instead, the insistent demand and ceaseless pressure must come from us outsiders asserting our grassroots power.