Saturday, April 18, 2009

Why Citigroup Should Not Be Called a "Bank"

Marketers and revolutionaries are among the few who recognize how very important language is in winning public debates. EBR believes that financial writers are inadvertently contributing to the victory of the "banksters" by using language that helps them.

Uppermost in the mind of Econblog Review in this regard is the widespread use of "bank" to refer to giant holding companies that own a bank. Here is the definition of a financial bank (as opposed to a riverbank, e.g.) from Merriam-Webster on-line:

an establishment for the custody, loan, exchange, or issue of money, for the extension of credit, and for facilitating the transmission of funds.

Clearly, a "bank" is defined as exactly what the average Joe thinks it is: a plain vanilla commercial depository institution, that with its deposits makes loans (extends credit); provides wiring of funds (facilitates the transmission of funds). A "bank" per this (correct) popular definition does not meet the description of Citigroup as listed on its website:

Citi is organized into four major segments – Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management.

Only the first of the above is what people think of when they think of a "bank" in relation to Citigroup. And of course Citigroup deliberately confuses the issue by calling both itself and Citibank "Citi" whenever it can.

The average citizen hears President BushBama and Treasury Secretary HankTimothy GeithPaulson, and their allies and acolytes talk about bailing out the "banks", and hears that terminology repeated even by staunch opponents of these bailouts in general and/or specific bailout policies, and thinks that this is somehow different from bailing out ExxonMobil when oil prices and demand may plummet because, these are BANKS.

The average person has no idea that when money goes to Citigroup, it goes to a corporation that owns Citibank N.A. and other banks in foreign countries, but that mostly tries to make money doing other things, such as trading for its own account, advising companies on takeovers, etc.

Econblog Review believes that over time, the public needs to think of companies such as Citigroup as Big Finance (or some similar term), just as it thinks of ExxonMobil and its brethren as Big Oil. Once this terminology is used, it will be easier to make the case for reinstatement of a modernized version of Glass-Steagall and for the numerous other reforms required to prevent recurrent systemic financial crises.

Copyright (C) Long Lake LLC 2009

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