Citibank’s Free Hot Dogs and Premium Millwork

maybe all the free giveaways actually bring in more business

Once upon a time, banks encouraged new deposits with promotional gimmicks. Nothing that would make Bill Veeck blush, but you would get things like free toasters when you open a new account. (Free hot dogs were more of a car dealership thing where I grew up.)

Michael Scherer:
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Do people of Vikram Pandit’s class believe that the display of luxuries accompanying vast wealth are necessary for the promulgation and/or maintenance of the citizenry’s faith in currency and credit? In this class’s culture, are their lifestyles synonymous with faux-Classical pillars adorning bank buildings’ facades?

maybe all the free giveaways actually bring in more business
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I doubt it brings in more business, but it likely buys good will from the politicians, reporters, and other insiders who use it.

It reminds me of how when I lived in California there was only one Wells Fargo ATM in the entire state that did not charge fees. Coincidentally, it was located in the basement of the state capitol and obviously used by legislators and their staffers. Buying customers? Probably not. Buying votes? You be the judge.

Think of it as a stimulus for the construction industry and stop kvetching!

“We did not adjust quickly enough to this new world, and I take responsibility for that mistake. We need to do a better job of acknowledging and embracing the new realities. Let me be clear with the committee — I get the new reality and will make sure Citi gets it.”
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Apparently they haven’t gotten it yet. Time to send the memo saying that you are all FIRED now!

Vikram Pandit’s class believe that the display of luxuries …..
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They don’t even think about it. In their world, 10 million simply isn’t a lot of money. You certainly wouldn’t consider outfitting their executives with cubicles, would you?

Another bouncing ball to follow. Seriously.

Well, this is tone-deaf and irritating enough, but his possible lie to Congress about his compensation is worse. And the larger story here is, why have we given about $50b to a company with about a $15b (inflated, due to the belief we’ll bail ‘em out) market cap?
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Same thing with AIG. The controversy that gets discussed is less expensive and less important than the bigger picture– how’d this happen, why are the same ppl there, and where has the free money we’ve given them in lieu of bankruptcy gone?
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I don’t mean to criticize this post– nothin’ wrong with this sort of thing on a blog, and I didn’t know about the hot dogs or the renovations. But the larger coverage isn’t much more penetrating than this, unfortunately.

Damn you, Scherer! No I’m hungry for a chili dog and it’s a long time to lunch!

My previous comment leads me to another point.
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If Obama and the Congressional Dems had any brains whatsoever they would have insisted in giving the average taxpayer something — anything — as a carrot for supporting TARP. My suggestion: No ATM fees for banks accepting TARP funds.
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An economic argument can be made that removing the fees would have a stimulus effect on the economy. If the government levied a flat $2-3 tax on ATM transactions, the GOP would go ballistic that we had created a “disincentive to engage in commerce”. But when the banks impose the same tax (which is vastly disproportionate to the cost of maintaining the ATMs, especially when imposed on small withdrawals) there is no outrage.
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At the very least, banks (all banks, not just TARP-banks) should only be permitted to impose a minimal fee (say, .5-1% of amount withdrawn) per transaction.

Time to boot the Congress out of office. Elect fiscally responsible Representatives and Senators.
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The cut off the access to the Taxpayer “Tit” of bailouts, earmarks, and other various spending sprees.

I guess it beats selling apples.

Dirks:
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They don’t even think about it.
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I understand that; it’s cultural.
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It’s also cultural for bank building designers to emulate Classical architecture.
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I also understand that $10 million is pocket change, relatively speaking.
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But these people aren’t living in Forbidden Palaces, either. It seems impossible for members of Vikram Pandit’s class to remain unaware of the conspicuous appearance of their privileged status. As he himself says, “I get the new reality“.
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It begs the question, then: Do they believe that their very existence as a class is necessary for a macro-economic good –that confidence trumps fairness as a Keynesian multiplier? Is that concept the class-based syphilis that infects their culture and conduct?

@rusty…

Taxpayer “Tit”
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It’s more useful to think of it as a big vat….
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People figure that if you got a large enough pile o’ Money all in one place, then no one notices the small amounts (in millions) that don’t get properly accounted for on the way out. As I’ve said elsewhere, everyone in both parties prefer utilizing the illusion. More honest accounting would require States to pay their own way and eschew Federal money altogether.
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File under – ain’t gonna happen.

Hey rusty,
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We tried that the last several years. How did that workout? Thanks, but I think we should continue to kickout all the “conservatives.”
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You don’t get a cookie for driving the bus into a ditch…

I think banks in fact do have a commerical need to appear very well-to-do. Especially since the Great Depression, they certainly need to appear solvent, which ultimately leads to the architectural features sz mentions. So if they’re consolidating from two floors to one, I’m inclined to give this a pass.

Moving the offices from two floors to one will save costs because, you know, they don’t have any of those inter-office communications thingies.
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Except the pneumatic tubes. Oh, and the lackeys.
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And what about all that space they plan to save? Great quote from the Bloomberg link: “Based on estimates made when the project was initiated, we expect to generate savings in the next few years well in excess of the project costs.” Of course those estimates assume continuation of the R/E bubble, whereas at current prices this project will pay off about the time the Morlocks get their first taste of Eloi.

Has any country ever recovered from a crisis like this without resorting to bailouts?
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Like John McCain, I don’t know much about economics. But the conventional economic wisdom is that the bailouts are ugly but necessary.
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As I commented in JNS’s previous post, the media debate seems to be drifting into a fact-free zone. (Surprising, I know.)

Banks need to look like a lot of money for the same reason Vegas casinos need to look like a lot of money. It makes the customers feel as if they, too, are players.

Again part of the problem with the entire debate is the entire psychological effect that comes from using huge numbers.

Any number one wishes to discuss in the Federal budget can be better appreciated by dividing by 111,609,629 — the total number of U.S. households, according to the U.S. Census’ 2005-2007.
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Put in that context the 10,000,000 being spent on this project is 9 cents per family.
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There are plenty of other discussions that would benefit from this treatment. If reporters( present company included) started presenting numbers that way more often, a lot more rational consideration would go into our discussions and direct comparisons between all the various sources of outrage would ensue.

Like John McCain, I don’t know much about economics. But the conventional economic wisdom is that the bailouts are ugly but necessary.
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Perhaps McCain might recall certain aspects of the Savings and Loans scandal…

“the media debate seems to be drifting into a fact-free zone.”
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No the media, just like Congress, are selling us all hotdogs and eating caviar during their congressional luncheons.

You know, I’m all for the free market and stuff like that, but since we’re giving these guys a bailout, I’m thinking there should be a bit of a quid pro freaking quo here…I mean, what’s the use of nationalization if the executives can just turn around and upchuck the money all over their offices?

Weiners passing out weiners. Why doesn’t this surprise me?

in the 80′s after that major recession during the Reagan years, America’s corporations got “lean & mean” to at the time become more profitable and to fight the then supposed spectre of Japanese business taking over America….but it worked. I remember those days well. We flew coach, not business class…and certainly not first class. Seems our children have to learn the same lesson…deja vu all over again!

Yoshi: Totally agree.
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I think the bonuses and spa retreats matter to a degree, because they reflect a corporate culture gone awry. I do think it’s possible for top executives to change corporate culture by stating “we will not spend money frivolously”
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But the real quid-pro-quo needs to be structural. The bonuses here are like the earmarks in the Federal budget. Maybe egregious, but what about the other 99% of the money?
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PD: Right on. The reporting on climate change suffers this problem too. How can there be global warming when it snowed today somewhere?!?!

Mr. Scherer,
Consolidating office space sounds like a good cost saving business decision to me. The article claims $3.2 million for the construction costs to renovate two floors of a large office. This sounds entirely reasonable. Another $6-$7 million for design fees, furniture, fixtures and equipment is also entirely reasonable. Your use of scare quotes for “premium” millwork and “soft seating” open areas reveals your ignorance of common construction industry terminology. Your description of the project as a $10 million redesign of Vikram Pandit’s executive suite is disingenuous and inflammatory. To me, the hot dogs are a more dubious expenditure.

I do my banking at a credit union that certainly wouldn’t give any extra confidence from its interior or exterior appearance. Nobody’s mentioned anything about it while I was listening. I expect my money’s safe enough.
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They do offer free coffee and soft chairs – because there are never more than two tellers working the front counter and people get cranky standing in line – a shrewd move that, I believe, keeps customers coming back.

MS didn’t mention that the 10 mil buys 17 offices. At 588,000 per, that seems steep…but not absurd.

Art:
I take your point with the overall percentage. I had that in the back of my head for a little bit when I heard about the raises. It doesn’t really matter compared to the $160-70 billion we’re dumping into the company in terms of math.
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But how on earth are we going to know the effectiveness of those billions?
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Incidentally, there might be a way the bonuses matter. If we scare away qualified people from working at AIG because they’re afraid of the government breaking contract, then their absence could prolong the crisis. So in the end what I want the government to do is just make up their mind about the bonuses one way or the other, then choke further excesses as much as they can.
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But if there’s any quality that can be attributed to the handling of the whole thing, it’s definitely NOT consistency. Not from the Administration, not from Dodd, or anybody else. If I were Mr. Liddy, I’d point out that those idiots in Congress just voted themselves a bonus anyway.

I hate to break it to you all, but the phrase ‘qualified people’ in this context is poisonous. The people who are ‘qualified’ are by definition criminally negligent fraud perpetrators.

Any experience in the field of securities underwriting should be immediate disqualification for current employment. What we need instead is an army of auditors. They wouldn’t be difficult to find.

How much of our money is Citi wasting on this public relations abortion?

I think though that the free hot dogs were not provided by Citibank outside their branch at 14th and G, but by tne new TD Bank branch at 14th and F Streets that opened last week. They had free popcorn too.

It looks like Citi is going to pull the plug on that public relations abortion, after all.
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…Are New Yorkers still left on the hook for that $400 million?
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Any reporters out there?

I’d like to back up a minute and point out that we may have just learned something relevant to our desire to understand just why Michael writes what he writes:
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“As a regular purchaser of hot dogs at this particular hot dog stand–cost $1.50, condiments included…”
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Michael, I appreciate your frugality (and I do love a good hot dog occasionally) but I hope you realize that you are what you eat. Try to work in a vegetable and some suitable brain food now and again. For our sake, if not your own.

This thread appears to be dead now, but I gotta add my thoughts anyway.
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Free hotdogs. That may seem to be an extravagance to those who have not been privileged to be invited to or to hang outside with mouth drooling, corporate hospitality tents at major golf tournaments, tennis, entertainment, other venues that draw crowds. Easiest ticket to get? Legislators and lawmakers.
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We are not talking hotdogs here. China and silver service, open bars, the finest foods. Hotdogs? I laugh.