Citigroup Failure

“Too big to fail” is a term used to describe a company that has become so essential to the economic success of a country that the government of that country must take excessive measures to prevent that company from ceasing to trade or going bankrupt (Amadeo, 2016). In this case, company is plural and the country that took those extreme measures was the United States of America. The 2007-2009 financial crisis caught the world by surprise and led to a renewed interest in understanding the inner workings of our financial systems and the consequence of not abiding by the governmental rules put in place to regulate those financial systems. With the collapse of investment bank powerhouse, Lehman Brothers in 2008, the worst financial crisis since …show more content…
JPMorgan Chase may be Citigroup’s top competition. Ranking 23rd in Fortune’s list of the top 500 companies, compared to Citigroup’s rank as 29th, JPMorgan Chase proves to be some stiff competition for Citigroup. Another top competitor of Citigroup is HSBC Holdings. This company ranked 35th in Financial Times Global 500, an annual list of the world’s largest companies where the greater the stock market value, the higher the ranking. Citigroup was right behind HSBC coming in at number 40. Rounding out Citigroup’s top 3 competitors is Bank of America Corporation. This banking giant is ranked 26th and 37th in on the Fortune 500 and Financial Times Global 500, respectively. Citigroup definitely has some stiff competition in the banking world, but as one of the largest banks worldwide, the company is holding its own fairly …show more content…
On top of all the misdeeds when it came to full disclosure, overcharging credit card customer, and money laundering claims, Citigroup was also found to be on the wrong end of the housing market crash. From 2003 to 2007, housing prices were on the rise, and banks made loads of loans and bundled them into “mortgage-backed securities,” which could be sold to investors seeking interest income (Geewax, 2014). Many lenders, including Citigroup, began marketing mortgages to consumers with poor credit or those who did not have enough income to justify the amount of money loaned to them. The Department of Justice (DOJ) claimed that Citi misled investors about the risks associated with these mortgages. Without fail by 2007, homeowners started to default on their loans, there was an overflow of unoccupied, available houses on the market which drove down real estate prices and jumpstarted the housing market breakdown. Although Citigroup claimed to play a minute part in the housing debacle, the Department of Justice felt differently. The DOJ felt the bank’s actions were so egregious that it warranted