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Repost of my post at Yahoo.

http://www.billparish.com/citigrouppyramid.html

Point 1:

"This is perhaps the biggest untold story of the financial markets and new economy, that is, how the Federal Reserve and other regulators allowed an insurance firm, Travelers Insurance, to take over the nations largest bank and proliferate practices used at Travelers on unsuspecting customers and shareholders. These practices include aggressively selling high commission annuities into pension plans, credit card fee abuse, predatory consumer lending, price fixing of Nasdaq stocks, predatory investment banking practices designed to stimulate mergers and a complete collapse of privacy standards. This only begins to chronicle what is occurring at Citigroup. Adjusting for the pooling loophole alone would imply that Citigroup is trading at a price earnings ratio in excess of 40/1."

Point 10:

"Also noted is that Citigroup's 100 million existing consumer customers, when combined with Associates 26 million, will provide excellent cross-sell opportunities. The merger will make Citigroup the largest originator of home equity loans in the country and also strengthen its lead in the credit card market."

Point 14:

"The Mysterious Merger Frenzy, Robert Samuelson, Newsweek, October 16, 2000
"Since 1994 it's totaled $5 trillion" and represents "the most uncovered business story today" according to Samuelson. One of the largest such mergers is the Travelers Insurance purchase of Citicorp. Not noted in the article is that most mega mergers use the "pooling loophole" to account for the merger, a loophole the SEC is fighting hard to eliminate. Without being able to use this loophole, most such mergers would not take place.

'Also not covered in the article is the impact on professional services such as legal, accounting and advertising. Mergers reduce the potential number of customers for such services and force consolidation in these professional areas, further fueling the merger scheme as many law firms become dependent on M&A activity and media outlets become dependent on a few large advertisers. While all eyes are on technology, in particular Cisco Systems, the most abusive situation is clearly at Citigroup.

'Another significant area not addressed are the investment banking fees generated from such mergers. Without these fees alone, Citigroup's earnings would plummet. For this reason, they have teams of investment bankers whose job is to go out and stimulate such mergers, whether they make sense of not.

'In concluding, Samuelson makes the statement "perhaps they 're spreading technology and lowering costs. Or maybe they're spawning corporate waste and empire building." In Citigroup's case, it is clearly the latter and its subsidiary Salomon Smith Barney."

Just one question - how valuable is potentialy 20 million subscriptions to a credit card company when subscriptions are - or soon will be - the NUMBER 1 reason for customer loyalty to plasticash?

FORM YOUR OWN OPINIONS AND LET ME KNOW WHAT YOU THINK. I'VE ALREADY FORMED MINE.

You are welcome.

J
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