Pres Article: Citibank Flashcards
Why was it hard for credit cards companies to profit in the 1970s?
State-level usary laws (interest rate limits) made it difficult to profit.
Which Supreme Court case allowed banks to export interest rates from their home states?
Marquette v. First of Omaha
Why did Citibank choose South Dakota for its relocation in 1981?
South Dakota had no interest rate caps, making it attractive
What key term in the National Bank Act was central to the Marquette decision?
“Located” - Banks were allowed to charge interest rates based on laws of the state they were located in.
How did Citibank address its rising costs due to state usury limits in New York?
It relocated its credit card division to a state with lenient laws
How did South Dakota protect their local banks when Citibank relocated there?
Prohibited Citibank from opening consumer-facing branches
What fee did the Citibank charge its customers in New York? When? What was the response from customers?
In 1976, they charged customers who fully paid off their credit cards a fee since they don’t pay interest. Customers were furious and returned their cards.
What was one of the main goals of President Roosevelt’s New Deal?
Stabilizing the economy by capping interest and deposit rates
What was an unintended consequence of deregulating the credit card industry?
Reliance on credit in low-income households.
