No Such Thing as a Free Lunch? Tell That to Citigroup

True story…I'm at Cafe Metro on 46th and Lex grabbing some lunch on a recent weekday afternoon. The place is packed with lines of 5 or 6 deep at the salad counter, the made-to-order pasta kiosk and especially at the cash register.

In front of me is a well-dressed, middle-aged man with graying hair and glasses in a conservative navy blue suit. On the surface, there doesn't seem to be anything extraordinary about the man, just the typical "Suit" waiting on line in midtown with a chicken quesadilla for lunch.

Little did I know that there was something incredibly special and magical about this gentleman! You see, he knows the secret password to open all doors, have all wishes granted and receive every manner of special treatment, so long as he believes he is entitled.

How do I know this? Well, when Blue Suit stepped up to the register and placed his tray in front of the cashier, rather than take out his wallet or a $20 bill or a credit card or anything that resembled the currency us mere mortals are forced to exchange for goods and services, he simply parted his lips and said the magic word:

"CITIGROUP"

I kid you not, readers, he literally uttered the word "Citigroup" (C) and his quesadilla was packed in a bag with plastic utensils and napkins, and he was out the door. No one asked him for ID or made a note anywhere of what he was eating that day. He just said "Citigroup" and bounced. I was on line to pay behind him with my own chicken quesadilla and a bottle of Diet Pepsi…cost to me as a non-Citigroup employee: $9.85 plus tax.

So here's the point…I was all for the bank bailouts as a means of preventing systemic risk. Who wants to see bank runs and people hoarding money and precious metals in their safes? That said, the U.S. taxpayer, with an assist from the TARP Fund, has already given Citigroup, wait for it…$52 billion unearned dollars to save themselves, as well as a loss-sharing agreement on $306 Billion of the toxic sludge on their balance sheet. And because Citi has been such a phenomenally well-run enterprise to have found itself in the position of panhandling, we must also underwrite the lunches of it's peerless employees, apparently, in the hopes that we can retain their services in the future.

Oh yes, we must make sure we retain the the incredibly brilliant legions of executives at firms like Citi, Morgan Stanley (MS), AIG and B of A (BAC). And in doing so, we must spare no expense or extravagance. With $700 billion in TARP funds, does it really matter if $300 million or so is spent on things like employee restaurant tabs, hunting trips, bonus payments, monthly garage parking, spa treatments, free day care, paternity leave (yeah, they really offer that at bulge bracket firms), corporate retreats and fwee ice cweam cones to boost morale?

I can only imagine asking the owner of my firm for day care expenses. He'd say "You make plenty of money, pay for it yourself like everyone else does." My firm is not on the TARP handout list; we operate in the real world and have to actually make money and care about things like risk. Citigroup and its ilk are asking for money in order to survive, yet they aren't acting as though they actually need it. The bloated pigs are wasting capital and lavishing it on themselves in the form of bonuses and perks as if it were their own cash, and not yours and mine.

Watching this faceless corporate drone walk out with what I myself have to pay for, and knowing that he can only do so because my tax money is being misappropriated, well, I've changed my mind. Bring on the systemic risk. Let 'em all sink to the bottom of the sea. No one misses Drexel Burnham or EF Hutton and they won't miss Citigroup either. Let the failed companies actually fail, and give me back my tax money so that I can choose which aspects of the economy to support with it.

And pay for your own quesadillas from now on, Citi employees…there should be no such thing as a free lunch.

Disclosure: no positions

Comments

[J Stew:]

You should've said "Citigroup" and got your lunch for free.

Jan 13 10:22 AM

[Moon Kil Woong:]

Great comment. I think they are getting a free dinner, free housing, and free car as well. If Citi was a kid he'd be a bully extorting money from all the kids with his pals AIG, Freddie the Mac, and Fannie Mae.

When you hear their name run. If they aren't causing catastrophe they are in some dark place betting on the destruction of parts of our economy using derivatives. Off balance sheet accounting is oh so vogue in this crowd. They are probably underwriting the default of the US government debt and their own companies right about now.

We need CDS and derivative reforms and transparency laws now. Bullies always get their way until their misdeeds are dragged into the light of day.

Jan 13 10:27 AM

[al s:]

I used to work for Citi and you are soooo correct.At one point there were THREE!!!!! dining rooms in Head office, the junior officer, officer and executive dining rooms.
Thinking about it now, it's humorous. The juniors would pay approx. $5 and gorge on any and everything. That's way there are/were so many obese junior officers). The officer (VP and up) dining was totally free and more elaborate.
Finally, the exec, where you were required to make a reservation and generally brought a client/customer. As fine as a 3/4 star Zagat.

The staffing was significant. Bring back the good old days !!!!

Jan 13 11:00 AM

[greek:]

I used to work at citi too, and whilst I see your point and more or less agree with your "pay your own way like everyone else" mentality and the need for smaller bonuses across the board, I think you are going way too far on the "let them collapse" front. If that happens then your

" give me back my tax money so that I can choose which aspects of the economy to support with it" statement might become a bit obsolete as you may have no money to pay tax with in the first place...

Jan 13 11:46 AM

[Joshua Morg...:]

Hey All,
Thanks for reading! Let me clarify something, though...if a company wants to underwrite their employee lunches or any other perks...this is America, they should do so. My issue is with the fact that they are on the government dole BIG TIME. How could they still continue to operate as if they are not?

what else are they still doing in lieu of lending and shoring up their balance sheet (which I thought was the point of the bailouts)?

if you liked this post, check out my blog at thereformedbroker.com

thx

Jan 13 03:05 PM

[EMS:]

These guys (C) suck... I think everyone is tired of the bailouts. At least the shareholders got their dividends for as long as they did. They will have absolutely nothing to show for their shares imminently...

Jan 13 06:53 PM

[monday1929:]

Citi still has its well-hidden multi-million dollar Armonk NY "Retreat" (bunker?)

Jan 14 08:54 AM

[User 337271:]

Way to think outside the box. Please note that they allow online ordering and payment. Only company name could be required for pickup.

Their online link:
store4.geomerx.com/CMN...

Jan 14 01:05 PM

[Gre:]

Prove that he didn't call ahead, give his credit card number and then say Citigroup. Why don't you ask Metro Cafe what happened instead of partial reporting?

As to the rest of your story, I couldn't agree more-- I think we have left the systemic risk, frozen problem and ventured into "increased" corporate welfare and that is wrong. The interbank lending rate is down significantly... almost at normal-- so why not everyone do business on their own. Let BAC or Citi fail/survive on their own merit and other bank(s) win.

Jan 15 08:43 AM

[dzyr4tt:]

if he would have called ahead , gave his credit card number.. he would have said his name and not citi group... dumb AZZZ


On Jan 15 08:43 AM Gre wrote:

> Prove that he didn't call ahead, give his credit card number and
> then say Citigroup. Why don't you ask Metro Cafe what happened
> instead of partial reporting?
>
> As to the rest of your story, I couldn't agree more-- I think we
> have left the systemic risk, frozen problem and ventured into "increased"
> corporate welfare and that is wrong. The interbank lending rate
> is down significantly... almost at normal-- so why not everyone do
> business on their own. Let BAC or Citi fail/survive on their own
> merit and other bank(s) win.

Jan 17 09:12 PM