When William “Wild Bill” Janklow was Governor of South Dakota in the early 80′s, he made a deal with Citibank that would throw the roof off credit card interest rates. “Wild Bill” would eventually give rise to credit card balances and bills that were off the charts due to enormous interest rates. Janklow was a one-man political army who, in 1981, boldly invited Citibank to South Dakota and blew the lid off the U.S. credit card business in the U.S.
Why? Because the deal inviting Citibank to South Dakota eradicated limits on how much interest South Dakota banks could charge borrowers.
Citibank knew a goldmine awaited them and they desperately wanted a home in South Dakota.
What happened next is a testament to the power of the rich, the powerful, and the political. And yet more proof that Middle America doesn’t stand a chance. In a secret meeting at the governor’s mansion with Walter Wriston, chief executive officer of Citicorp, the bank’s parent, Governor Janklow agreed to drive through the legislation to remove rate caps in a swap for 400 Citibank jobs – in South Dakota of course.
There you have it. A deal for 400 new jobs the Governor could take credit for - in exchange for credit card larceny.
This deal would come to transform U. S. consumer lending and bank profits. When interest rates were allowed to rise as high as banks wanted them to go, credit cards became a ticket to telescopic profits. In the ten year period that ended on Dec. 31, 2007, credit card issuers together earned more than $50 billion. This was mostly earned on the difference between their own cost of money and consumer rates as high as 30 percent. Some lenders pushed rates as high as 80 percent. In 2007, credit cards accounted for 20 percent of both revenue and profits for J P Morgan Chase.
Just imagine how many of these “deals” go down every day in the offices, hallways and golf courses all over the nation. Don’t think for a moment that any “deals” are done that benefit the non-rich.
Janklow still has law offices in Sioux Falls, South Dakota where he proudly maintains a 4-foot length of red ribbon decorated with numerous Citibank credit cards.
Until my next post . . .
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Despicable, but comes as no shock. No group of people are more greedy & selfish than the people who already have a ton of cash. This greed will be the ultimate death of our society.