And it’s Gone – Guy Walks Into Citigroup Branch, Loses $40,000
Guy Walks Into Citigroup Branch, Loses $40,000
Looking at the way that U.S. Senators Elizabeth Warren and John McCain are pitching their proposal for a 21st-century version of the Glass-Steagall Act, I can’t help but wonder if they’re making a mistake.
Mostly they have promoted their new bill in terms of protecting taxpayers and the broader economy from a too-big-to-fail bank that might need another bailout. A lot of voters don’t get the connection between the problem and the solution being proposed, and it’s debatable if there is one. Here’s a better argument: The reason it’s a good idea to separate securities firms from commercial banks is to protect consumers from brokers selling schlock investments.
If the senators are going to persuade Congress to bring back Glass-Steagall, they should show examples of real, sympathetic people. This brings me to the story of Philip L. Ramatlhware, an immigrant from Botswana who went to a Citigroup Inc. (C) branch in downtown Philadelphia one day five years ago to open a regular bank account.
He was 48 years old at the time and disabled, after being hurt in an accident as a passenger on a Greyhound bus. His English wasn’t good, he had no college education and his last job had been at a fast-food kiosk at the Philadelphia airport. In April 2008, he received $225,000 in a settlement for his injuries, part of which went to pay legal fees. He was holding the settlement check when he walked into the branch.
Immediately he was referred to a broker for a “financial consultation,” according to an arbitration claim he filed against Citigroup. The broker assured him the money would be invested in “guaranteed” funds and that he could have access to them whenever the need arose, the complaint said. Ramatlhware gave him $150,000 to invest. The broker put $5,000 into a bank certificate of deposit, bought a $133,000 variable annuity and invested the rest in a series of mutual funds.
Less than six months later, Ramatlhware had lost $40,000, according to the complaint. Citigroup settled the case in 2010 for $22,500, without admitting liability, according to a report on the case by the Financial Industry Regulatory Authority.