Citigroup Merger In Inside Job Essay

602 WordsFeb 13, 20123 Pages
Citigroup Merger Scheme The film The Inside Job provides a in depth look at the various ethically ambiguous business practices that take place in The U.S. and around the globe which helped spark the financial crisis of 2008. One such practice, the merger of Citicorp with Travelers, used morally questionable business practices in order to become the largest financial services company in the world. In 1998 these two companies merged to become Citigroup. The problem with this merger was that it was illegal, and a clear violation of The Glass-Steagall Act, which was enacted on the heels of The Great Depression in 1933. This Act prevented banks with consumer deposits from engaging in risky investment banking activities. The Chairman of The Federal Reserve, Alan Greenspan, said and did nothing to prevent this merger from happening and The Federal Reserve itself gave them a one-year exemption for their merger. In 1999 Congress passed The Gramm-Leach-Bliley Act that overturned The Glass-Steagall Act and paved the way for future mergers. The Chairmen of both parent companies, John Reed and Sandy Weill, became co-CEOS and The Vice Chairman Robert Rubin would go on to make $126,000,000 for himself under Citigroup. It is clear that the parties involved in the Citigroup merger were operating under the moral philosophy of egoism. Egoism defines right or acceptable actions as those that maximize a particular person’s self-interest as defined by the individual. John Reed, Sandy Weill and Robert Rubin all acted in order to gain power and wealth for themselves; their actions were detrimental to the average consumer with deposits in their banks because the merger was risking their money in order for the individuals at the top to obtain monetary gains. They believed that they were doing right by themselves in this merger, by taking the opportunity that arose, and using business

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