Citicorp

2008-08-18: Home Equity Frenzy Was a Bank Ad Come True
“Live Richly.”

That catchy slogan, dreamed up by the Fallon Worldwide advertising agency, was pitched in 1999 to executives at Citicorp who were looking for a way to lure Americans to financial products like home equity loans. But some in the room did not like it. They worried the phrase would encourage people to live exorbitantly, says Stephen A. Cone, a top Citi marketer at the time.

Still, “Live Richly” won out. The advertising campaign, which cost some $1 billion from 2001 to 2006, urged people to lighten up about money and helped persuade hundreds of thousands of Citi customers to take out home equity loans — that is, to borrow against their homes. As one of the ads proclaimed: “There’s got to be at least $25,000 hidden in your house. We can help you find it.”

Many experts say the ads encouraged Americans to go deeper into debt.

Live Richly Showcase

Citi History 101:
2001-03-19: Is Citi Bleeding Its Weakest Borrowers?
With its $30 billion purchase of Associates First Capital Corp. last year, Citigroup cemented its position as the country's largest subprime lender--catering to those who don't qualify for normal bank loans.

CitiFinancial's Web site advertises a debt-consolidation loan featuring a customer endorsement--"I now can afford so much more than I thought possible," says Spencer L. of Worcester, Mass. A sample worksheet shows that Spencer can take out a $20,000 home-equity loan to consolidate his bills, pay off credit cards, and reap $310.57 in "monthly savings." The fine print notes that Spencer will pay that back in 120 months at a 13.49% interest rate. But nowhere on the Web site does it say that it would cost $36,500 to pay off starting debts of $17,000.

Citi said it's proud of the progress it has made and that it has the best practices in the industry. Nonetheless, debt-consolidation loans rarely save consumers money in the long run. True, they are usually tax-savers, but such loans mostly lower monthly payments by heaping on long-term debt. And many subprime borrowers quickly ramp up credit-card debt--starting the cycle all over again.

“Live Richly.”