Lessons Learned: What Citibank Slipup May Mean for the Rest of Us

I awoke this morning to find out that I may be well advised to sell off some of my Citibank shares (grant it I don't own Citibank in any of my real portfolios) on the news that their revenue was likely to fall significantly in the 3rd quarter. The reason for the fall? The sub-prime mortgage market again.

While I don't wish any company any ill will, I believe Citibank's situation continues to accentuate 3 things.

1. Companies wishing to take a high risk, whether a major corporation, such as Citibank, or a small ma and pop shop down the street, must understand what their exit strategy is.
2. Companies need to understand where their stable operating platform is and take moves to maintain stability in order to limit dramatic drops in revenue.
3. When you develop an unethical product (pardon the soapbox here) eventually it will catch up to you and hurt your business in at least the short term, if not also the long term.

The attempts of sub-prime lending companies to put individuals into homes that they should have been smart enough (both the lenders and the buyers) to know that they could not afford, shows a particularly distasteful part of American business understanding. Americans today simply do not take the time to understand issues prior to making decisions and they further allow their televisions to cloud common sense. As business owners, employees, and consumers, it is essential that we are diligent in our pursuit of only ethical products and shun the unethical because it always catches up to us.