Citibank is an extremely low grade institution that both takes advantage of its customers and engaged in mortgage fraud during the housing bubble. Amazingly authors think nothing of holding them up as a paragon of efficiency with their Six Sigma quality programs.
Citibank, the ultra corrupt bank that had to be bailed out by taxpayers (which instead should have been placed into receivership), was all over the press prior to the financial crisis discussing the great strides it has made in implementing Six Sigma quality improvement. The quote below is typical of many articles written about Citibank and Six Sigma.
To address the problem, Podkowsky’s department implemented the Asset-Based Finance Cross-Functional Performance Challenge. A crucial part of the Asset-Based Finance team’s progress was vesting the authority to “sign off” on loan availment to his team. By reducing the number of “hand-offs” necessary to make funds available, the cycle time for this segment of the availment process was reduced by an average of 75 percent, from two hours to 30 minutes.”We’ve completed that project, and it’s been very successful with reduced cycle time,” notes Podkowsky. “Instead of getting complaints from customers, we’re now getting compliments.”
- http://www.qualitydigest.com/dec99/html/citibank.html
That worked out great. However, while the loans and mortgages may have been made faster, the verification of the process fell off of a cliff. Citibank seems to have forgotten that their most important value add to the process is to actually verify information. Citibank did not care because they simply resell mortgages to Goldman Sachs, who also does not care, because they just resold the mortgages to stockholders.
Six Sigma
Beyond being poorly implemented, six sigma is a bad idea all the way around which is based upon a very weak proposal regarding statistics. The philosophy is built around the idea that a specific error rate can be applied to any situation, and the philosophy ends up being used as an excuse to do anything. See the post below.
http://www.supplychainconcepts.org/2010/02/six-sigma-is-for-losers-seven-sigma-sweeping-the-nation/
Conclusion
Citibank is not an example of anything positive in the US economy and is a horrendously corrupt firm with no standards that happens to have a government granted franchise. The idea that Citibank has quality standards means that either the programs are completely useless, or Citibank is lying about what they did. The idea that a Citibank adheres to quality principles is undermined by the fact that they dropped their mortgage standards through the floor when it was profitable to do so. There is no need to have any lofty goals, as Citibank will not meet them. It would be nice if Citibank forgot about esoteric quality programs and just was able to not steal from its customers, and not write fraudulent loans. Is there a Six Sigma program for that or is that just common sense and having a moral compass.
Interesting Blog. I have to disagree with you about Capitalism. It is fare from neutral. Check out Michael Parenti’s books and talks or even Das Kapital. Many are under the false impression that Marx wrote about Communism but no, he wrote about Capitalism.
Just so you know, my position is not that capitalism is the wrong system, only that it requires extensive checks and balances or it becomes rife with monopolies and abuse, such as what we are seeing right now with BP and what we saw with extensive financial industry fraud. My position is also that many large companies are completely lying about their value add to society. BP’s value add is very small, and primarily based upon cheating taxpayers out of their mineral rights. Banks pretend they are private firms, when in fact their power flows from the fractional reserve system….which is entirely government based. This blog describes how arguments about capitalism are mostly misleading and futile, and that there can be good forms or bad forms. The US happens to practice one particular modality of capitalism that is unsustainable and is leading us to becoming a third world nation.
http://counterecon.com/2008/01/11/unquestioned-capitalism/
Please read it, because many people visit this blog and quickly assume that it’s view is that I want to change economic systems. This is not the case. The blog is proposing a more sustainable and less abusive form of capitalism, and that many things which we are told are capitalist or “free market” are in fact really just monopolies or socialism for the rich. Another proposal of the blog is that the vast majority of Americans are unable to either think critically, or to break through years of propaganda that they are free and live in some type of “democracy.”