Among the first big moves made by Michael Corbat, who took over as CEO of Citigroup in October of 2012, was to announce that the massive international bank would be withdrawing from its consumer banking businesses in Pakistan, Romania, Turkey, Paraguay and Uruguay.  There are hints that this expense reduction move--which will save the corporation $1.1 billion annually and cut 11,000 jobs--is not going to end with just these 5 countries.  However, the financial institution does not intend this to be a general policy change on a global scale, but rather a specific and targeted cost reduction, so it can focus on those of 40 countries in which its consumer banking operations have the highest potential for growth.

International banking in general is a complex and difficult operation, and consumer banking can be particularly so.  The number and variability of regulatory requirements faced by financial institutions in disparate nations can be mind-boggling, and the infrastructure required to manage those regulations is not something that can be readily duplicated from nation to nation.

Of course, offloading such business is also not always easy.  To sell one’s consumer banking assets necessarily requires finding a buyer, and that’s harder done than said.  Companies such as HBSC Holdings, for instance, have sold many such businesses since 2011, but they have often had to settle for selling prices that were quite a bit less than what they would hope to have received.  Still, considering the fact that 2/3 of the countries in which Citigroup does consumer banking business bring in only about $2 billion a year each --tiny compared to the company’s nearly $2 trillion in assets--the benefit of such trimming down seems likely to outweigh the cost, even with low selling prices.

Even Citigroup’s U.S. consumer banking business is not very impressive compared to such American consumer giants as Chase, Bank of America and Wells Fargo.  Unfortunately, for tax reasons, Citigroup has to keep those taxable U.S. assets.  So for now, the practice of cutting the less profitable of the overseas consumer banking operations is a useful, and fairly painless, way to reduce costs.

Despite the fact that the general economic recovery has been extremely sluggish, and the fear of the Fiscal Cliff and then the Dept Crisis that have clouded many horizons, one bright vista in recent months has been the real estate market.  Not only is that a good thing in and of itself, but it's especially positive news considering that the real estate market was one of the first harbingers of the Great Recession.

The November S & P/Case Shiller composite index, which follows 20 metropolitan areas' housing prices, showed a rise of 0.6% on a seasonally adjusted basis, and an overall price increase of 5.5% year-over-year.  That's the biggest gain since August 2006.  What's mpore, November marked the 10th month in a row that the overall prices in the index rose, which beats out the nine-month run in 2009-2010 when prices were boosted by the homeowner tax credit.

The most impressive rise on the index occurred in Phoenix, which saw a huge 22.8 percent yearly gain in prices, while the single downturner was New York City, which fell a rather mild 1.2% from the previous year.

While this hasn't had much impact on the other markets yet, it is at least a positive mark for an economy that has had far too few such occurrences, especially in real estate, for years.

In an interview on the Nightly Business Report, Raj Date, the Deputy Director of the Consumer Finance Protection Bureau (CFPB) detailed some new rules on what lenders must ensure in their potential mortgage recipients.  The rules demand that lenders make good faith efforts to ascertain from borrowers the following list of requirements:

That the borrower actually has the ability to repay the loan;

That the borrower has a job;

That the borrow has a certain minimum credit score;

That the borrower has demonstrated the ability to meet monthly payments that include the mortgage, property taxes, and other home expenses.

These requirements, according to Date, are an attempt to develop straightforward, sensible, and consistent criteria for granting mortgages, and are, as he points out, really a return to older, conservative notions of what one needs to be able to demonstrate in order to obtain a mortgage.  This is as opposed to the far-too-loose lending requirements that led to the mortgage crisis in the first place, when banks and speculators, with the encouragement of the federal government, allowed mortgages to individuals who would previously never have qualified.  That practice, combined with international markets buying up American mortgages on the notion that they were a very safe investment, led to overeager lending and the subsequent mortgage crisis.

Of course, following that crisis, mortgages have been hindered by the far-too-strict policies that arose as a consequence.  It was certainly understandable to reel in the enthusiasm after such disastrous effects, but the growth of the mortgage market and the economy as a whole has been slowed by the over-reluctance of lenders to allow mortgages, for fear of further bad debts and uncertain consequences.  Thus, this new set of rules was crafted to give explicit and clear requirements, so that lenders and borrowers can know what to expect, and can be reasonably sure that reckless lending and borrowing will significantly reduced.

Date admits that these are not perfect rules, and there will inevitably be some people who get mortgages who really shouldn’t, and some who would be able to handle one just fine who will have difficulty finding a willing lender.  He makes it clear that the CFPB does not consider this a completed quest, but an ongoing journey to get the best possible lending guidelines for stability and prosperity.  Nevertheless, he considers these rules a definite improvement over both of the previous mortgage situations, one that will hopefully bring more sanity and predictability to the mortgage market.

On Thursday, November 1st, 2012, I had the great pleasure of meeting the French Ambassador to the United States, Francois Delattre.  This meeting took place after a luncheon at the Conrad Hotel in Miami, where Ambassador Delattre gave a speech about France’s strategy for innovation and business, and how they are working to support and encourage technological and economic progress.  This luncheon was part of “French Week Miami,” an annual event that, for its fifth anniversary, was extended to last for a full month, and was hosted by the French American Chamber of Commerce Florida.

In addition to the Mayor of Miami, top executives from a number of prominent French-American companies were present to hear the ambassador speak.  They included representatives from Louis Vuitton, e-Medicis, Touax, and Van Cleef & Arpels, as well as a representative from the Principality of Monaco.  The luncheon and the speech were excellent and afterward I had the chance to speak with Ambassador Delattre privately about those areas where France and the U.S. are cooperating on innovation, as well as France’s initiatives in Latin America.

Ambassador Delattre has had a long career in diplomatic service for France, having joined the French Foreign Ministry in 1989.  His positions in the Western Hemisphere have included that of the Press and Communications Director at the French Embassy in Washington, D.C. from 1998 through 2002; he was also Consul General in New York City from 2004 to 2008 and the French Ambassador to Canada from 2008 until 2011, when he was appointed to his current post.

According to Ambassador Delattre, the French government is putting great effort into encouraging education and innovation, both at the level of international and national business, and also at the level of education.  France’s programs are scheduled on 3 to 5 year courses, promoting especially the areas of biotechnology, nanotechnology, research and development in general, and of course, the educational programs and institutions which produce experts in those fields, as well as all the businesses that make them profitable.  The French government is giving huge tax rebates to companies, both domestic and foreign, that are producing innovations.  Those rebates can be as large as 50% of a company’s entire R & D budget.

France is also developing and producing “innovation clusters,” where researchers in educational institutions, businesses and related organizations work with government encouragement and financial support to bring about the next generation of technological developments.  The French government has taken the impressive step of consolidating all of their bureaucracies that deal with international business into one body, the Invest in France agency, to reduce red tape and make it easier for companies from other nations to do business in France.

Such incentives and programs can be very attractive to many companies that take part in international commerce and are technology ground-breakers, both because of the potential tax and financial incentives, and also for the creative people and resources available in the Innovation Clusters.  Miami in particular is the hub for innovative American companies that do business with and in France, and France is eager to encourage them and others like them with these exciting programs.

In addition to their endeavors with the United States, France is eagerly pursuing closer business, education and technological ties to Latin America.  Brazil, for example, has surpassed Germany as the world leader in biotechnology, and France is eager to share in and contribute to that prosperity.  Also, France is making a point to avidly pursue industries with strong sustainability, in order to maintain a consistent economic strength far into the future.

The government of France is providing many advantages to those innovative technology companies that wish to do business with them.  Ambassador Delattre is happy to bring that news to America, to business leaders, to academics, and to those students who will follow in their footsteps.