Business Basics & Financial Crisis

We are hearing & reading news of economic slowdown & financial crisis which has hit the US economy badly. Latest in the row is Citi Group's near future possible fall. Citi Group management is thinking of expelling it's current CEO Mr.Vikram Pandit or sell 50% or the entire business or take help from US government (in the form of a bail out package). As far as Citi Group is concerned it's too big to fall & it's bankruptcy will affect the world economy drastically for sure. Hence possibly US Government may bail out Citi Group at the cost of it's own terms & conditions. US already has witnessed the fall of Lehman Brothers. Further US Govt. bailed out AIG & other financial institutions & has already announced the package of $700 billion to its financial corporations.
But the Big Question is would this situation have been avoided & what can be done to avoid such situation in future? Citibank & almost all financial institutions had taken the growth/profit for granted. But let’s not forget Continuous Improvement (CI) is the key to success in all sectors & this CI means self assessment, learning from previous mistakes, fool proof plans for future growth & backup/alternative solutions in crisis situation. Today I was reading a news of the arrest of a co-operative bank’s directors which fallen due to improper & hap hazardous loans being given to one specific director’s family. This is the case of corrupt governance at smaller level, but when the similar situation occurred in US at national level it is definitely not the corrupt governance but that typical attitude of extravagant spending.
When due to political pressure US Financial institutions gave loans to almost everyone without checking their repayment power nobody would have thought of such economic disaster. We were reading about Citi Group’s losses for last 2 years & when Citi would have joined this “you ask for loan we will give you” spree it might have acted as fuel in already burning Citi. When Mr. Pandit took charge as CEO of Citi Group last year he had a Herculean task in front of him. But instead of providing remedy to internal problems Mr. Pandit decided to buy Wachovia Bank for $2.2 billion. Such a decision is definitely suicidal especially when you yourself are in loss, when financial market is tumbling & when cost cutting is the mantra everywhere. And now today Citi Group needs bail out package to survive. We must remember that unless until we are capable enough to stand on our own we can’t take somebody else’s burden on our shoulder. Recently Citi Group decided to slash 52000 jobs worldwide (which is almost 20% of its total staff) as remedial major to tackle the crisis. When you slash 1/5th of your workforce then there is something terribly wrong.
Citi Group might come out of this crisis but the lesson to learn from all this crisis situation is to let’s make realistic assumptions about everything we do & not to take anything for granted.