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Citibank, Credit Cards, and the Local Politics of National Consumer Finance, 1968–1991

Abstract

Within the postwar financial regulatory system, state-level regulations—particularly interest rate limits—constrained the profitability of bank credit card plans. But differences in law among the states allowed motivated institutions to circumvent local laws using these mobile financial instruments. Eventually, banks themselves became mobile, placing irresistible pressure on states to eliminate local restrictions on consumer finance. The critical moment came when Citibank relocated its credit card business to Sioux Falls, South Dakota, in 1981. By examining this move in its longer context, this essay provides a new perspective on the rise of consumer finance in the late twentieth century, one that emphasizes strategic manipulation of local law by firms pursuing a national customer base.

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References
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Caleb Nelson , “Preemption,Virginia Law Review 86 (Mar. 2000): 225305

Randall Kroszner and Philip Strahan , “What Drives Deregulation? Economics and Politics of the Relaxation of Bank Branching Restrictions,Quarterly Journal of Economics 114 (Nov. 1999): 1460–62

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Business History Review
  • ISSN: 0007-6805
  • EISSN: 2044-768X
  • URL: /core/journals/business-history-review
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