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I’m struggling a little on the details. Citi paid 900mm to lenders of which only 175mm went to Brigade. Things I’d like to know: -Who got the other amount and

I’m struggling a little on the details. Citi paid 900mm to lenders of which only 175mm went to Brigade. Things I’d like to know: -Who got the other amount and Did they return it? -The 900mm mistake is actually several mistakes not just 1 simple typo? How is that possible. As for wrapping my head around this. It’s a total debt of 1.5bn. Let’s drop some zeros and see how we think of it. Let’s say 15k credit card with AMEX. I owe 150 in interest but instead I send 1,500. Would they refund the mistake? Let’s go ahead and follow the headline and say I paid 9k of my 15k balance. Would they refund the mistake? (Honest question) This scenario is at the consumer level and zeros matter but I see sloppiness somewhere in Citi and their dealing with money when it’s specifically what they are trusted to do. As for the “loss”... Let’s consider how this should likely play. The loss here of Citi isn’t materially that they lose the money. It would get rolled into a loan to Revlon at the same rates. Revlon still has to pay it, just Citi has to float the time. The material loss to Citi should be near zero - they could even sell the loan at a slight loss to get it off their plate. Oops we sent 900mm to you... Now we are the loan holder. They end up with money tied up and should Revlon go to bankruptcy then they will realize this loss. Stats -Citi has a 100bn market cap. -They have currently 685bn in loans outstanding to borrowers. -currently holding 26.4bn for credit losses for pandemic. https://www.citigroup.com/citi/news/2020/second-quarter-2020-earnings.htm https://www.citigroup.com/citi/news/2020/second-quarter-2020... The only news I really see here is how Citi ops let an unexpected amount get sent without proper authorizations.

tinco 6y ago
Maybe it's like that Hawaii mistake, the "pay installments" button was right next to the "repay full loan" button. Also, that it now happened to 900M means it has probably happened before to smaller loans before, I bet there's some sort of law about that.
curryst 6y ago
Some of the earlier articles about this mentioned that Revlon is struggling and that the creditors were worried about getting paid back for the loan. This seems like a really bad loan to service.
polack 6y ago
> The 900mm mistake is actually several mistakes not just 1 simple typo? How is that possible. They probably repaid all lenders that are customers of Citibank and that took part in the $1.8 billion loan to Revlon. Maybe one button to "close" the loan? :)
PascLeRasc 6y ago
Let's take your example and just call it a $150k small business loan instead, since most small businesses will just be making the minimum interest payment, not really trying to pay it off quickly, where I could see a regular person throwing money at half their credit card debt after selling their car or something.
Estroikas 6y ago
People need to get out of the idea that just because something or someone has extra 0s in their account, that they should be more liable for things. Mistakes can happen at all levels, if society intends to build fair and equitable environments, it needs to stop looking at group A or group B differently. Don't forget that if there is an undue burden to be 100% all of the time, it will be priced into the offering at some point, leading the end user to foot the bill.
- alasdair_ 6y ago
  > People need to get out of the idea that just because something or someone has extra 0s in their account, that they should be more liable for things. Perhaps. The thing to note is that if someone loses a lot of money, they are treated far better in terms of societal resouces (courts, judges, police time etc.) than those who lose small amounts, even though if the system was fair all losses would be treated equally. For example: if you tell the police you’ve had $500 in damage done to your car, they may get as far as filing a report but nothing else will usually happen. If a company has $500 million in property damage done, there will be an enormous investigation and the DA will be actively involved etc. In other words, group A and group B are already looked at differently.
LatteLazy 6y ago
If you're employer sent you 10x your monthly salary, you would be expected to return 9 of those x's. Not just "great, don't pay me again for 9 more months, let's hope I don't quit before then lol".
- koboll 6y ago
  Right, but that's because I'm not owed 10x my monthly salary.
  - LatteLazy 6y ago
    Yes, you are, just not yet, exactly like revlon/brigade.
    - salamander014 6y ago
      No, you aren't. Unless he was on contract for the year, the salary for the rest of the year won't be paid in full if the employee leaves or is fired, for example. A loan is the opposite.
      - karpierz 6y ago
        You may not be required to pay the full loan if your company goes bankrupt. A loan is a series of scheduled payments which are likely but not guaranteed to happen.
      - LatteLazy 6y ago
        Sorry to be blunt but... you're sort of wrong twice: * EVEN IF he has a contract for the year, there would still be 1001 things that might happen between then and now that mean he isn't actually due payment (company bankruptcy, his death etc). That's why he cannot keep the money. * And that is exactly the same position that Revlon\Brigade are in: Brigade are no more SURE they will get paid or that Revlon will even be legally required to pay them...
        6y ago
avianlyric 6y ago
I think this is a bit of a jump > Let’s consider how this should likely play. The loss here of Citi isn’t materially that they lose the money. It would get rolled into a loan to Revlon at the same rates. Revlon still has to pay it, just Citi has to float the time. Neither Citi or Revlon have agreed to lend/borrow money from each other. Citi isn’t party to any of the loans Revlon has taken out (other than as a financial administrator). So why would Citi suddenly just taken on this loan to Revlon? It would like if your bank accidentally paid off your credit card (we’ll ignore how that might actually happen). You wouldn’t suddenly have a loan agreement with your bank. How would that work? Neither party agreed any terms. What would the interest rate be, repayment period etc? Your bank won’t even know what agreement you had with your credit card provider, so they would need to rely on you being honest about what you owed and the interest to pay. And no they couldn’t just ask your credit card provider, that would be a massive breach of privacy. That’s ignoring the fact there’s no guarantee that your bank can support such a loan. Even if they have the cash, they might not be able to continue meeting their regulatory capital and liquidity requirements. Especially as it would be a high risk loan (both in your hypothetical scenario and in Citi’s real scenario). In short there are many reasons why you can’t just go “oh it’s your loan and your problem now, good luck with the hot potato”.
vxNsr 6y ago
> I owe 150 in interest but instead I send 1,500. Would they refund the mistake? Let’s go ahead and follow the headline and say I paid 9k of my 15k balance. Would they refund the mistake? (Honest question) This scenario is at the consumer level and zeros matter but I see sloppiness somewhere in Citi and their dealing with money when it’s specifically what they are trusted to do. As for the “loss”... It's different for a very important reason. Revlon didn't authorize the money to be sent. This is like you telling your bank to send a check to AMEX for $150 and they put down $1500 on the check, it comes out of their funds, not yours, and then when AMEX cashes the check that's when the mistake is discovered. The important point is that Citi made the mistake not Revlon. My guess is that if Citi loses the suit they'll end up being the lender for the part that Brigade loaned.
- manquer 6y ago
  The problem is citi is the guarantor of the revlon loan . It is more like your dad paying your credit bill in full instead of the minimum and now saying he wants the money back
  - andreareina 6y ago
    I'm not finding anything that says Citibank is a guarantor, only administrator, whatever that means. If Citibank did guarantee the loan, then Brigade has no need to fear Revlon's bankruptcy right, since they'd be able to collect from Citi. Unless they're worried that Citi is going to go under, which is another kettle of fish.
    - manquer 6y ago
      It is cash flow . Everyone is in a crunch , if revlon default on this loan, and then go under , getting money of anyone will take a long while . Brigade gave the loan pre pandemic , under very different conditions , today they are probably happy with the money back. It could also be that They may other liabilities of their own, where this liquidity could be useful. Under normal market you want as little of money with you, money in the bank does not earn much , it is doubly important if you are in the business of making investments . However in poor confidence conditions you want as much liquidity as you can have which is why everyone starts buying treasuries when markets go south .
signal11 6y ago
> Let’s say 15k credit card with AMEX. I owe 150 in interest but instead I send 1,500. Would they refund the mistake? Yes if you had exceeded your minimum payment: https://www.fool.com/the-ascent/credit-cards/articles/overpay-credit-card-bill/ https://www.fool.com/the-ascent/credit-cards/articles/overpa...
- rcar 6y ago
  Overpayment in credit card terms is typically when you pay more than the full balance, not more than the minimum payment. Getting a refund under the given circumstances (1500 on a 15k bill with a 150 min pay) might be possible from some lenders, but would almost certainly involve a lot of time on the phone with customer service reps.

tinco 6y ago

Maybe it's like that Hawaii mistake, the "pay installments" button was right next to the "repay full loan" button. Also, that it now happened to 900M means it has probably happened before to smaller loans before, I bet there's some sort of law about that.

curryst 6y ago

Some of the earlier articles about this mentioned that Revlon is struggling and that the creditors were worried about getting paid back for the loan. This seems like a really bad loan to service.

polack 6y ago

> The 900mm mistake is actually several mistakes not just 1 simple typo? How is that possible. They probably repaid all lenders that are customers of Citibank and that took part in the $1.8 billion loan to Revlon. Maybe one button to "close" the loan? :)

PascLeRasc 6y ago

Let's take your example and just call it a $150k small business loan instead, since most small businesses will just be making the minimum interest payment, not really trying to pay it off quickly, where I could see a regular person throwing money at half their credit card debt after selling their car or something.

Estroikas 6y ago

People need to get out of the idea that just because something or someone has extra 0s in their account, that they should be more liable for things. Mistakes can happen at all levels, if society intends to build fair and equitable environments, it needs to stop looking at group A or group B differently. Don't forget that if there is an undue burden to be 100% all of the time, it will be priced into the offering at some point, leading the end user to foot the bill.

alasdair_ 6y ago
> People need to get out of the idea that just because something or someone has extra 0s in their account, that they should be more liable for things. Perhaps. The thing to note is that if someone loses a lot of money, they are treated far better in terms of societal resouces (courts, judges, police time etc.) than those who lose small amounts, even though if the system was fair all losses would be treated equally. For example: if you tell the police you’ve had $500 in damage done to your car, they may get as far as filing a report but nothing else will usually happen. If a company has $500 million in property damage done, there will be an enormous investigation and the DA will be actively involved etc. In other words, group A and group B are already looked at differently.

LatteLazy 6y ago

If you're employer sent you 10x your monthly salary, you would be expected to return 9 of those x's. Not just "great, don't pay me again for 9 more months, let's hope I don't quit before then lol".

koboll 6y ago
Right, but that's because I'm not owed 10x my monthly salary.
- LatteLazy 6y ago
  Yes, you are, just not yet, exactly like revlon/brigade.
  - salamander014 6y ago
    No, you aren't. Unless he was on contract for the year, the salary for the rest of the year won't be paid in full if the employee leaves or is fired, for example. A loan is the opposite.
    - karpierz 6y ago
      You may not be required to pay the full loan if your company goes bankrupt. A loan is a series of scheduled payments which are likely but not guaranteed to happen.
    - LatteLazy 6y ago
      Sorry to be blunt but... you're sort of wrong twice: * EVEN IF he has a contract for the year, there would still be 1001 things that might happen between then and now that mean he isn't actually due payment (company bankruptcy, his death etc). That's why he cannot keep the money. * And that is exactly the same position that Revlon\Brigade are in: Brigade are no more SURE they will get paid or that Revlon will even be legally required to pay them...
      - 6y ago

avianlyric 6y ago

I think this is a bit of a jump > Let’s consider how this should likely play. The loss here of Citi isn’t materially that they lose the money. It would get rolled into a loan to Revlon at the same rates. Revlon still has to pay it, just Citi has to float the time. Neither Citi or Revlon have agreed to lend/borrow money from each other. Citi isn’t party to any of the loans Revlon has taken out (other than as a financial administrator). So why would Citi suddenly just taken on this loan to Revlon? It would like if your bank accidentally paid off your credit card (we’ll ignore how that might actually happen). You wouldn’t suddenly have a loan agreement with your bank. How would that work? Neither party agreed any terms. What would the interest rate be, repayment period etc? Your bank won’t even know what agreement you had with your credit card provider, so they would need to rely on you being honest about what you owed and the interest to pay. And no they couldn’t just ask your credit card provider, that would be a massive breach of privacy. That’s ignoring the fact there’s no guarantee that your bank can support such a loan. Even if they have the cash, they might not be able to continue meeting their regulatory capital and liquidity requirements. Especially as it would be a high risk loan (both in your hypothetical scenario and in Citi’s real scenario). In short there are many reasons why you can’t just go “oh it’s your loan and your problem now, good luck with the hot potato”.

vxNsr 6y ago

> I owe 150 in interest but instead I send 1,500. Would they refund the mistake? Let’s go ahead and follow the headline and say I paid 9k of my 15k balance. Would they refund the mistake? (Honest question) This scenario is at the consumer level and zeros matter but I see sloppiness somewhere in Citi and their dealing with money when it’s specifically what they are trusted to do. As for the “loss”... It's different for a very important reason. Revlon didn't authorize the money to be sent. This is like you telling your bank to send a check to AMEX for $150 and they put down $1500 on the check, it comes out of their funds, not yours, and then when AMEX cashes the check that's when the mistake is discovered. The important point is that Citi made the mistake not Revlon. My guess is that if Citi loses the suit they'll end up being the lender for the part that Brigade loaned.

manquer 6y ago
The problem is citi is the guarantor of the revlon loan . It is more like your dad paying your credit bill in full instead of the minimum and now saying he wants the money back
- andreareina 6y ago
  I'm not finding anything that says Citibank is a guarantor, only administrator, whatever that means. If Citibank did guarantee the loan, then Brigade has no need to fear Revlon's bankruptcy right, since they'd be able to collect from Citi. Unless they're worried that Citi is going to go under, which is another kettle of fish.
  - manquer 6y ago
    It is cash flow . Everyone is in a crunch , if revlon default on this loan, and then go under , getting money of anyone will take a long while . Brigade gave the loan pre pandemic , under very different conditions , today they are probably happy with the money back. It could also be that They may other liabilities of their own, where this liquidity could be useful. Under normal market you want as little of money with you, money in the bank does not earn much , it is doubly important if you are in the business of making investments . However in poor confidence conditions you want as much liquidity as you can have which is why everyone starts buying treasuries when markets go south .

signal11 6y ago

> Let’s say 15k credit card with AMEX. I owe 150 in interest but instead I send 1,500. Would they refund the mistake? Yes if you had exceeded your minimum payment: https://www.fool.com/the-ascent/credit-cards/articles/overpay-credit-card-bill/ https://www.fool.com/the-ascent/credit-cards/articles/overpa...

rcar 6y ago
Overpayment in credit card terms is typically when you pay more than the full balance, not more than the minimum payment. Getting a refund under the given circumstances (1500 on a 15k bill with a 150 min pay) might be possible from some lenders, but would almost certainly involve a lot of time on the phone with customer service reps.