Evidently, there is overall economic challenges both locally and globally. To view this fact well is the aspect of high rate Loan defaults especially in the subprime market that has been in the rise throughout the year 2007. This is because as interest rates on adjustable-rate mortgages reset, some borrowers becomes overburdened and can not pay the resultant high monthly payments (Michael, 2007).Thus, the rising interest rates raises the cost of borrowing for all lenders, which blocks banking firms earning high revenues since housing loans have traditionally been a strong source of revenue for banking firms in US and world wide. Therefore, the management would see sense in reducing cost of lending to the clients to attract large pool of clients and benefit in the long run (Barry and Joel, 2003).
In relation to the U.S. Operations, should be formulated to have segments of U.S. retail banking, credit cards, and commercial lending segments. This will not only strengthen Citigroup business operation but also merge the funds to over $40b in hedge fund and private equity assets, which have the potential for huge growth. Thus, the combined unit should fetch the low end of industry multiples.