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So by early 1980, with New York refusing to go along, Citibank set out on a search for new place to base its credit card division. Usury laws were still on the books in the vast majority of the states. In an effort to stimulate the local economy, South Dakota was in the midst of eliminating its usury laws. To preempt concerns from local banks about new competition, Citibank also promised to open only "a limited" bank. "All we want to do is use it to issue cards.'' For Mr. "To me, this wasn't a credit card deal, it was a jobs deal," he said. I was slowly bleeding to death." With bipartisan support and backing from South Dakota's banking association, Janklow proposed a special "emergency'' bill. "I was going to sleep at night thinking that we were the new financial center of America.'' But other states were quick to catch on.
And federal banking rules required that before banks could set up operations outside their home state, a formal invitation had to be issued by the legislature of the state they wanted to enter. "We'll put the facility in an inconvenient place for customers and we'll pay different interest rates," Mr. "Citibank actually drafted the legislation,'' he said. Delaware, which passed similar legislation the following year, would foil Mr. "By that time, we'd captured a lot, but we thought we were going to get them all.
In 1966, an incident dubbed "the Chicago debacle" unleashed an intense wave of public venom.
"The Chicago Debacle" It was just before Christmas when five million cards were dropped by a group of Midwestern banks scrambling to be the first to reach the untapped Chicago market of holiday shoppers.
But the concept of far-off banks soliciting the masses with open-ended lines of credit challenged the traditions of small-town lending. People were outraged by what some called usurious temptations, and bankers were flooded by massive defaults.» Graph: Market Share of Top 10 General-Purpose Credit Card Issuers View the effects of consolidation.In 1990, the top 10 general-purpose credit card issuers had a 56.5 percent share of the market.Local bankers had prevented any state legislature from ever extending such an invitation. "Literally we introduced it, and it passed our legislature in one day.'' The arrangement ultimately brought 3,000 high-paying jobs to South Dakota and a host of new suitors from banks across the country. Chase, Manufacturer's Hanover, Chemical -- they all went to Delaware. South Dakota would never become the next New York or Hong Kong, but Bill Janklow carved out a niche in credit card operations that remains one of the largest sources of jobs in the state."The tragedy to me is that if Delaware would have waited one year," he said, "we would have had 20,000 more jobs in this state today." The day Citibank first called will always remain bittersweet to Mr. "Four different messages in one day from four different directions," he added.