Citibank announced yesterday that it might take back its highly-publicized promise to abandon universal default. The promise drew praise when it was announced, and it also helped Citibank and other lenders fight off any new regulations. After all, if the industry would regulate itself, Congress wasn’t needed. This was just another example of the genius of the free market–better products will prevail, increasing consumer wealth. But it seems the market didn’t work so well.
