Five Dumbest Things on Wall Street: July 2

New Jack Citi

Barely a month ago, President Obama signed into law sweeping reforms that restrict credit card interest rates and fees. We guess nobody at the U.S. bank of Citigroup(C Quote) got the memo.

Citigroup, which is one-third owned by the U.S. government, sharply increased the interest rates on as many as 15 million co-branded credit cards, the Financial Times reported Wednesday, even as the Obama administration wages war on abusive lending practices. Holders of co-branded cards who failed to pay their balance in full at the end of the month saw their rates surge by an average 24% -- or nearly three percentage points -- between January and April, the FT said, citing a Credit Suisse(CS Quote) analysis.

Protecting consumers from pushy credit card companies has been a priority for Obama ever since his presidential campaign last year. Making Citi's rate increases all the more awkward is the fact that Obama's administration recently sent draft legislation to Congress to create a new agency to oversee consumer protection in the financial industry.

Can the good folks at Citi embarrass the president? Yes they can!

Citi, in a statement to the FT, said it "adjusted pricing and card terms for some customers as part of our regular account reviews."

Oh, please, there is nothing regular about Citigroup or any of its practices. Citi's credit card portfolio has experienced massive delinquencies and charge-offs, and it's only going to get worse as unemployment rises and the economy stays sour.

Granted, other banks like Bank of America(BAC Quote), American Express(AXP Quote), JPMorgan Chase(JPM Quote) and Capital One(COF Quote) are feeling the squeeze as more consumers have trouble paying their bills. But whether it's cranking up interest on credit cards or trying to raise base salaries to make up for lost bonuses, Citi is always in a class by itself, unable to get out of its own way.

And now after this latest mishap, quite hilariously, it is directly in the president's way.

Dumb-o-meter score: 95 -- Citigroup better beg for a presidential pardon.