Citigroup, Inc. (NYSE: C) saw a 57% drop in its Q3 profit as reported yesterday, which unfortunately should not come as any surprise to long-term watchers of the financial services company. I continue to be amazed that current CEO Chuck Prince, who took over from the legendary Sandy Weil four years ago, has lasted this long with the up-and-down performance levels he led the company to in his tenure.

Peter wrote on this a few weeks back, and it's something I completely agree with. As a shareholder in this company, I'm calling for change. Wait, I did that already (years ago). Perhaps my luck will change after this summer's credit crunch sacked Citi in the gut.

Let's pour some more salt in the wound: after yesterday's quarterly meltdown, the financial services behemoth acknowledged that the risk management models it has in place to prevent the kind of nuttiness bestowed upon it by the subprime lending situation that's still underway failed the company.

HSBC Holdings (NYSE: HBC) is the latest financial company to drop out of the subprime lending game in the U.S. (and it is a game). HSBC, which is Europe's largest bank and has a large presence in the U.S., said that it would jettison 750 jobs from its Decision One Mortgage unit, take a hair under $1 billion in charges and write-downs, and completely exit the subprime market in the U.S. due to the business no longer being sustainable. Note to HSBC: duh!

In my view, the subprime mess was produced by the loan industry, from the top brass to the commission-based lenders who lined up ignorant citizens to borrow tons of money on foolish terms and with so little homework that "F" students would have cheered. Did shareholders of these companies complain when the lenders were raking in profits? Nope. Are they crying now that entire companies are going belly-up or are exiting the business while taking large losses? Sure they are.

In an inspiring moment of corporate-speak, HSBC Holdings group chief exec Michael Geoghegan stated that, "It's no longer sustainable and not the right place to allocate capital in the future." But it was obvious years ago that lending money and setting up short-term financing on top of a house made of cards was not the right place "to allocate capital." Billion-dollar lesson learned, HSBC.