Citi Looks Too Accident-Prone To Make It to 300

Agenda-Setting Financial Insight.
June 11 2012 12:01 PM

Citi Looks Too Accident-Prone To Make It to 300

Citi’s second century has been marred by too many near-death experiences to assure it makes it to 300 intact.

Photo by ROSLAN RAHMAN/AFP/Getty Images

Happy 200th birthday Citigroup (C.N) – shame you are unlikely to make it to 300. At the very least, it’s hard to envision the accident-prone New York bank will make it to 2112. Founded in 1812 as the City Bank of New York, Citi’s first century was more successful than the second. By 1912 Citi was the largest U.S. bank with worldwide operations, a top-three underwriting business and one near-death experience, in 1837. Since then it’s had several costly expansions and four more near-fatalities.

At its founding, Citi was a blue-chip operation; its first president, Samuel Osgood, had been in President George Washington’s cabinet, and its money came from former sponsors of the shuttered first Bank of the United States. The bank’s first century saw only one major hiccup, when it suspended specie payments on May 10, 1837, but was bailed out by John Jacob Astor, who installed his protégé Moses Taylor as director. Taylor ran the bank from 1856 to 1882 as the financial services arm of his iron, coal and railroad business empire.


James Stillman, who bought effective control of the bank in 1891, was as rich as Taylor, but with an international reach, having financed the 1876 coup that installed Porfirio Diaz as president of Mexico. By 1912 the bank was America’s largest, and was referred to in the “Money Trust” hearings of 1913 as one of its three leading issuing houses. Only foreign branches were lacking - illegal until the 1913 Federal Reserve Act.

But Citi’s second century has been marred by too many near-death experiences to assure it makes it to 300 intact. It flirted with insolvency in 1920 after Cuban sugar loans went sour. Then “Sunshine Charlie” Mitchell, its 1920’s-era president, was prosecuted for tax evasion; describing his role in the 1929 financial crisis, Senator Carter Glass said: “Mitchell more than any 50 men is responsible for this stock crash.”

During the Great Depression Citi’s stock par value was cut by 40 percent and it was bailed out by the Reconstruction Finance Corporation. Then, after another exuberant burst of international expansion in 1959-1980, during which chairman Walter Wriston claimed “countries don’t go bust” it was bailed out in 1991 by Prince Al-Waleed bin Talal. In 2008, losses in the U.S. mortgage market necessitated another rescue, this time by U.S. taxpayers.

Since 1912, Citi’s relative progress has been modest and its propensity for accidents high. That combination makes future longevity mostly unimaginable.

Read more at Reuters Breakingviews.


War Stories

The Right Target

Why Obama’s airstrikes against ISIS may be more effective than people expect.

The One National Holiday Republicans Hope You Forget

It’s Legal for Obama to Bomb Syria Because He Says It Is

I Stand With Emma Watson on Women’s Rights

Even though I know I’m going to get flak for it.

Should You Recline Your Seat? Two Economists Weigh In.


It Is Very, Very Stupid to Compare Hope Solo to Ray Rice

Or, why it is very, very stupid to compare Hope Solo to Ray Rice.

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Why Is This Mother in Prison for Helping Her Daughter Get an Abortion?

The Only Good Thing That Happened at Today’s Soul-Crushing U.N. Climate Talks

  News & Politics
Sept. 23 2014 6:40 PM Coalition of the Presentable Don’t believe the official version. Meet America’s real allies in the fight against ISIS.
Sept. 23 2014 2:08 PM Home Depot’s Former Lead Security Engineer Had a Legacy of Sabotage
Sept. 23 2014 1:57 PM Would a Second Sarkozy Presidency End Marriage Equality in France?
  Double X
The XX Factor
Sept. 23 2014 2:32 PM Politico Asks: Why Is Gabby Giffords So “Ruthless” on Gun Control?
  Slate Plus
Political Gabfest
Sept. 23 2014 3:04 PM Chicago Gabfest How to get your tickets before anyone else.
Brow Beat
Sept. 23 2014 4:45 PM Why Is Autumn the Only Season With Two Names?
Future Tense
Sept. 23 2014 5:36 PM This Climate Change Poem Moved World Leaders to Tears Today
  Health & Science
Sept. 23 2014 4:33 PM Who Deserves Those 4 Inches of Airplane Seat Space? An investigation into the economics of reclining.
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.