December 1991 — “Memories are short, when a salesman is in hot pursuit.” So wrote a prescient Henry Mueller in the 1970s, when he was Citibank’s chief credit officer. His comment was recalled in Institutional Investor’s December 1991 cover story, “The Collapse of Citibank’s Credit Culture.” At the time the story was written, Citi was sitting on $7.8 billion “and counting” of nonperforming commercial loans, according to the article, which laid the blame for Citi’s woes at the feet of chairman John Reed, portraying him as “a troubled intellectual unwilling to impose himself on the institution.” On the brink of collapse, Citi — and Reed — were saved when Saudi Prince Alwaleed bin-Talal invested $590 million for a nearly 15 percent stake in the bank after J.P. Morgan declined to acquire it. Citi went on to merge with Sandy Weill’s Travelers’ Corp. in 1998, creating the perfect model of the modern financial conglomerate before once more losing track of Mueller’s adage. After writing off more than $17 billion in subprime-related securities in 2007, Citi was rescued once again by capital injections from overseas investors — sovereign wealth funds in Abu Dhabi and Singapore — as well as by Alwaleed and Weill.
