Borrowed Time: Two Centuries of Booms, Busts, and Bailouts at Citi

by James Freeman, Vern McKinley Narrated by Fred Sanders

Overview

The alarming, untold story of Citigroup-one of the largest financial institutions in the world-from its founding in 1812 to its role in the 2008 financial crisis, and the many near-death experiences in between.

During the 2008 financial crisis, we were told that Citi was a victim of events beyond its control-the larger financial panic, unforeseen economic disruptions and a perfect storm of credit expansion and private greed. To save the economy and keep the bank afloat, the government provided huge infusions of cash through multiple bailouts that frustrated and angered the American public.

But, as Wall Street Journal writer James Freeman and financial expert Vern McKinley reveal, the 2008 crisis was just one of many disasters Citi has experienced since its founding more than two hundred years ago. In Borrowed Time they reveal Citi's disturbing history of instability and government support. It's a story that neither Citi nor Washington wants told.

Citi has long been tied to the federal government in a relationship that has benefited both. From its earliest years, its well-connected leadership-most of its initial stockholders had owned stock in the Bank of the United States-took massive risks that led to crisis. But thanks to a rescue by private investors, including John Jacob Astor, the bank survived throughout the nineteenth century.

This is just the tip of the iceberg. The scale of the financial panic of 2008 was hardly unprecedented. As Borrowed Time shows, crisis and outright disasters have been surprisingly common during the century of government-protected banking-especially at Citi.

Editorial Reviews

Publishers Weekly

06/25/2018
There’s a lot more to the story of the bank that was “too big to fail” than the 2008 crisis—and it doesn’t look good, insist Freeman, assistant editor of the Wall Street Journal editorial page, and McKinley, an attorney. Citigroup, the beneficiary of a “bailout culture” formed by an unhealthy relationship between Wall Street and Washington, secured aid by portraying itself as a helpless victim. The company’s long history, however, tells a different story: of a giant that has frequently floundered, yet has not just survived but, thanks to government intervention, profited off financial panics. The authors relate the long, fraught history of Citigroup since its early-19th-century origins, describing its incompetent early management, its pre-Depression CEO “Sunshine Charlie” Mitchell (who blithely found “no cause for alarm” regarding the stock market in 1928), and bailout-era CEO Vikram Pandit, who pleaded with federal officials, “Don’t give up on us.” Citi received $45 billion from the U.S. government, the most of any bank, but, Freeman and McKinley assert, its claim of being subject to circumstances beyond its control should have been received far more skeptically. This is the first book to focus on Citigroup’s handling of the 2008 financial crisis, and readers looking for new insight on the Great Recession will find much here. (Aug.)

From the Publisher

This book convincingly shows—through fascinating investigative reporting of 200 years of history—how  connections between government and Citi grew closer over time and became the ultimate cause of bailouts, detested by so many Americans, and even of the market conditions that led to the financial crisis.” — John Taylor, Mary and Robert Raymond Professor of Economics, Stanford University

“At the next banking crisis, Citi likely will be there, once again. Borrowed Time explains why.” — Bartly Dzivi, Special Counsel, Financial Crisis Inquiry Commission

“If you think the 200-year history of an American bank sounds dry, think again. Borrowed Time is a highly entertaining and informative run through a long list of the crises faced by Citibank.” — The Financial Times

The Financial Times

If you think the 200-year history of an American bank sounds dry, think again. Borrowed Time is a highly entertaining and informative run through a long list of the crises faced by Citibank.

Bartly Dzivi

At the next banking crisis, Citi likely will be there, once again. Borrowed Time explains why.

John Taylor

This book convincingly shows—through fascinating investigative reporting of 200 years of history—how  connections between government and Citi grew closer over time and became the ultimate cause of bailouts, detested by so many Americans, and even of the market conditions that led to the financial crisis.

Charles Calomiris

This engagingly written book stands Wall Street conventional wisdom on its head. Rather than accepting the view that banks are inherently in need of regular government control and bailouts, the authors use a deep dive into the history of Citibank to argue the opposite. When Citi was managed under the discipline of market competition, before its behavior was distorted by government protection and control, it withstood severe macroeconomic shocks, and was a source of assistance for other banks and the government. With a series of examples tracing the highs and lows of risk management over two centuries, the authors show that Citi’s risk choices (including deciding who ran the bank) were often heavily and unfavorably influenced by government control and support.

Kirkus Reviews

2018-06-18
A relentless exposé of the 200-year-old banking enterprise.During the early decades of the United States, after the colonies broke away from the British, the Founding Fathers engaged in lengthy, heated debates about the wisdom of creating a central bank under the aegis of the government. One of the entities that eventually emerged from these debates was what we call Citibank or Citigroup. Freeman, assistant editor of the Wall Street Journal's editorial page, who used to be investor advocate at the Securities and Exchange Commission, and McKinley, a consultant and attorney, maintain that despite its facade of solidity for two centuries, the bank has experienced repeated massive failures only to be rescued each time by wealthy private investors and/or the federal government. Before the phrase "too big to fail" became all-too-familiar in the 2000s, it described a widespread perception within the circles of the wealthy during the 19th and 20th centuries. Moving the story along, the authors salt the narrative with colorful characters who have controlled the institution from top to bottom—e.g., Moses Taylor during the Civil War era, Frank Vanderlip before and during World War I, Charles Mitchell during the Great Depression, Walter Wriston (1967-1984), and a cast of miscreants who contributed to the 2008 financial crash. Throughout the book, the authors also profile members of Congress, Federal Reserve Bank governors, and others outside Citi. Unfortunately for millions of investors, even the smart, well-intentioned regulators turned out to be ineffectual at ameliorating the widespread chaos caused by Citi and similar financial institutions. The boom-and-bust cycles chronicled by Freeman and McKinley accumulate in chapter after chapter until it seems that Citi executives and government regulators were little more than a procession of villains. Readers may feel hard-pressed to identify even one hero in the book.An exposé that might lead readers to stash their savings under a mattress.

Product Details

BN ID:	2940170413119
Publisher:	HarperCollins Publishers
Publication date:	08/07/2018
Edition description:	Unabridged

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