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

The disturbing, untold story of one of the largest financial institutions in the world, Citigroup--one of the " too big to fail" banks--from its founding in 1812 to its role in the 2008 financial crisis, and the many disasters in between. During the 2008 financial crisis, Citi was presented as the victim of events beyond its control--the larger financial panic, unforeseen economic disruptions, and a perfect storm of credit expansion, private greed, and public incompetence. 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 financial experts James Freeman and 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 history of instability and government support. It's not a story that either Citi or Washington wants told. From its founding in 1812 and through much of its history the bank has been tied to the federal government--a relationship that has benefited both. Many of its initial stockholders had owned stock in the Bank of the United States, and its first president, Samuel Osgood, had been a member of the Continental Congress and America's first Postmaster General. From its earliest years, Citi took massive risks that led to crisis. But thanks to private investors, including John Jacob Astor, they survived throughout the nineteenth century. In the twentieth century, Senator Carter Glass blamed Citi CEO "Sunshine Charlie" Mitchell for the 1929 stock market crash, and the bank was actually in violation of the senator's signature achievement, the Glass-Steagall law, in the late 1990s until then U.S. Treasury Secretary Robert Rubin engineered the law's repeal. Rubin later became the chairman of the executive committee of Citigroup, helping to oversee the bank as it ramped up its increasing mortgage risks before the 2008 crash. The scale of the financial panic of 2008 was not, as the media and experts claim, unprecedented. As Borrowed Time shows, disasters have been relatively frequent during the century of government-protected banking--especially at Citi.

About the Author :
James Freeman has been the Wall Street Journal's principal writer of unsigned editorials on Wall Street banking and regulation since the crisis of 2008. Under his own byline, he has published extended interviews with many of the most consequential people in finance, from the founder of the world's largest hedge fund to the lead software developer of the Bitcoin project. He is a Fox News contributor and frequently appears on the Fox Business Network. He has also appeared on CNN, CNBC and MSNBC. Vern McKinley's clients include the U.S. Treasury, International Monetary Fund, and KfW (German Development Bank). He has advised governments in over 30 countries, many of which were experiencing financial crises at the time. Prior to his consulting career he worked for the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Resolution Trust Corporation and the Department of the Treasury's Office of Thrift Supervision. His career started with the FDIC in the midst of the banking crisis in Texas during the 1980s. McKinley is credited with correctly predicting in 1997 that the structure of Fannie Mae and Freddie Mac would one day lead to the meltdown of the two institutions. All opinions are his own.

Review :
"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 "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." - Charles Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia Business School "At the next banking crisis, Citi likely will be there, once again. Borrowed Time explains why." - Bartly Dzivi, Special Counsel, Financial Crisis Inquiry Commission "Forget about whether Citigroup was ever too big to fail, all I know is this incredible book was too good to ever put down! Bank on it! Talk about a wild financial ride, and all on our dime. Because if James Freeman and Vern McKinley are right, the ride isn't over, and neither are we! Read it with an open mind...and a closed wallet." - Neil Cavuto, Anchor and Sr. Vice President, Fox News and Fox Business "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