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Citibank has been at the forefront of American banking since its fledgling years. Starting in 1812, despite war with England, Citi would begin and soon flourish. However, it can be lonely at the top. With great presence in American banking, the ebb and flow of the American economy can often turn to Citi for better or for worse. Whether it was the Panic of 1837, the 1929 Stock Market Crash, or the most recent subprime mortgage crisis, Citibank is often in the mix for the worst of times, but has been there for the best of times as well.
From New York to National to Overseas
The history of Citibank can be traced back all of the way to 1812. Then known as the City Bank of New York, it was first run by a former patriot the American Revolution, Colonel Samuel Osgood. Osgood might be more famously known as first United States Postmaster General, but the former officer of both The Battle of Lexington and Concord and the Siege of Boston would spend the last year of his life as the president of the City Bank of New York.
Following the Panic of 1837, a financial crisis in the early history of the American economy that led to a large market correction, the City Bank of New York's ownership would be transferred to John Jacob Astor, one of the most powerful men in the country. He would name Moses Taylor is head. Taylor is considered to this day to be one of the wealthiest men in the country at the time, making his fortune via the boom of the railroad industry after the American Revolution and the 1837 market correction and would turn his business ventures into an empire as the president of City Bank of New York.
By 1863, City Bank of New York would join the newly developed National Banking System. It would change its name to the National City Bank of New York and by 1868, the bank had become one of the largest banks in the country. It would also develop the very first foreign department in a national bank in the country which opened the doors to overseas markets. This would lead to the first overseas bank being opened in Buenos Aires, Argentina in 1914.
The Rise of Citibank and Innovation
Charles Mitchell, an infamous character in the history of the United States and its economy, would be named President of National City Bank of New York in 1921. "Sunshine Charley", as he was known, would be indicted in 1933 on tax evasion charges. While he was found not guilty, the U.S. Attorney's office would investigate Mitchell's role in the stock market crash of 1929. However, under his guidance, National City Bank of New York would grow into the largest security issuing entity in the world. By 1930, the bank would open 100 branches in 23 different countries.
By 1976, the First National City Bank as it was now known, had undergone several mergers and as a result, would be renamed Citibank, N.A. Up to this change, the bank had already been developing ways of lending, including the U.S. dollar certificates of deposits, leasing, and the credit card sector. In 1967 they would introduce the "Everything Card" and soon after develop Automated banking card, aka the Citicard. This was the precursor to the ATM card. When the ATM machine was developed and reached New York by the 70's, the Citicard easily transitioned for ease of use by holders. Citibank was one of the first banks in the country to use ATM machines.
Citibank would become the largest bank in the United States and would be located in over 90 countries by 1998. The 2000's would see Citi expanding their domestic territory. California saw its first Citibank in 2002. The bank entered Texas in 2004.
Citibank and the Sub-prime Mortgage Crisis
Several days after Merrill Lynch reported billion dollar losses due to the Sub-prime Mortgage Crisis, a series of events and financial conditions that led to a rise in subprime mortgage foreclosures that resulted in the decline of securities that backed the loans, Citibank would as well. Reporting between $8-$11 billion dollars, Citi would begin cutting costs and jobs and relocation of their branches.
While also battling major losses throughout the 2000's, they would also see itself in court battling a series of class action lawsuits claiming several improprieties through their practices in regard to customers. In 2008, Citibank would have to repay $14 million to customers. In the government bailout, Citibank would receive $25 billion by the U.S. government. As a result, in 2009, Citigroup would divide itself into two businesses to better focus on their banking ventures.
Currently, Citigroup is headed by Vikram Pandit. Pandit, an Indian-born American banker and former associate at Morgan Stanley would reach notoriety during the government's investigation of the subprime mortgage crisis when he was quoted as saying, "My salary would be $1 with no bonus per year until we return to profitability!" Pandit would indeed be given a salary of $1 for two years. His salary was increased to $1.75 million for the progress Citi has made under his guidance. By 2011, Pandit would become one of the highest paid CEO's in the country after being rewarded with a $23.2 million dollar reward.
Citibank as it Stands Today
Since being given a bailout, Citi has paid back its government loans in full. It is the third largest bank holding company in the United States. From its fledgling stages as a premier bank in New York to an innovative world renowned mega-bank, Citi has always been at the forefront of the banking industry in the United States. Despite its lumps taken during the most recent economic crisis, the bank has overcome them before and you can expect them to do so again, if they already haven't.