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Friday, November 06, 2009

Report: Citigroup Creator Apologizes for Merger

FOXBusiness

John S. Reed, former chairman of Citicorp Inc. (C), and the chief executive that presided over the bank’s merger with Travelers Group Inc. in 1998, apologized in an interview for the merger that created banking behemoth Citigroup, according to reports.

The deal, which saw the combination of Reed’s commercial bank with Travelers which owned investment and bond-trading firm Salomon Smith Barney Holdings Inc., created the largest financial company in the world. Citi has accepted $45 billion in government loans as part of Treasury's Troubled Asset Relief Program.

Reed now says the merger was a mistake, according to a report by Bloomberg News.

In the years leading up to its repeal, Reed lobbied the federal government to overturn the Glass-Steagall Act, officially done away with in 1999, allowing commercial banks to merge with investment banks for the first time since the Depression. Now Reed is arguing that lawmakers should reinstate the law, the report.

“When you’re running a company you do what you think is right for the stockholders. Right now I’m looking at this as a citizen,” Reed said in a letter written to the editor of The New York Times on Oct. 21, according to Bloomberg.

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