Three Reasons It Took 10 Years to Grasp Citi's Woes
For a 10th merger anniversary, it is apparently a tradition to receive regrets and obituaries. It's not surprising that this has happened to Citigroup regarding its formerly heralded marriage to Travelers, or that one of the merger's masterminds has uttered a public "Whoops, our bad." The only surprise is that it took so long.
The Business Press Maven asks for a moment of your time so he can walk you through the three major reasons why coverage of Citigroup and its aim to become the world's financial supermarket was so overwhelmingly positive. This, despite plenty of evidence to the contrary, lasted from the time of the Citicorp-Travelers merger announcement through Sandy Weill's retirement two years ago (read about it
here
), when the business media wasted an opportunity to define Weill's legacy by examining the fate of the financial supermarket and instead focused on human interest items such as his tan and his poetry.
Why, pray tell, why? Why, in the wake of the April 6, 1998, Citicorp-Travelers merger, did we get articles like
Business Week
's "
" or others, like
this
from
The Financial Times
, that brought up nary a single negative and instead featured promotional quotes from Weill and John Reed, the two architects of the deal. The
Financial Times
story explained that "investors and analysts hailed the deal as ground breaking and warned of the threat it posed for other companies in the financial service sectors," before ending on the typical note of affirmation: The stock prices reacted positively that day.
What more could any long-term thinker want besides at least a nod to the other side of the story?
Well, a lot. The Business Press Maven had cheered for the last, best hope for financial supermarkets. It involved
Shearson Financial
,
Lehman Brothers
(LEH)
and
American Express
(AXP) - Get Report
, and the whole grandiloquent concept essentially boiled down to stockbrokers handing out pamphlets for people to buy American Express cards that few wanted.
Eventually, none other than Sandy Weill got involved -- well, re-involved. But the vaunted financial supermarket of the late 1980s and early 1990s went nowhere. So why did it take nearly a decade to realize the same thing was going to happen in the 1990s and beyond 2000 ... with the same cast of characters?
Here are three reasons. Heed them as we go forward to the financial markets of the '00s and '10s.
Reason No. 1
: There were two men behind the deal, and both made for a great story. Sandy Weill was the up-from-the-bootstraps entrepreneur, a hustling, gruff visionary -- Horatio Alger meets brilliant Wall Street mastermind. Reed was the steady, brilliant, all-American insider. You could tell the story through either man's eyes, or even better, write about how these unlikely financial bedfellows would rise together.
Reason No. 2
: The market was rising. The deal came at a strong time in the stock market, and that strength eclipsed any questions about the merger's potential drawbacks from the get-go.
Reason No. 3
: A cute catchphrase. One retrospective article notes how Wall Street used the phrase "financial supermarket" as a selling tool. The article was referring to investors, but remember that no one gets sold more quickly than the business media on a catchy phrase that seems to explain itself. They've gotten caught on this one at least twice in the past generation. But now, together, we need to keep count to make sure they don't go for a third time. As always: Beware. And be aware.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
to send him an email.