Was Mr. Potter right all along?

The story of Citi and the missing $900 million.

For those of you not up to speed, Citi Bank accidentally transferred $900 MILLION to several companies that were due interest payments to Revlon Creditors.  Instead of sending interest payments due, they accidentally sent payoffs, HPS Investment Partners received $127.3 million, and Symphony Assent Management LLC received $109.7 million from Citi.  This is important for two reasons; first, they obviously made a HUGE mistake sending up to 100 times what was owed on the notes.  Second; and more important, CITI is a massive global bank that is responsible for managing its customer's accounts to the penny and is accountable to the New York Federal reserve to perfectly balance their accounts every day or face seizure by the Fed. They missed by almost a billion dollars in one day! 

Even given all that, what I find even more fascinating is the behavior of the people that received these clearly ill-gotten gains.  They are fighting to keep the money!  Imagine that you wake up one morning and find $250,000 in your checking account that didn't belong to you?  What would you do?  Most people would call their local banker, a guy that might look like Jimmy Stewart, and say, "Hey, I think you might have made a mistake."  Something similar happened to my wife's business a few years back when her bank posted the "proceeds" from a loan that she never applied for to her business checking account.  As it turns out, her account was one digit from the account to the company that should have received the funds.  The bank was very grateful for my call.

Now I'm wondering if I'm the one that has a screw loose.  These guys who have much more high-finance experience than I will ever have are claiming that the money is theirs.  Only in the world of finance does this even have a chance of being a thing.  Is this a matter of upbringing?  My mom would have kicked my a** if I took $5 that didn't belong to me.  What do the mothers of the General Partners of Symphony and HPS think of their sons and daughters?  What did they teach them?   Did they teach them that Mr. Potter was right? 

In a world confused by many things, I'm glad that my mother taught me the essential simple truths; work hard, be honest and give back.  I'll bet Citi Bank wishes that the folks at Symphony and HPS had met my mom.

About the author:

Ron Boire grew up in Beekmantown, New York.  The son of a hard-working "bad-ass" Irish mom whose advice he misses every day.