John S. Reed, who earlier in his career played a direct management role in Citibank's sprawling credit card business, tried to persuade the Justice Department not to file its antitrust lawsuit against MasterCard and Visa.

Mr. Reed, now co-chairman and co-chief executive officer of Citigroup, met informally with Joel I. Klein, assistant attorney general of the Justice Department's antitrust division, during the investigation preceding the suit.

The meeting was revealed to American Banker by an attorney who asked not to be identified. The exact timing could not be found out. A Citigroup spokeswoman confirmed that Mr. Reed had met with Mr. Klein but declined to comment on what they discussed.

Mr. Reed reportedly conceded that the credit card industry made a mistake in the 1970s by letting banks issue both the MasterCard and Visa card brands-the practice known as duality that the government wants to unwind.

But Mr. Reed said the industry has adapted well and argued that the government should not intervene.

Mr. Klein apparently did not agree; the complaint filed Oct. 7 calls for a dismantling of duality, at least among the most powerful MasterCard and Visa banks.

Mr. Reed's meeting and comments caused consternation within the industry, according to sources.

The fear was that whatever he says might carry more weight than the statements of others in the card industry. In the Department of Justice's lawsuit are many examples of senior Visa and MasterCard executives' expressing sentiments similar to Mr. Reed's, but observers said their opinions might matter less to the judge.

Prosecutors could, for example, take a deposition from Mr. Reed or call him as a witness during the trial.

If the department "wants to win, all they have to do is get the big guys" to incriminate the card associations, said the attorney.

"If Reed said that, the government is going to quote him early and often," said Lloyd Constantine, a former assistant attorney general of antitrust for New York State, who is suing MasterCard and Visa on behalf of large retailers.

- Lisa Fickenscher

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