A recent "insider report" in The Washington Post would have us believe that New York Federal Reserve Bank President E. Gerald Corrigan and Citicorp president John S. Reed returned Citicorp to prosperity simply by the application of common sense and tough love.

But the teller at your local credit union or your barber would be inclined to file that version of what happened alongside the tale of George Washington and the cherry tree.

Barely mentioned in the story, written by Brett D, Fromson and Jerry Knight, was the little matter of "falling interest rates."

It might be worth asking whether falling interest rates, rather than the collusion between Mr. Corrigan and Mr. Reed, had the most to do with getting Citicorp off its deathbed.

Ousting Bank Presidents

It is not that regulatory intervention wasn't called for, or is even unusual. In fact, during the agriculture crisis when Mr. Corrigan was president of the Federal Reserve Bank of Minneapolis, regulators "intervened" daily, ousting bank presidents so fast that lists were being written in pencil. Ironically, most of their banks were run much better than John Reed's.

Make no mistake: The badly crippled Citicorp could not have been allowed to fail; it was a dirty job and someone had to handle it. To avoid having a major bank failure on his watch, Mr. Corrigan had to pump life into the ailing giant.

The 51-year-old Fed president has a bright career ahead of him. His keen skills and capacity for hard work are not in question. At the New York Fed since 1985, he proved his mettle on Black Monday and in the Salomon Brothers scandal.

Corrigan's Career Options

Those who know Mr. Corrigan would agree that his retirement announcement early this year came after, and not before, he decided on his next career goal. Many feel he would like to succeed Alan Greenspan as Fed chairman.

Taking another step into the guessing game, one can speculate that Mr. Reed could now gracefully announce his desire to "pursue other interests."

This would open the door for Mr. Corrigan to take the Citicorp helm, reviving Walter Wriston's dream of making it a truly "world class" bank in size and scope.

It remains to be seen if a move by Mr. Corrigan into a top management role at a major institution in a competitive field will be to his long-term advantage.

Members of Congress from farm areas may choose to take issue with policies that wiped out many agricultural banks but saved Citicorp. That was a gamble on Mr. Corrigan's part that may come back to haunt him.

Mr. McCrady heads McCrady/Midwest, a business and trade consulting firm. From 1976 to 1988 he was executive vice president of the Independent Bankers of Minnesota.

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