For years Citigroup Inc. has been on the receiving end of criticism for a business model that many considered too unwieldy to ever succeed.

Such criticism has tended not to extend to JPMorgan Chase & Co. and Bank of America Corp., the latter of which in particular has struck deals that make its set of businesses more like the one for which Citi has been assailed.

That gap it is partly a reflection of how the crisis has forced a fresh assessment of financial services business models in general, particularly with respect to the place of investment banking. It is also a sign that the consensus view on Citi may have completed a shift to one that assigns blame to execution on its model rather than the model's design.

Gary L. Crittenden, Citi's chief financial officer, sees the tide turning on acceptance of the universal model, which he says remains one of the best ways to guard against "the vagaries of financial crises," allowing a company to pursue a more diverse business mix that matches asset liability with consistent and stable funding.

And with few exceptions, the narrower consumer finance and mortgage model that peppered the financial sector just a few years ago has faded away, he said.

Now a similar development is occurring in investment banking.

Bank of America, which acquired the mortgage lender Countrywide Financial Corp. in July, announced its wedding to Merrill Lynch & Co. Inc. last week. That pairing unfolded the same week Lehman Brothers fell. Both developments followed this year's emergency sale of Bear Stearns Cos. to JPMorgan Chase.

"I do believe that the business model that draws on various funding sources, particularly a stable form of deposits that can then be invested in various businesses … is proving itself as the model of choice," Mr. Crittenden said in an interview last week.

Citi insiders have said the depth of the mortgage meltdown and its own shortcomings in risk management — not its model — were the primary sources of the company's problems in recent years.

The New York company posted a second-quarter loss of $2.5 billion, its third loss in as many quarters. It also reported a $7.2 billion provision for loan losses, reflecting continued deterioration in its mortgage portfolio, and $7.2 billion of market-related writedowns, the bulk of which were tied to mortgage-backed securities.

Under new chief executive Vikram Pandit, Citi has bolstered its risk management team this year and is "re-engineering" its expense management structure, in addition to cutting its head count, Mr. Crittenden said.

It is also improving management and avoiding future credit risks, he said. "We are taking the necessary steps" to control costs and bolster profitability.

Though still bleeding, Citi says its latest results do indicate improvement. Its second-quarter loss was half of that posted for the first quarter and a fourth of the $9.8 billion loss it posted for the last quarter of 2007.

Citi generated $18.7 billion of revenue during the second quarter, matching its best quarters before the mortgage meltdown — writedowns aside. It has said that, coming out of the credit crunch, its goal is to earn $20 billion a year.

In another sign of reinvigoration, last week Citi considered a bid for Washington Mutual Inc., according to a source familiar with the talks. Mr. Crittenden would not discuss the speculation, but the source said Citi executives are confident enough about their return to solid footing to absorb weakened competitors.

Citi "is on offense," the source said.

A source close to Wamu said last week that both Wells Fargo & Co. and JPMorgan Chase were considering a bid for the Seattle thrift company, which is buckling under the weight of steep mortgage losses. The companies would not discuss the matter, and no obvious front-runner had emerged Friday.

Analysts said something more telling than Citi's moves on the deal front are the moves made by its closest rivals: JPMorgan Chase's acquisition of Bear Stearns and B of A's move to absorb Merrill. These deals suggest that both B of A and JPMorgan Chase, though hardly mirror images of Citi, are embracing the idea of bringing a wide range of major financial businesses under one umbrella, analysts said.

"That, to me, would seem to validate the Citi model," Robert Ellis, senior vice president of wealth management at Marsh & McLennan Cos.' Celent, said in an interview last week.

Anthony Davis, a Stifel, Nicolaus & Co. analyst, said the "sentiment on Citi's model ebbs and flows, obviously, but I do think what's happening in 2008 is confirmation that more banks are thinking that a universal model or something like it, with very disciplined management, can work."

Kenneth Lewis, B of A's CEO, put it this way during a press conference last week to explain the Merrill deal: "The combined company is a much stronger entity and will survive most anything as a result of the combination. … So we come out of this able to grow, gain market share, do more business with our clients."

Of course, Mark Fitzgibbon, director of research at Sandler O'Neill & Partners LP, said so many unknowns have crept up and bitten bankers in the past year that nobody can be certain a universal model will prove to be the right one for large financial companies.

Long before the mortgage markets busted and triggered the current credit crunch, Citi touted itself as a diverse financial behemoth that could draw on the strengths of one business line when another falters.

But as the mortgage meltdown bled into a range of other business lines over the past year, Citi got hurt badly. If the mortgage contagion spreads even further, as many expect, a few months from now critics could be calling once again for Citi's dismemberment, Mr. Fitzgibbon said in an interview last week.

However, he said, Citi's woes to date can be traced to flawed business decisions resulting from a pack mentality that permeates banking — if one company is making big bucks on risky mortgages and investments, many others feel they must follow.

Citi was as guilty of this as the industry as a whole was, Mr. Fitzgibbon said, so its troubles so far reveal little about the universal model.

"It's still a big question whether the universal model is the right model," he said. "I personally don't subscribe to the thinking that you have to be universal to survive, but I also don't subscribe to the thinking that the universal model is broken."

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