Editor's Note: This is the second article in a two-part series published by American Banker. Previously: The late Bess Myerson, a former Miss America who died in December 2014, came to Citibank in the 1970s with a mission to reform the bank's retail practices. Her first order of business was to simplify the language on Citi's promissory note for its consumer loans. Then she turned her focus to the bank's collections unit.

Revising the promissory note had taught Bess Myerson that Citi’s collection unit tended to engage in strong-arm processes with a singular mission to collect debts by hook or crook. So she shifted her attention to reforming the way that collectors interacted with delinquent customers.In many respects, the collection unit was a purgatory of sorts. Old-timers on their way out and low-performing officers were sent there to bide their time until they retired. High-performers rarely landed there.

Bess made the case that the collection department was too important to consumer fairness to be treated as a managerial afterthought. She sensibly asked the bigwigs, "Shouldn’t your best people be put in charge?"

Her idea was that promising officials should learn what happens when their best-laid marketing plans fail, exposing hordes of customers in a bind through no fault of their own to cruel indignities. Bess believed that Citi had a duty to help borrowers get back on their feet.

Bess’s understanding of the issue was influenced in part by a trip we took one day to civil court headquarters in lower Manhattan. In a large basement room, she saw row after row of cabinets with Citi’s name on them. Each cabinet held hundreds of files of delinquent customers on their way to being officially stamped as judgments, many of which Citi would use to impose liens on their homes.

Bess was shocked that Citi was suing so many people. She saw it as an abuse of the court system and insisted that there had to be better ways to work directly with distressed borrowers to get them to repay.

The people at the top listened. In short order they assigned smart, experienced managers to modernize and humanize the collection process. They ordered the new team to work closely with other units like risk management and marketing to better understand the causes and effects of delinquencies.

Statistical analysis replaced ancient group-think. Every part of the collection process had to be put under a microscope to assure it would prove to be efficient, fair, media-sensitive and legal. The objective was to produce win-wins for the bank and its customers. The end results were significantly less lawsuits and far more negotiated workouts.

Bess had nothing to do with these specific changes. But excellent manager that she was, she got the ball rolling in the right direction by motivating good people to reach for the sky.

A Legacy of Consumer Reforms

I could go on and on about the successes of Bess that are now long forgotten. Bess almost always won the day during her time at Citi, and both the bank and its customers benefited enormously. Instead of losing competitive advantages, Citi won them in scores. Instead of facing vilification from politicians and the media, it won praise from longtime adversaries including New York governor Hugh Carey, the much-feared head of the Senate Banking Committee William Proxmire, newspapers across the country and even die-hard competitors.

Citi was likewise flattered to see within months of the inauguration of its plain-language note that virtually every bank in the United States had changed their agreements to mirror Citi's. Even President Jimmy Carter climbed on board when he made plain language a mandate of his administration. His Secretary of Commerce awarded Citi a citation for leading the cause.

The new note was so powerful that it influenced law schools across the country to change their legal writing courses, paving the way to what is now a flourishing global plain-language movement and prompting the adoption of plain-language laws in every state.

On the collection side, Bess’s reforms soon became the norm across the banking industry. They weren’t Nirvana, but they were far better than the ugliness that had prevailed before she arrived at Citi. And they beat anything politicians or law enforcers could have come up with.

One could say that Bess was a real-life George Bailey. In reforming Citi, she changed banking for the better for millions of consumers.

She even leveraged her position at Citi to help save New York City itself. In 1975she played a pivotal role in persuading Walter Wriston, Citi and other major banks to support an effort to save the city from bankruptcy.

The successful turnaround of the city eventually lured Bess back into politics. In 1980, she became a New York State candidate for the U.S. Senate. Unfortunately, she lost her primary — in part to nasty charges about her years at Citi. Had Bess won the primary, I believe she would have won the election and even had an excellent shot at winning the U.S. presidency in 1988.

It is wrong that Bess never got credit for her good deeds at Citi. She helped rescue the company when it when it was in deep trouble. Sadly, Citi is once again wrestling with a number of problems. Its customers and government are angry, and its future appears bleak. The bank needs to relearn the lessons of the Bess Myerson era. And it should do so by finding another Bess.

Duncan A. MacDonald is a former general counsel of Citigroup Inc.'s Europe and North America card businesses.


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