Planning profitable futures: the introduction of statistical planning techniques in American banks

Abstract

Much of the blame for the 2007–2008 economic and financial crisis was placed on the faith of bank managers, executives, and federal regulators in quantitative analysis, models, and equations. However, this article disputes the Financial Crisis Inquiry Commission’s claim that quantitative analysis entered into banking with the hiring of quantitative analysts or ‘quants’ in the 1970s. Instead, the article traces the history of quantitative analysis in banking to the widespread introduction of planning techniques in the 1960s. The article demonstrates that in the 1960s nearly a quarter of all surveyed commercial banks had adopted planning techniques. These banks were active in their quest for new ways to lend and invest and for management strategies strengthened by statistical models and techniques that promised to enable bank executives and managers to calculatedly manage an unknowable future. Drawing on archival documents on Citibank’s planning departments, the article highlights how planning techniques in the late 1960s influenced banks to enter more forcefully into the consumer credit market and guided the adoption of mostly unprofitable and high-risk bank credit cards. In the end, the article interrogates the history of the introduction of statistically based planning methods in bank management practices and how these techniques helped form a pathway to the validation of ‘increased risk-taking’ in American banking in the mid- to late twentieth century.