Editor’s note: Alice Schroeder is the author the New York Times bestseller The Snowball: Warren Buffett and the Business of Life. She is a former managing director of Morgan Stanley, where she became Institutional Investor’s top-ranked property-casualty insurance analyst and wrote an influential newsletter on the insurance industry. She was recently named, alongside Ben Bernanke and Hillary Clinton, as one of the “People to Watch” by Business Week.

Citigroup board member Dick Parsons is taking over as the bank’s new chairman in what has become the fastest-spinning chairman’s seat in the East. He’s the fifth chairman in the last three years (after Weill, Prince, Rubin and Bischoff). The latest move is a mark of Citi’s desperation, and a last-chance bid to restore trust.

It’s hard to believe how fast financial trust can dissolve until you’ve seen a bank run. Citibank’s kicked off November 20, the day the market crashed to its 2008 low. I went to a forlorn party that evening at the New York Stock Exchange. Guests clenching flutes of champagne with white knuckles wandered around deserted trading posts and gaped at screens that bled electronic red ink. Disbelieving murmurs of “Citi below four dollars!” rose from little clumps of people. But before the bank could dissolve into another Lehman, government officials took it into their ICU over the weekend to craft a rescue plan.

At our local Citi branch the following Saturday morning, which sees maybe two customers at once on a busy day, half a dozen people filled the lobby. One man was nervous, neatly dressed in jeans and a bomber jacket, and had the determined air of a small businessman who had pep talked himself into not being bullied by the big bad bank. 

“I want my fifty thousand dollars,” the man said to the teller. The subtlest nerve-twitch crossed her face, but she kept her gaze steady. "I’ll have to call my manager," she said.

“We don’t have fifty thousand in cash,” the manager said. “We can give you twenty thousand. But that’s very bulky. A bank check would be safer.” No, the man said. Go look in the vault again. Resignedly, the manager departed. Time passed, and the line grew longer. The man who wanted his money grew noticeably anxious as it became apparent some plan was being hatched in the back. Finally the manager returned. “I’m sorry, sir,” he said, “but we can only give you twenty thousand.”

Anyone who has seen "It’s a Wonderful Life" knows: That’s the wrong answer. “I want my money,” said the customer, in a voice audible throughout the lobby. “I don’t want your check!” Tiny gasps from the line. Somebody had said it aloud – Citi’s check might bounce. The manager and teller started stuffing money into a bag posthaste; they wanted this prophet of financial doom out of their building. Minutes later the man departed, laden with his bundles of twenty dollar bills. The rest of the people stepped forward for their turn to retrieve their cash.

Knowing that scenes like this must be taking place around the country, and that a mob in pajamas could arrive at Citi’s doors at dawn on Monday to test the nation’s faith in FDIC insurance, the Treasury Department sweated over its rescue plan. In the nick of time on Sunday night it quashed the bank run by agreeing to co-sign hundreds of billions of dollars of Citi’s checks.