It was almost a throwaway line.
But at a time when the banking industry is showing signs of regaining its financial balance, Ross Perot chose to resurrect old charges that the nation's largest bank -- Citibank -- is insolvent.
Appearing Monday night on a live broadcast on ABC News, he answered a question about Japanese ownership of the Seattle Mariners baseball team by calling it an example of how the United States is "losing in international competition."
Then, veering into banking as an example, he noted that the largest U.S. bank is only the 21st-largest in the world and contended that "if you ever take the Third World loans that'll never be paid out, it's insolvent."
Mr. Perot did not identify the bank by name, but only Citibank N.A. fills the bill.
It was not the kind of comment usually heard from a public official concerned with the health of the banking system and mindful of the dangers of creating undue worry among depositors. In fact, his charge of insolvency was quickly rejected by regulators.
Leonora Cross, a spokeswoman for the comptroller of the currency, the Washington-based regulator for most of the nation's largest banks, said yesterday that "Citibank is not insolvent."
But Mr. Perot is not a public official; he is a businessman. And, as an investor, he has bet over the last six months that problems at Citicorp, the bank's parent, would cause its stock to fall.
According to his filings with the Federal Election Commission in mid-May, Mr. Perot did not own any Citicorp stock but did borrow more than $1 million of the banking company's stock late last year, and again on March 25, so that he could sell it.
That practice, known as short selling, would produce a profit for Mr. Perot if the price of Citicorp stock declined and he was able to buy shares at a lower price than the shares he sold but did not own. Loans of Citicorp stock to Mr. Perot were reported to the Federal Election Commission May 18 and reported in Grant's Interest Rate Observer June 5.
James D. Squires, a spokesman for Mr. Perot, said in a telephone interview yesterday that "as a matter of principle, we are not answering any questions about the financial disclosures." Later in the campaign, he said, "I am sure you will hear Mr. Perot talking about the declining competitive position of American banks."
Although Mr. Perot's thinking about the problems of the banking system and the measures that might improve its health remain unclear, the available information strongly suggests that as an investor, he badly misjudged the prospects of Citicorp. Since the times Mr. Perot in effect placed bets that Citicorp stock would fall, its price has risen steadily.
Citicorp closed at $21.25 yesterday, up from $10.375 on Dec. 30, 1991, when he borrowed more than $1 million worth of stock from Goldman, Sachs & Co., and $17 on March 25, when he borrowed more than $1 million worth of stock from Jefferies & Co.
Mr. Perot's comments appeared to have no impact on Citicorp or other banking company stocks yesterday.
The problem for Citicorp the last few years has not been, as Mr. Perot said, its losses on loans to less-developed countries. Those losses were recognized and subtracted from profits in 1987, when the company added $3 billion to its reserve for losses and in 1989, when it added an additional $1 billion.
Instead, the problem recently has been losses on commercial real estate, where 25 percent of Citicorp's $12.3 billion of those loans were delinquent or not expected to be repaid in full, and it held an additional $2.3 billion of real estate from foreclosed loans.
Assertions that Citibank and other large banks were insolvent were made occasionally in 1990 and 1991 as the industry's losses on commercial real estate loans led to comparisons with the savings and loan industry. Rep. John D. Dingell, a Democrat from Michigan, echoed those contentions last July.
Even assuming that Citicorp has underestimated its losses on loans, analysts say, the company is far from insolvent.
James Rosenberg, a banking analyst at Shearson, Lehman Brothers, said in a recent study that even if Citicorp suffered losses on risky loans much greater than the company has already admitted, it would still be solvent, with shareholders capital of $4.2 billion plus $2.3 billion more of preferred stock.
That is not a thick cushion for a $216.9 billion company, but it is a cushion analysts expect to increase as Citicorp sells more non-essential businesses, cuts expenses and earns profits. After losing $457 million last year, Citicorp earned a profit of $183 million in the first quarter.
Banking specialists said that ranking banks by size understates the role U.S. banks play in global financial markets. In the United States, 12,000 banks share the market. In other countries, such as Japan, the market is dominated by just a few dozen banks.