Curriculum·Graduate·G606
Agentic Payments and the Machine-to-Machine Economy
Citibank's mistaken payment to Revlon's lenders, August 2020. Citibank, acting as agent on a Revlon loan, meant to send a roughly 8 million dollar interest payment.
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Citibank's mistaken payment to Revlon's lenders, August 2020
Citibank was acting as the administrative agent on a loan owed by the cosmetics company Revlon, and in August 2020 it meant to send lenders a routine interest payment of about 8 million dollars. Through an operational error, staff using a confusing internal payment system did not correctly suppress the principal, and Citibank instead wired about 900 million dollars of its own money to the lenders, accidentally paying off the entire loan. The payment was authorized and executed exactly as the final instruction said, and it was final.
The lessons
- G606-01The payment that could not be undoneExplain that an authorized payment executes as instructed and is hard to reverseabout 33 min · opens on Citibank's mistaken payment to Revlon's lenders, August 2020
- G606-02Giving software the authority to payExplain that authorizing software to move your funds delegates spending power, not just a taskabout 33 min · opens on Furucombo, February 2021
- G606-03Reputation and staking: trusting an agentExplain that a reputation with no cost of being wrong is cheap to give and unreliable to trustabout 33 min · opens on The credit rating agencies, 2007 to 2008
- G606-04The micropayment economy, and the limits that make it safeExplain why machine-speed automated activity can cascade faster than any human can interveneabout 34 min · opens on The Flash Crash, 6 May 2010