Thomas Chrystie, Creator of Cash Management Account, Dies at 80
Thomas Chrystie, the Merrill Lynch & Co. executive who developed the Cash Management Account, a 1970s innovation that drove the firm’s growth into a full-service financial provider, has died. He was 80.
He died on Dec. 24 at a care facility in Charleston, South Carolina, after suffering many years from Alzheimer’s disease, according to his daughter, Helen C. Hipp. He had been a longtime resident of Wilson, Wyoming.
In the 1970s, when Merrill Lynch was looking to expand the work of its “thundering herd” of brokers, Chrystie helped Donald Regan, the firm’s chairman, brainstorm an innovation that other Wall Street firms soon had to follow.
Prohibited by the Glass-Steagall Act of 1933 from offering traditional checking and savings accounts, Merrill Lynch in 1977 introduced the Cash Management Account, in which clients could stow dividend and interest income and earn money-market interest rates, higher than those offered by banks. Clients could access their funds through a Visa card or checks.
For Merrill Lynch, the arrangement opened a new source of management fees and a tool to lure customers from its competitors.
As chief financial officer, Chrystie had traveled from New York to the Stanford Research Institute in California to develop ideas for new business ventures. From that work emerged the idea for the CMA account.
“Tom was really one of the great innovative leaders at Merrill,” Winthrop Smith Jr., a former Merrill Lynch executive vice president whose father led the firm in the 1950s, said yesterday in an interview. He said the CMA was “revolutionary” on Wall Street.
Commercial banks, troubled by the infringement on their turf, tried challenging the new accounts in court. Chrystie’s foresight in obtaining the trademark and patent for the CMA caused headaches for competitors, including Paine Webber and Dean Witter Reynolds, which challenged the patent and, after failing, owed Merrill Lynch a licensing fee.
Some Merrill Lynch brokers also objected, seeing in the new accounts time-consuming work that didn’t provide brokerage fees. At the firm’s annual spoof luncheon, Chrystie was presented with a “golden turd award” for worst innovation.
Within a year, the CMA “was a raging success,” and Chrystie came to value his off-color trophy, Smith said.
Merrill Lynch’s CMA “has propelled the firm into the leading edge of the revolution in financial services that is transforming Wall Street,” the New York Times reported in 1981. Within four years of being introduced, the program had attracted 300,000 accounts, representing $6 billion in cash, the newspaper reported.
Edward Yingling, former head of the American Bankers Association, called creation of the CMA “one of the top dozen or so events that changed the financial services industry,” the ABA Banking Journal reported in 2003. Yingling is now a partner at Covington & Burling LLP in Washington.
Merrill Lynch, stung by losses from subprime mortgages during the financial crisis of 2008, agreed to sell itself to Charlotte, North Carolina-based Bank of America Corp.
Thomas Ludlow Chrystie II was born on May 24, 1933, in New York City, one of two children of Thomas Witter Chrystie and the former Helen Duell.
His father, an attorney, was “a member of one of New York’s oldest families” and a great-grandson of John Albert Weygand, one of the founding trustees of the 18th-century institution that today is Columbia University, the Times reported in his obituary in 1956.
Chrystie graduated from the Taft School in Watertown, Connecticut, in 1951 and Columbia University in 1955. He served in the U.S. Air Force as a management-analysis officer from 1956 to 1958 and then received an MBA in 1960 from New York University.
His 33-year career at Merrill Lynch, from 1955 to 1988, began in investment banking, with a focus on the Detroit area, Smith said. Chrystie was named head of investment banking in the early 1970s by Regan, who led the firm until 1981, when he became U.S. Treasury secretary under President Ronald Reagan.
As the firm’s first CFO, Chrystie “recognized that Merrill needed to diversify its financing, so he worked hard to get Merrill its first credit rating from Moody’s and start issuing commercial paper, which was really innovative for a Wall Street firm,” said Smith, author of “Catching Lightning in a Bottle,” a book on the firm’s history, and president of Sugarbush Resort in Warren, Vermont.
Chrystie was a former trustee of Columbia University. In retirement, he developed Spring Creek Ranch in Jackson, Wyoming.
In addition to his daughter, survivors include his wife, the former Eliza Balis; another daughter, Alice C. Wyman; two sons, Adden B. Chrystie and James M. Chrystie; and five grandchildren. Another son, Thomas Witter Chrystie, predeceased him.
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