Could have seen this one coming: Citigroup (NYSE:C) was booted from the Dow Jones Industrial Average this morning, along with Motown failure General Motors (NYSE:GM).

In what might be the irony that ends all ironies, former Citigroup subsidiary Travelers (NYSE:TRV) will replace Citigroup in the 30-stock index.

Choose your own adventure
Citigroup spun off Travelers -- a diversified insurance company -- in 2002 because it was too old, slow, and boring. As Citigroup's 2001 annual report states, the spinoff was meant to "enable our company to focus its resources more fully on higher growth areas of financial services."

And so it did. By shedding blue-chip businesses like Travelers, Citi went on a mission to exploit "high growth" areas like mortgage-backed securities, propriety trading, and subprime lending. These were all indeed highly profitable areas ... until they became highly toxic. Today, Citigroup is a ward of the state, hemorrhaging money, and for all intents and purposes a colossal failure. Travelers, on the other hand, reported nearly $3 billion of net income in 2008, and hasn't posted a quarterly loss throughout the financial crisis.

Many investors were shocked that Travelers -- a relatively small and unknown company -- was selected to replace Citigroup in the Dow 30. GM was replaced with tech ruler Cisco (NASDAQ:CSCO), while others suggested iconic names like Apple (NASDAQ:AAPL) or Pepsi (NYSE:PEP) would have been worthier replacements.

Dow hits the reset button
But maybe Citigroup's surprise replacement was intentional. Perhaps the history between Citigroup and Travelers is symbolic of where the financial services industry is going. The adventurous Citigroup creation is being replaced by its tried-and-true, conservative, slow-growing, remnants. That's how finance is supposed to be. Trillion-dollar banks that strive for innovation and explosive growth are extraordinarily dangerous. With Travelers replacing Citigroup on the list of America's iconic companies, maybe we're all starting to come to terms with that reality.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Apple is a Motley Fool Stock Advisor selection. PepsiCo is a Motley Fool Income Investor recommendation. The Fool has a disclosure policy.