Courtesy of Pam Martens.
There are three words that provide context as to why Vikram Pandit, CEO of Citigroup, was abruptly dispatched from the bank eight days ago: Sheila Bair and Libor. Bair’s book, Bull By the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself, threw down the gauntlet to Citigroup’s board to justify why it was keeping Pandit on board.
More than any other bank or CEO mentioned in Bair’s outstanding recounting of the financial crisis, Citigroup and Pandit are cast in a harsh light – as they should be. Bair was the Chair of the FDIC and revealed in her book that Citibank, the insured deposit bank within Citigroup, had actually been downgraded to a rating of Camels 4, which would have landed the company on the troubled bank list. It was only pressure from Citigroup’s other regulators that got the bank upgraded to a Camels 3 within the same quarter, preventing the bank’s name from ever appearing on the published listing of troubled banks.
As for Pandit, Bair had this to say about a meeting with regulators:
“Pandit looked nervous, and no wonder. More than any other institution represented in that room, his bank was in trouble. Frankly, I doubted that he was up to the job. He had been brought in to clean up the mess at Citi. He had gotten the job with the support of Robert Rubin, the former secretary of the Treasury who now served as Citi’s titular head. I thought Pandit had been a poor choice. He was a hedge fund manager by occupation and one with a mixed record at that. He had no experience as a commercial banker; yet now he was heading one of the biggest commercial banks in the country.”
In another passage, Bair again asks aloud what someone with Pandit’s nonbanking background is doing running one of the largest banks in the world:
“What astounded me was why the Citigroup board hadn’t gone higher for a respected, experienced commercial banker. It could have done so much better than Pandit. In the past, Citi had been led by well-respected industry titans such as John Reed and Walter Wriston. Bringing in a top-name CEO would have been a huge boost to market confidence in the Citi franchise.”
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