When will the Feds do the right thing and break up Citi (C)?
The bank, by virtue of its size, internal chaos, and a management which still bizarrely thinks that the bank needs to grow, remains a significant source of systemic financial risk. The mission of current management and the bank’s regulators should be to go full speed ahead on dismantling it.
This is the bank, remember, that up until recently was still doing no-doc loans, because it couldn’t get its paperwork in order.
In the meantime, the bank apparently has to deal with the shame of needing an outside consultant come in and tell it how its executives are doing:
FT: People close to the situation said Citi had retained Egon Zehnder, a headhunter and board advisory consultancy, to carry out an in-depth management review requested by the government after stress tests on banks in May.
The push for Citi to enlist external help, led by the Federal Deposit Insurance Corporation and backed by other regulators, underlines authorities’ desire to keep Citi’s upper echelons on a tight leash after rescuing the bank with $45bn. It also raises questions about the long-term future of Vikram Pandit, Citi’s chief executive who is under fire from the FDIC, and other senior executives.
Meanwhile, Felix Salmon points out that the bank’s chairman and professional board-sitter Dick Parsons only has $350k in Citi stock, which is a pittance. At these prices, it’s an option for him — they’ll either go up a lot, or down a little. He should either get out of the way, or reallyg et some skin in the game.
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