Earlier today we mentioned that the government should be considering seizing Citigroup and breaking it up. Unfortunately, it seems that the Obama administration is going in the opposite direction: protecting Citi’s chief executive from FDIC bosslady Sheila Bair, who has been agitating for changes to Citi’s top management.
It looks like Treasury Secretary Tim Geithner has become Pandit’s best friend in Washington.
Bill McConnell of the Deal explains:
The $58 billion stock swap was reportedly held up as the Federal Deposit Insurance Corp. chairman pressed to have Pandit replaced with an individual with commercial banking, rather than investment banking experience. Citing “people with knowledge of the Treasury Secretary’s views,” Bloomberg said Geithner insists that Pandit’s turnaround plan be given time to work.
The notion that Bair was trying to push out Pandit was first reported in the June 5 Wall Street Journal. Reports that she has been defeated only one business day later raises doubt about the veracity of the initial report of her meddling.
Given that the Fed, not the FDIC, is Citi’s primary regulator, it would be a breach of protocol for Bair to press hard for the ouster of an executive on the fringes of her jurisdiction. But a great way for her rivals to undermine her would be to leak news of her straying beyond her authority and then being slapped back.