Last week the handpicked golden boy tapped by Treasury chief Tim Geithner to run Citigroup was shown the door. He may have walked out, but he was led to the threshold by the board.
Vikram Pandit, the hedge-fund manager and former Morgan Stanley exec who counted former Citi Chairman Robert Rubin as an ally, was chosen to run the huge commercial/retail bank.
Pandit sold his hedge fund to Citi initially for about $800 million. Shortly after he joined Citi, the bank had to shut the fund and take a $200 million write-down on its portfolio.
Pandit’s deal price was eventually renegotiated to $165 million for the shuttered business. Talk about foreshadowing . . .
He was later put in charge of the entire bank, over the objections of regulators and despite not having had any commercial or consumer banking experience.
For years, shareholders and some federal regulators have been very unhappy with Pandit’s performance, but while he was under Treasury’s TARP (Troubled Asset Relief Program), there was no replacing him.
Now free from government crony capitalism, Citi’s board replaced Pandit with 30-year banking veteran and former Harvard football star Michael Corbat.
Under Corbat, who was an NFL prospect and is known for his team- building skills and banking knowledge, along with intense physical workouts, expect Citi to become a lean, mean banking machine. He ain’t no caretaker.
Sheila Bair wrote in her book, “Bull by the Horns,” that Pandit was placed in charge of Citi directly by Geithner over many objections, not the least of which was hers as chair of the Federal Deposit Insurance Corp.
Bair wrote that the appointment was due to Geithner’s idolization of Rubin, who recommended Pandit.
Rubin was also apparently the driving force behind Citi acquiring Pandit’s fund to begin with.
As you can imagine, Bair welcomed the move by Citi’s board to oust Pandit. She told CNBC, “Why do you think 55 percent of shareholders didn’t want him to receive his compensation?”
She praised Corbat as “very strong operationally, which is what Citi needs,” and told Bloomberg, “He’s always prepared.”
And Bair would know.