What if Citigroup CEO Vikram Pandit Keeps His Job?
As he passes his two-year anniversary at the helm, not only is he still working his way out from under a mountain of toxic assets, but he also has to deal with a giant albatross in the form of the U.S. government since it handed over $45 billion in taxpayer funds to stabilize the company in late 2008. The present situation has the government as both a debtor (owed payback on roughly $27 billion in trust preferred securities) and a shareholder (owning about 34% of the company's common stock).
Throughout 2009 media reports have suggested that Pandit was not up to the enormous task of returning Citigroup to profitability, that he does not have enough commercial banking experience to run the company and that he wasn't working fast enough to remedy the balance sheet. There's also been speculation that his position was hampered because he did not get along with certain regulators, most specifically Federal Deposit Insurance Corp. Chairwoman Sheila Bair, and that perhaps she wanted him removed.But, as the year draws to a close, it appears the perception of Pandit is changing as the company has made palpable progress under his stewardship, unwinding toxic assets, and reducing headcount and expenses, so as to come out this mess a slimmer, more focused international bank. The latest evidence came just this week in reports that say the company has apparently built up enough credibility to embark on a capital raise which could involve the sale of as much as $20 billion in common stock as part of the plan to clear its bailout tab. "We're past the moment of maximum stress on Citi. He's