1. Pandit's Departure
Let's be totally honest Dumbest fans. We too were surprised by Vikram Pandit's abrupt exit on Tuesday, especially since the Citigroup (C - Get Report) CEO presided over the bank's market-beating earnings release only the day before. No doubt about it, it was a jaw-dropper even for jaded folks like us who purport to have seen it all.
That said, now that the shock has subsided and we've regained clarity, it's obvious that the rapidity of Pandit's dumping was the dumbest thing about it. Only on Wall Street, and to an even greater extent, only at a horrorshow like Citigroup, would Pandit have lasted as long as he did in the top job.
Let's just review some of the highlights of Vikram's tenure, shall we?* Since Dec. 11, 2007, the day Pandit was tapped as CEO, Citigroup's stock has tumbled a split-adjusted 89% through Monday's closing price. Citigroup shareholders have paid him a total of $261 million over that same period. * In November 2008, the Treasury Department propped-up Citigroup with a $20 billion emergency infusion, on top of the $25 billion it received the prior month, from the $700 billion TARP fund. The government also backstopped about $300 billion of Citigroup assets, as its share price sank below $5 and some depositors pulled funds from its branches. * Former FDIC Chairman Sheila Bair (from her book Bull By The Horns) on Pandit: "He was a hedge fund manager by occupation and one with a mixed record...he had no experience as a commercial banker... no private investor was likely to invest in Pandit's bank...wouldn't have known how to underwrite a loan if his life depended on it...(Citigroup) bollixed its own attempt to buy Wachovia." * In October 2011, Citi paid the Securities and Exchange Commission $285 million to settle civil fraud charges that it misled buyers of a complex mortgage investment as the housing market was beginning to collapse. * In March 2012, Pandit told analysts that the bank had recovered enough to win permission to raise its quarterly dividend to 10 cents a share from a penny, only to see the Federal Reserve reject his plan after conducting stress tests. * In April 2012, about 55% of Citigroup shareholders rejected Pandit's $15 million 2011 pay package in a non-binding vote. * In September 2012, Citigroup was forced by Perella Weinberg to take a $4.7 billion write-down over the value of its stake in Morgan Stanley-Smith Barney. So let's just add this up. Not only did Citigroup's shareholders view Pandit's performance as awful, but so did the folks at Treasury, FDIC, SEC, Federal Reserve and Citi's competitors on Wall Street. Oh man, even Richard Nixon didn't have an enemies list this long! And now we suppose you can add Citigroup's new chairman Michael O'Neill to it. Even though Vikram said the decision to leave was his own, it was clearly O'Neill who orchestrated the coup that sent Pandit packing and installed the more traditional commercial banker Michael Corbat in his place. In retrospect, we probably should have started the countdown to Pandit's departure in April after O'Neill took the chairman job from that do-nothing Richard Parsons. But perhaps like everybody else, we had grown so accustomed to watching Pandit fail in his attempt to run this Too-Big-To-Fail bank that we never expected this day would come. But it has. To which we say: So long Vikram. We may be the only ones left, but we still hate to see you go. -- Written by Gregg Greenberg in New York.