NEW YORK (
) -- President Obama may be having problems finding support in his push for financial reform from the other side of the aisle but he's got at least one strong advocate on Wall Street:
CEO Vikram Pandit.
In a letter obtained by
, Pandit thanks Obama for his
about reform in Manhattan last week and says he's on board for change.
"It is clear to me that changes are necessary in order to create robust markets, investor confidence, and trust in the financial system," he writes in the
dated April 23. "I completely endorse the principle that there cannot be distance between Wall Street and Main Street."
Pandit then goes on to outline what he thinks constitutes meaningful reform, saying he's in favor of central clearing and settlement of derivatives trades, a "strong" federal consumer authority, and an end to the concept of "too big to fail" that allowed Citigroup itself to weather the financial crisis with the receipt of $45 billion in bailout funds.
On compensation, he advocated for a "merit-based system driven by long-term performance." Pandit also said earlier in the letter that he doesn't believe banks should speculate with their capital, a sentiment that could be interpreted as being in favor of the so-called Volcker rule, which calls for banks to refrain from proprietary trading.
The surfacing of Pandit's comments comes with the debate front and center in the national debate after
executives, including CEO Lloyd Blankfein, spent Tuesday being questioned about their role in the financial crisis by a Senate panel.
The financial reform bill sponsored by Christopher Dodd (D. Conn.), the Chairman of the Senate Banking Committee, is also ever-present in the headlines at the moment as Senate Republicans have now blocked moving the bill to the debate phase three times already this week, prompting President Obama to chastise their unwillingness to even discuss what the bill should contain in recent appearances.
Pandit has made great progress in the past year in righting the ship at Citigroup, and the company's surprise first-quarter profit of $4.4 billion showed the company could keep up with money-center rivals
Bank of America
How tough the final reform bill ends up being remains to be seen, so it's difficult to quantify what the impact of some of the measures that Pandit is endorsing would be on Citigroup's bottom line. For example,
estimated on Tuesday that the removal of government support for "too big to fail" could have an adverse impact on debt ratings for many banks, which could in turn conceivably raise their borrowing costs.
"In particular, new resolution authority for 'non-banks.' including bank holding companies, could increase the ability of regulators to unwind large, interconnected financial institutions, and this could be detrimental to bondholders over time,"
said. It then estimated the benefit of the government's implied support on the credit ratings of a number of big banks, saying Citigroup enjoyed a boost of four notches as did
. Bank of America's rating was five notches higher, the biggest lift on the list, according to the ratings agency.
Citigroup shares took off in mid-March and rallied right into earnings season, but the stock has been pressured this week on the news that the U.S. Treasury had begun paring down its 7.7 billion stake in the company, although at least
thinks a boost in institutional ownership would be sufficient to counter pressure from the government's divestment.
Citigroup shares were edging up 2.2% to $4.44 in recent trades with volume still heavy at 826 million with less than two hours to go in the session.
Written by Michael Baron in New York