This blog post originally appeared on RealMoney Silver on Feb. 12 at 7:29 a.m. EST.
Yesterday in The Edge, my
exclusive trading diary, I was critical of the political theatre of the absurd and suggested that the bank managements should have turned the table around and asked the members of Congress whether they would be willing to work for $1 until the government returns to a budget surplus.
This morning, I will add to my list of grievances:
how poorly Congress was prepared; and
Vikram Pandit was in his response.
Let me be specific.
During the course of the testimony, Congress had specific questions with regard to bankers' compensation in 2007, 2008 and 2009.
In questioning Citigroup's Vikram Pandit, not a single member of Congress knew to query him about the absurd level of compensation ($165 million) he received in 2007 in connection with Citigroup's
. In essence, Citigroup dramatically overpaid for his "smallish" hedge fund in order to incent Pandit -- the large premium over fair market value of Old Lane was clearly 2007's compensation to him -- but, again, nobody asked him to lump the $165 million into his 2007 compensation answer. Clearly, none had done the research. (The Old Lane deal was a disaster. It turned out to be another value-destructive Citigroup deal. In June 2008, Citigroup
because of terrible performance.)
Just as poor as Congress's research was regarding Pandit's 2007 compensation, Pandit's responses to their compensation questions was disingenuous. When asked about his projected 2009 compensation, Pandit, with a smile of approval on his face, repeatedly underscored that he had asked the Board of Directors of Citigroup for "
only $1 in salary
." Not volunteering that he received excessive compensation back in 2007 (when he sold Old Lane) was insincere. He should have volunteered the fact that he had previously received such a large sum less than two years ago.
Simply stated, the Congressional inquisition was one big waste of time, sounded like a "Saturday Night Live" skit and likely served to further disaffect investors who have repeatedly seen their politicians in a most unpleasant light over the past nine months.
Yesterday's Congressional hearings were a farce, and the transparency of our political process over the past year has likely served as a P/E-multiple-contracting event.
Doug Kass writes daily for
, a premium bundle service from TheStreet.com. For a free trial to
and exclusive access to Mr. Kass's daily trading diary, please click here.
Know What You Own: Citigroup operates in the money center bank industry, and some of the other stocks in its field JPMorgan Chase (JPM) - Get Report, Wells Fargo (WFC) - Get Report, Royal Bank of Canada (RY) - Get Report, Bank of New York Mellon (BK) - Get Report, Bank of America (BAC) - Get Report and Toronto-Dominion Bank (TD) - Get Report. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.When will the downturn end? How can you profit now? Find out at The Traders Expo, a "must-attend" event featuring, among others, TheStreet.com's Helene Meisler of Top Stocks, Jud Pyle of Options Alerts and James Altucher of RealMoney. FREE to TheStreet.com members, The Traders Expo will be in New York City, Feb. 21-24. Register here with priority code 013526.
At the time of publication, Kass and/or his funds had no positions in the stocks mentioned, although holdings can change at any time.
Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.