Public CompanyFDIC presses for Citi's top mgt rejig: Report
The Federal Deposit Insurance Corp (FDIC) is pressing for top management reshuffle in trouble financial institution Citigroup, a move that may threaten Chief Executive Vikram Pandit"s position in the company, a media report says.
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Attributing it to people familiar with the matter, The Wall Street Journal said, "The Federal Deposit Insurance Corp is pushing for a shake-up of Citigroup Inc"s top management, imperiling Chief Executive Vikram Pandit."
The FDIC, under Chairman Sheila Bair, also recently "pressed a fellow regulator to lower the government"s confidential ranking of Citi"s health — a change that would let regulators control the firm more tightly," the report said.
FDIC is a government regulatory body which insures bank deposits and acts as a receiver for collapsed banks among many other responsibilities.
The report said FDIC"s willingness to take an increasingly tough position toward Citi is setting up a bitter clash between regulators — some of whom disagree with the FDIC"s position — and between the FDIC and Citigroup, whose officials have argued that "Bair is overstepping her authority."
"The FDIC is our tertiary regulator," after the Office of the Comptroller of the Currency and the Federal Reserve, The WSJ report said quoting Citigroup Chief Financial Officer Ned Kelly.
The Wall Street Journal noted that Citigroup has taken steps to shrink itself and clean up its financial mess. Last month, the bank had performed better than expected on the Federal Reserve"s "stress test" of top banks" strength.
"Still, some officials across the government are frustrated at the company"s pace of change. FDIC officials in particular are concerned about the lack of senior executives with experience in commercial banking, " the daily said.
"Pandit himself comes from an investment-banking background, but most of the bank"s current problems stem from troubled consumer loans, " it added.
Citing people familiar with the matter, the report said federal officials have reached out to Jerry Grundhofer, the former US Bancorp CEO, who recently joined Citigroup"s board to gauge his interest in the top job.
Grundhofer, is well-regarded in the industry for steering US Bancorp to profitability while avoiding the risky lending that hurt Citigroup and many other banks, it added.
Citigroup"s woes have set off repeated clashes within the government following last year"s extraordinary effort to recapitalize the bank with at least $45 billion in taxpayer money. After a planned share conversion, taxpayers will own up to 34 per cent in the company.