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December 5, 2007, 7:03 am

Who wants to run Citi?

Does anyone want to be CEO of Citi (C)? If so, speak up. Josef Ackerman of Deutsche Bank (DB) is the latest high-profile banking executive to shy away from taking the top job at the financial titan, according to reports in Bloomberg and the FT. Other top financial execs who have indicated they aren’t interested include U.S. Treasury Secretary Hank Paulson and former Wells Fargo chief Dick Kovacevich, the FT reported.

It’s easy to see why people aren’t exactly rushing to get in line for interviews with Citi’s executive search committee. The bank has already been rocked by multibillion-dollar writedowns on its holdings of toxic mortgage-related securities called collateralized debt obligations. It was the announcement last month that Citi would take a hit as large as $11 billion that finally led to former CEO Chuck Prince’s resignation, after investors spent months calling for his scalp.

Some analysts believe Citi’s CDO headache is due to get worse, however, with some analysts saying Citi’s losses could total $26 billion. As huge as that number is, it leaves aside the issue of how Citi deals with its exposure to other kinds of risky debt known as structured investment vehicles and conduits. While rival HSBC (HBC) is dealing responsibly with its own SIV problems by taking the vehicles onto its balance sheet, Citi is still hoping to delay the inevitable pain from the SIV mess by subscribing to Paulson’s SIV troubled bailout plan. Meanwhile, the bank has just launched into a second wave of cost-cutting, hoping to finally bring its expenses down as its earnings power weakens.

So who’s Citi’s best hope? Bloomberg reports that the top internal candidate is hedge fund whiz Vikram Pandit, who is highly regarded by Chairman and power broker Robert Rubin. But Rubin has come under fire himself for his hefty pay and for the board’s lax oversight of lending excesses during the Prince regime, and he was heard endorsing Prince’s efforts just weeks before the CEO’s ouster. The paucity of top shelf candidates has led to all manner of offbeat suggestions, such as rehiring John Reed, who was CEO of Citicorp back in the 1990s before Sandy Weill shoved him aside in a power struggle following the merger creating the current Citi.

And what do Citi’s long-suffering shareholders want? They don’t care who takes over - they just want to see the stock recover some of that Weill magic. Chief spokesman for this faction is Legg Mason Value Trust manager Bill Miller, the Citi shareholder whose fund beat the S&P 15 years running before hitting the wall in the last two years. As CNNMoney’s Paul La Monica reports, Miller doesn’t have any specific candidate in mind. What he wants, he told an audience at Legg Mason’s annual year-end investment symposium, is someone who will jumpstart the sleepwalking company, as Mark Hurd did at Hewlett-Packard (HPQ) after Carly Fiorina was fired.

“I would like someone to run Citi like the way that Hurd saw HP - someone to come in and simplify the processes,” Miller said Tuesday. “Citi doesn’t need a major strategic overhaul.”

That’s what shareholders are hoping, anyway.

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Subprime Help on the Way, Dodd Responds
Wednesday, December 04, 2007 -
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WASHINGTON, D.C. - Senator Chris Dodd (D-CT), Chairman of the Senate Banking Committee, responded to Treasury Secretary Henry Paulson’s statement that the Treasury Department would soon announce a plan to modify and refinance loans for certain subprime mortgage borrowers.

“Secretary Paulson’s comments that the Administration has taken action to stop predatory lending strain credulity. The Administration has repeatedly failed to use the tools at its disposal to protect homebuyers from abusive lending. The Administration has been late to recognize the severity of the problem and slow to act. As recently as two weeks ago, media reports indicate that Secretary Paulson was dismissive of the idea of broad-based loan modifications.

“If Secretary Paulson and the Administration are truly serious about helping American homeowners who have been preyed upon by unscrupulous and abusive lenders, I urge them to push servicers to adhere to the principles that they previously agreed to at the Homeownership Preservation Summit I convened earlier this year. These principles require that loan modifications must provide for long-term affordability and any loan modifications must be broad-based and transparently made. Modifications also need to be made available to borrowers who have become delinquent because of loan resets, but who had been current prior to that. These homeowners should not be punished because of the abusive loans they were sold. Any plan from the Administration that falls short of this goal of providing long-term affordability will merely defer mass foreclosures to a later date.

“In addition, the Fed is currently writing a rule that could potentially provide great protection to homeowners under the Home Ownership and Equity Protection Act (HOEPA) of 1994. This rule must establish strong, comprehensive requirements and remedies designed to protect homeowners and homebuyers from predatory lending.”

Related Articles :

  • More Homeowners Falling Behind On Mortgage Payments
    The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 4.67 percent of all loans outstanding in the third quarter of 2006 on a seasonally adjusted basis, up 28 basis points from the second quarter, and up 23 basis points from one year ago, according to the MBA's National Delinquency Survey.
  • Subprime Mess May Force National Licensing For Brokers
    After the requisite finger-pointing and blame-laying, Congress and federal regulators are moving toward some fixes to problems in the subprime mortgage market. Among possible outcomes is the requirement that mortgage brokers be licensed at the federal level.
  • NAR Calls For Responsible Lending Policies With Increased Consumer Protection
    Representatives from The National Association of Realtors testified today that abusive lending problems are national problems and require solutions that afford the homebuyer greater protection. NAR noted that irresponsible and abusive lending, and "problematic" loans, are disastrous not only to borrowers and their family but also to the community, and to the economic strength of those and surrounding communities.
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December 7 2007: 12:10 PM EST
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The man who could be Citi's king

A high-profile speech to insiders could be a clue to the Citigroup CEO succession puzzle. Meet Vikram Pandit.

By Patricia Sellers, editor at large

Vikram Pandit's speech to a group of influential Citi alums fueled rumors that he may become Citi's CEO.
Wall Street is still kickin'
Fortune's Andy Serwer believes that Wall Street is far from dead.

NEW YORK (Fortune) -- Has Citi's past met Citi's future?

When 80 or so alumni of Citicorp - the global bank that merged into behemoth Citigroup (Charts, Fortune 500) - met in midtown Manhattan for their annual alumni lunch Thursday afternoon, an intriguing speaker subbed for Chuck Prince, the company's recently departed CEO: Vikram Pandit, the man who could be king.

No one knows whether he will be since the CEO search is in process - and hitting walls, we hear. But the appearance by Pandit, who oversees Citi's institutional businesses, adds to speculation that he is in the lead to nab the top job.

Pandit, born in India, spent the bulk of his career at Morgan Stanley (Charts, Fortune 500), where he headed the global equities business and later was president and chief operating officer of the firm's institutional securities and investment banking group. He left in early 2005, along with other executives who clashed with then-CEO Phil Purcell, whom the Morgan Stanley board forced out that summer.

Like a lot of Wall Street's flickering stars, Pandit launched a hedge fund. Then, Citigroup, reeling from its own slew of top-level departures, brought Pandit's firm, Old Lane Partners, for a price estimated at more than $800 million. The returns haven't been impressive so far. But if Pandit would step up and turn Citi around, the purchase price would then be justified.

On Thursday, to this formidable audience of former Citi honchos - including Rick Braddock, Larry Small, Victor Menezes and Nancy Newcomb - Pandit said the right things. He told the alums that Citigroup has a great franchise but needs to do a lot better in terms of productivity, risk management and culture. Right on.

Taking questions, he was not specific enough for a few folks, who grumbled that Prince, last year's speaker, was better with numbers and details. But then again, what did details-oriented Prince, a lawyer by training, get Citi? Declining profits and multi-billion writeoffs, that's what.

The alums agreed on one thing: Whoever takes charge at Citigroup - whether it turns out to be Pandit or a CEO recruit from the outside - that executive needs to return the leadership to real business people who know, first and foremost, how to run a bank and rebuild a global giant.  To top of page

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Who remove these two post from here
Here is a preview of the posted reply:
Name: ..
Thanks do you see who wants to run it

Other top financial execs who have indicated they aren’t interested include U.S. Treasury Secretary Hank Paulson and former Wells Fargo chief Dick Kovacevich, the FT


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Subject:New reply in thread "Who wants to run Citi?"
Date:12/5/2007 9:41:28 AM Central Standard Time
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Great Post Smurf

Citi get's the Great Turkey Award Hey Citi, We have some SWAMPLAND 4 SALE! Real CHEEP!



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O -

 I would like to know why is was removed also? If yo guys don't mind?

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On a couple of my post commemt been taken out I don't know why,But I would like to know .Smurf

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Camel Jockey's

Abu Dhabi to the rescue

By BDN Staff

Citigroup, America’s biggest U.S. bank, desperate for cash in the mortgage crisis, is arranging to get a $7.5 billion investment from Abu Dhabi, raising eyebrows and serious questions.

For the tiny but super-rich emirate on the Persian Gulf, $7.5 billion is small change. Its "sovereign fund," a state-owned financial fund, has assets estimated at $875 billion, the world’s largest. It gets its money from surpluses produced by its oil industry, which has the fifth-largest reserves in the word.

Abu Dhabi is also getting a good deal on its investment. It will buy securities that convert into Citigroup stock that will yield 11 percent a year — nearly twice what the bank’s bonds pay.

But there are problems. First, there is Abu Dhabi’s past. Sheik Zayed, father of the present ruler, owned the notorious Bank of Credit and Commerce International, known as BCCI. It engaged in fraud, bribery, money laundering and other corruption around the world in the 1980s, involving prominent Americans including former Defense Secretary Clark Clifford and Sen. Stuart Symington. New York District Attorney Robert Morganthau prosecuted the bank for evasion of U.S. banking laws and forced it to pay hundreds of millions of dollars in settlement.

Morganthau recalled to The Wall Street Journal that Sheik Zayed once told the State Department that if anyone in the royal family was indicted in the scandal he would pull his billions out of the United States and make no further investments here. The Journal quoted Morganthau as saying that Abu Dhabi under the current emir, Sheik Khalifa bin Zayed al Nahyan "has been responsible" since BCCI.

Still, The Journal has called the deal with Citigroup "unfortunate, if not a tragedy, that America’s largest bank had to go hat in hand to Arab sheiks because of bad management and blundering U.S. monetary policy."

Citigroup got deeper into the subprime mess in September with its purchase of AMC Mortgage Services, which held $45 billion in the questionable mortgages. And the federal government was slow to warn of coming foreclosures and defaults and bankruptcies as well as the AAA credit ratings
bestowed on sellers of risky mortgage investments.

The Journal pointed out that Abu Dhabi’s 4.9 percent stake in Citigroup plus an earlier Saudi Arabian stake of 3.9 percent, as well as uncounted smaller Middle Eastern investments, puts Arabs in a powerful position in the huge American bank. Citigroup says that Abu Dhabi will have "no role in the management or governance of Citi," but that’s much like what the old American Bank said in the 1980s when BCCI had secretly bought it.

By keeping this new investment below 5 percent, Citigroup and Abu Dhabi are avoiding federal scrutiny of the deal. Transparency would be preferable, especially when tracking money transfers is so important in combating terrorism.


Reader Comments

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Joshua of Bangor, Maine - 12/10/07
I'm not so sure about the alarmist liberal media part of your post, Holden, but the part about all government, religion, etc was spot on. Vernon, I hardly think that it's the domestic spending programs that are funding the PRC, seeing as how they make up (in total) less than half of the money our government spends every year. Why did you fail to mention the gigantic waste of money we call the pentagon. The Iraq war has been funded almost in it's entirety on the PRC's dime. It's the Republicans who are spending their childrens' (not to mention grand-children, great-grand-children etc.) money. The worst part of it, however, is the fact that they can't even account for half of this money, so where did it go? Straight into the pockets of the war-mongers in Washington.

Vernon of Bangor, Maine - 12/10/07
Would it be to much to ask the BDN editors to sign their work so readers know who the writer is?

Holden of Holden, ME - 12/10/07
Attention BDN staff and any other alarmist liberal media: This is not news, all this is about is a private company in a global market that is receiving investment from another country. This happens everyday, thousands of times a day from hundreds of countries across the globe and to hundreds of different companies. 7.5 Billion is nothing, that kind of money moves around in single transaction deals, buyouts, consolidations, sell-offs and trades several times a month, we just dont here about it. This is being hyped up because it is a traditional U.S. company that looks like it is being bought by an :::Evil arab state::: ... oooooohhhhhh nnoooooo. Come on now, we have U.S. businesses doing deals with China, Russia, Saudi Arabia, and plenty of other unsavory countries all the time. It is just bussiness. Sure its partially crooked, but all business, politics, and religion is, so where is the news in this story?

Vernon of Bangor, Maine - 12/10/07
Is Citigroup obtaining funding from Abu Dhabi any more odious that the USA Fed government obtaing funding from The People Republic Of China... Every time you advocate some new Federal spending program (and some state) that is exactly what you do.


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