Sheila Bair, former chairman of the FDIC, spoke with Tom Keene and Ken Prewitt on “Bloomberg Surveillance” today about Vikram Pandit’s departure as CEO of Citigroup Inc. (NYSE:C). Sheila Bair said that “this was a very positive move and the board discharged its responsibilities and I think they should be commended.”
Bair went on to say: “I did have concerns about Mr. Vikram Pandit’s qualifications to serve as the CEO of the largest commercial bank, because he had never been a commercial banker.”
Bair on Pandit’s departure:
“I think the board is doing their job. The most important job for a board is to pick the Chief Executive Officer and they need to do that in a way that has the right fit of skills and responsiveness that will help meet the challenges of the corporation. I think the board is doing their job and they wish Mr. Pandit well and they wish Mr. Corbat well, but I think they are exercising their prerogative or obligation to define appropriate management and leadership for the corporation.”
On whether Pandit was pushed out:
“I will take at face value how Citigroup Inc. (NYSE:C) is explaining it and I do wish both of them well. But the board hires the CEO and the board needs to make sure the right mix of experience and qualifications to meet the current needs of the corporation. I think the board is doing their job and this should be a good model for other boards. There were obviously some issues, some shareholder unhappiness. I don’t want to say anything that’s not positive because I think this was a very positive move and the board discharged its responsibilities and I think they should be commended for that.”
Video and excerpts below:
On criticisms of Pandit:
“I did have concerns about Mr. Pandit’s qualifications to serve as CEO of the largest commercial bank since he’d never been a commercial banker. Also, in my interactions with him–on the bailout initiatives, the ring-fence with the original Wachovia situation–I saw not a good ability to execute, not a good ability to have information, which I thought was pretty basic for anyone managing a large institution…this was a concern to me. Citigroup Inc. (NYSE:C) still has a very good global franchise, there’s some very positive things about Citigroup Inc. (NYSE:C) and I think they deserve the best of leadership. I wish Mr. Pandit well and I think he’s got skills that may be well suited at a different type of organization, but we did see problems with execution.”
On how Citi’s board operates with Michael O’Neill as chairman:
“A lot of the board members are new and those appointments were a result of a lot of the initiatives that the FDIC was pushing. I think it is a well-qualified board and we’ve made some very positive changes there. I do think O’Neill is a former commercial banker, he does has a very good reputation and track record and understands banking. I have a lot of confidence that he and his board are making the right decisions at the right time. I think we all want to wish Mr. Pandit the best. I think the way they are explaining this is quite positive, but they need to move forward.”
On whether the banking industry is in the clear now:
“No I think there are still a lot of headwinds. As I say in my book, I think that we did not clean out and restructure the industry in 2009 creates a drag now. There’s a recent McKinsey report out now about this: if you prop up the inefficient institutions with the ones that managed well, you interfere with the markets being able to drive more efficient outcomes and that’s what we did. And I think the sector is still too bloated. That combined with economic uncertainties–I’m glad that they are profitable, I certainly wouldn’t want it the other way around given the government exposure for these large institutions, but profits are being driven heavily by momentum that is not sustainable. A lot of it is coming from QE3.”
