FDIC Chairman Sheila Bair has repeatedly questioned Vikram Pandit’s leadership and his ability to remain as Citi’s top manager. Bair’s objections consist in the fact that she doesn’t think his management includes enough commercial-banking experience to get the lender out of its distressed financial condition. However, it seems that the Obama administration, at least for now, is siding with Pandit on this one and in a way protect him from Bair’s attempts of forcing changes to Citi’s top management. What’s more interesting is that Treasury Secretary Tim Geithner seems to have become for now Vikram Pandit’s best friend in Washington.
Bill McConnell of The Deal explains:
The $58 billion stock swap was reportedly held up as the Federal Deposit Insurance Corp. chairman pressed to have Pandit replaced with an individual with commercial banking, rather than investment banking experience. Citing “people with knowledge of the Treasury Secretary’s views,” Bloomberg said Geithner insists that Pandit’s turnaround plan be given time to work.
The notion that Bair was trying to push out Pandit was first reported in the June 5 Wall Street Journal. Reports that she has been defeated only one business day later raises doubt about the veracity of the initial report of her meddling.
Given that the Fed, not the FDIC, is Citi’s primary regulator, it would be a breach of protocol for Bair to press hard for the ouster of an executive on the fringes of her jurisdiction. But a great way for her rivals to undermine her would be to leak news of her straying beyond her authority and then being slapped back.