Opinion
Pandit Should Learn a Lesson from Reed
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By Roy Smith, Kenneth Langone Professor of Entrepreneurship and Finance & Professor of Management Practice
January 9, 2012
Four years ago, in December 2007, less than 12 months after selling his hedge fund to Citigroup for $800m, Vikram Pandit became its chief executive. He replaced Charles Prince, appointed by the board in 2003 after the pressured resignation of Sandy Weill.
Prince, a lawyer and troubleshooter for Weill with little executive or banking experience, was appointed on Weill’s say-so with no search committee. Prince left a mess behind him, into which Pandit was tossed headfirst. First there were $120bn of write-offs on mortgage and other loans that depleted all of the bank’s capital, forcing the US government to bail it out and become its largest shareholder. Second was the long-running legacy of being what some called a regulatory “serial offender”, and a defendant in a seemingly endless stream of litigation alleging fraud, misconduct and predatory activity.
The first destroyed Citigroup’s aggressive, take-no-prisoners business model, once feared and admired as the most powerful in the banking industry, and the second shattered its once-brilliant reputation and brand.
Read full article as published in Financial News.