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  • Citi's Pandit Is 'Forgoing' His Bonus: Was There an Alternative?
    Tom, you have touched on a very important nuance of the bonus culture. When bonuses become ‘deferred compensation’ instead of ‘profit sharing’ it is easy to understand why there is a sense of entitlement that these gentlemen will ‘forgo’. As you know, in financial services businesses the ‘masters of the universe’ model pays bonuses based on league tables and deal pipelines – neither of which have a direct correlation to profits. It underscores the yawning gap between where we are and where we need to get in reforming practices in the financial services – particularly because of the systemic risk they pose to the well being of society. Maybe ‘forgo’ is a start!
    Jan 06 07:18 am |Rating: +3 0 |Link to Comment |View article
  • Who Owns Chrysler's Headquarters?
    This ‘financial engineering’ is not unique to Cerebrus. This way of making money by extracting value from the ‘family silver’ owned by others is the standard modus operandi of a vast swathe of market players. It reflects the cancer eating into the financial well being of society and needs systematic treatment – surgery, chemo therapy, radiation. Regulators need to be able to shine a light into the darkest corners of the markets in order to re-build the confidence that has been destroyed by market participants running amok.
    Dec 26 09:09 am |Rating: 0 0 |Link to Comment |View article
  • Cramer's Mad Money - Return to the Forbidden Citi (12/19/08)
    Miriam, you wrote: “Pandit was the architect of Citi’s turnaround in 1991”?! I wasn’t aware of this historical ‘fact’. Even though I have followed Citi’s fortunes since 1988, the first I heard of Pandit was when he sold Old Lane Partners to Citi for $800 million in 2006 and then liquidated the fund in 2008.
    Dec 22 08:24 am |Rating: 0 0 |Link to Comment |View article
  • Why Citigroup Imploded
    Citigroup was an accident waiting to happen since the merger of Travelers and Citicorp in 1998. The ‘boring’ global Citicorp that was focused on customers, not on Wall Street joined up with Travelers – a company made up of the asset stripped carcasses of many second tier (sub-prime oriented) financial companies. The two cultures clashed violently which led to systematic destruction of shareholder value – even though the stock price kept going up!
    Traveler’s management wrested control and the resultant dysfunctional company stumbled repeatedly over the past ten years. Every time a major stumble occurred there was a wringing of hands, firing of the ‘culprits’ but no change in the culture – cabals continued to rule, crushing dissent and appointing people to roles for which most were visibly unqualified. In fact the main qualification was that you were ‘trusted’ by Sandy and his inner circle – nothing else seemed to matter.
    The same culture still prevails – only some of the people in power have changed. It’s going to be a long haul back, provided the leadership actually make the effort to modernise management practices to represent the current century!
    Nov 25 08:55 am |Rating: 0 0 |Link to Comment |View article
  • Will Citigroup Regain Its Lost Luster?
    The banking model where you make real money out of phantom money is dying. We need to get back to a model that is focused on meeting customer needs effectively and making a profit as a result. How boring but sustainable! Unfortunately the system is awash with toxins and I fear that the prolonged ‘near death’ experience will continue for some more time. As a shareholder of Citi for over the past 15 years, I have watched in horror as its share price has being massacred over the past 18 months, I can only keep fingers crossed and hope that actual death doesn’t occur. Since the other banks are in the same leaky boat, society will hopefully rescue them – but hold to account those who have rewarded themselves so handsomely with other people’s money.
    Nov 20 07:17 am |Rating: 0 0 |Link to Comment |View article
  • Volkswagen Demonstrates the Market's Sturm und Drang
    This rare opportunity of seeing short sellers on the receiving end of a bad bargain represented a bright spot in a general environment of doom and gloom. However it emphasises the need to stop all market distorting practices and for shining a light on all market participants. The rules of the game need to be clarified and applied to all players. The casinos need to be separated from investor markets.
    Oct 30 10:25 am |Rating: 0 0 |Link to Comment |View article
  • Destruction of Wealth?
    The US economy has become a giant casino, where, for example a car manufacturer made more profit from selling car loans than selling cars! Something had to give – and it has with a vengeance. We can now watch with horror as the 6 trillion dollar Credit Default Swap market unravels - 1000 dollars for each man, woman and child on this earth – yes even the 2 billion that who live on less than one dollar a day!
    Oct 16 13:04 pm |Rating: 0 0 |Link to Comment |View article
  • Citigroup Should Walk Away from Wachovia
    I think that Wells Fargo has given Citi an opportunity to ‘dodge a bullet’ over their shot-gun engagement with Wachovia. They need to settle for a payment and walk away and focus on their existing global franchise. Prudence not ego will be more useful at this time.
    Oct 06 05:43 am |Rating: 0 0 |Link to Comment |View article
  • How Much Will a Wells-Wachovia Deal Cost Taxpayers?
    I think that Wells Fargo has given Citi an opportunity to ‘dodge the bullet’ over their shot-gun engagement with Wachovia. They need to settle for a payment and walk away and focus on their existing global franchise. Prudence not ego will be more useful at this time.
    Oct 06 05:41 am |Rating: 0 0 |Link to Comment |View article
  • Batten Down the Hatches: Economic Forecast
    I agree with DenisL (Oct 5 at 2:12pm). The mortgage related credit derivatives market is a small part of the total market where lack of clarity of ownership and responsibility is all pervasive. It is necessary for this massive 'can of worms' to be dealt with. If in the process house prices fall to affordable levels and stock values actually represent the worth of the companies - that should be acceptable to all champions of the free market. Public money is better spent on investment in the crumbling infrastructure and in promoting alternative energy solutions. Jobs will follow the money.
    Oct 06 05:17 am |Rating: 0 0 |Link to Comment |View article
  • Credit Crisis Sharpens Anger Over CEO Pay
    I like the argument that you have presented though I don’t agree with the remedies. Capping salaries and benefits, and/or deploying punitive taxes will not only destroy innovation and enterprise, but will also stoke corruption – misuse of corporate resources. However the current system is rotten to the core, where insiders pick the pockets of the public and call it capitalism! It needs some serious decontamination.

    A fresh regulatory framework that creates transparency for all players in the markets is an absolute necessity. Congress needs to invest some quality time in building a new integrated framework as well as creating an independent regulator that has authority over all market participants. They also need to coordinate regulatory efforts with rest of the world to minimize arbitrage.

    Meanwhile as the system deleverages, we’ll just have to grit our teeth and keep our fingers crossed.

    Oct 06 04:58 am |Rating: 0 0 |Link to Comment |View article
  • Citi Examines Its Carrots and Sticks
    Citi has been presented with an excellent opportunity to cash out the deal and focus on its own current sprawling global franchise. There is huge value it can unlock for the shareholder by managing the existing franchise effectively – without getting bogged down in additional remedial portfolios. Citi, please quit while you’re ahead!
    Oct 04 11:32 am |Rating: 0 0 |Link to Comment |View article
  • The U.S. Shouldn't Pay Ransom to Wall Street
    Tom, I agree with your approach. It is incredible that the US government is contemplating the option of pouring copious quantities of fuel on the fire raging at Wall Street. A cold shower i.e. insistence that the books of all players be open to inspection by federal authorities so that transparency can be increased in the markets – may be a better solution. This reduction of uncertainty will help stabilize the markets – perhaps at a short term loss of 500-600 points on the Dow, which may not be a bad place to be.
    Oct 02 12:30 pm |Rating: 0 0 |Link to Comment |View article
  • The Cost of Putting Expedience Before Justice
    Steve, that is a very thoughtful view. Implementing a solution for an ill-defined problem reduces its chances of success. But I guess gambling is the best way to bail out a casino!
    Oct 02 11:43 am |Rating: 0 0 |Link to Comment |View article
  • The "Heads I Win, Tails You Lose" Bailout Bargain
    Wall Street is driving the agenda, so speed is trumping common sense. It is surprising that sets of alternatives have not been presented to the law makers by the Treasury, Fed and SEC, explaining the upside and downside of each set of alternatives. This would allow decisions/votes on the basis of informed choice rather than a ‘gun to the head’. It would be useful to first put in place some mechanisms that promote transparency before pouring $700 billion onto a gambling table with loaded dice. Only regulated banks, who fully and openly report all their debt holding should be allowed to participate in the solution. This will keep out the shadow players who are there to make a quick buck rather that help alleviate the credit crisis.
    Oct 02 11:24 am |Rating: 0 0 |Link to Comment |View article

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