"For his doctoral thesis at Columbia University in the 1980s, Vikram Pandit tackled a complex economic problem involving asset pricing. His academic advisers told him it would be impossible to unravel. They were right. He never solved the problem. ... Citigroup also is expected to detail the downsizing strategy aimed at dismantling pieces of the financial supermarket that Mr. Pandit repeatedly defended even as the credit crisis and recession overwhelmed his efforts to tackle problems haunting the company long before he arrived. Mr. Pandit hasn't said publicly what changed his mind. ... On Nov. 17, Mr. Pandit touted the company's prospects in an empoyeee meeting. That evening, he boarded a Citigroup jet for a one-day trip to Brazil. Some employees were surprised that he didn't cancel the trip. ... At a meeting in Sao Paulo, an employee asked Mr. Pandit whether the U.S. government might have to intervene to prevent Citigroup from unraveling. Mr. Pandit said no. ... The next day, Mr. Pandit held a conference call with about 3,000 executives. He lashed out at 'fear-mongering' by short-sellers and rivals. But he defended the company's health and structure. 'This is a fantastic business model,' Mr. Pandit said", my emphasis David Enrich at the WSJ, 16 January 2009.
"Sheila Bair, chairwoman of the [FDIC], recently tried to describe how this would work: 'The aggregator bank would buy the assets at fair value. But what does 'fair value' mean? In my example, Gothamgroup is insolvent because the $400 billion of toxic waste on its books is actually worth only $200 billion. The only way a government purchase of that toxic waste can make Gotham solvent again is if the government pays much more than private buyers are willing to offer. ... But should the government be in the business of declaring it knows better than the market what assets are worth? And is it really likely that paying 'fair value,' whatever that means, would be enought to make Gotham solvent again? What I suspect is that policy makers--possibly without realizing it--are gearing up to attempt a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but in practice amounts to making huge gifts to bank shareholders at taxpayer expense, disguised as 'fair value' purchases of toxic assets.", my emphasis, Paul Krugman (PK) at the Houston Chronicle, 21 January 2009.
Pandit is either a criminal or a fool. Either way, he should be exited and told to return his $165 million "signing bonus". Citigroup's controller's office needs a thorough house cleaning. Pandit is right, Citigroup has a "fantastic business model" for him. It gave him $165 million for nothing. Is it possible, I an outsider, 2,000 miles from New York, knows more about what ails Citigroup than its CEO?
Uncle Sam would deceive the public? Say it ain't so, Joe. I go PK one better, why do we let the government declare it knows what interest rates are appropriate? Kill the Fed!