Bair’s summer in the Citi

September 30, 2009

Sheila Bair and Dick Parsons may not be best friends, but they certainly spent a lot of time together this summer.

Federal Deposit Insurance Corp head Bair and the Citigroup chairman met or spoke on the phone on at least five occasions during the summer, FDIC records show. Parsons got more official face time with her than any single bank executive.

Parsons even had more time with FDIC chairman Bair than Treasury Secretary Timothy Geithner — the Obama administration’s point man on financial regulatory reform. Bair and Geithner, who haven’t always seen eye to eye on reforming the banking industry, met three times on official business this summer.

The FDIC provided Reuters with a copy of Bair’s datebook from June through August in response to a Freedom of Information Act request. The 92-page document offers a window into the FDIC chairman’s world, providing a brief listing of who Bair met with during that three-month period.

There is no record of what was discussed during those meetings, so it forces one to become a bit of a detective to piece together what may have been on the agenda. One can only guess what Bair and Alan Greenspan talked about over lunch on July 1, or what she and bank analyst Meredith Whitney may have chatted about on July 9.

But it is Bair’s frequent consultations with Parsons and other Citi board members that really jump out from the pages of the datebook. In June alone, Bair met with Parsons three times.

These communications may not be too surprising, given Citi’s precarious financial state, and the federal government’s big monetary commitment to prop up the banking giant.

Yet it’s notable that after The Wall Street Journal reported on June 5 that the FDIC was pushing for a management shake-up at Citi, there’s no record of Bair meeting even once with Citi CEO Vikram Pandit. It doesn’t appear Bair met or scheduled a phone call with a single member of Pandit’s management team over the summer.

Interestingly, the Journal’s page-one story about Bair rattling the cages at Citi ran just three days after Parsons met with her on June 2. Seven days later, Bair had a teleconference with Parsons and the rest of the 17-member bank’s board, which includes Pandit.

It’s been clear that Parsons has taken the lead in handling Citi’s often tense relationship with the FDIC and other federal agencies. But it’s still surprising that neither Pandit nor anyone from his team met with Bair, even after Citi did as the FDIC requested and installed a new chief financial officer on July 9 along with other management changes.

These days the storyline coming from those close to Citi and its 17-member board is that Parsons has managed to smooth out any lingering bad feelings between Bair and Citi’s top management.

Some of that bad blood stems from the FDIC throwing up a road block to Citi’s unsuccessful bid for Wachovia. The former Time Warner chairman and chief executive supposedly convinced Bair not to push for Pandit’s ouster and put the FDIC chairman more at ease with the direction Pandit is taking the bank.

Maybe that’s the case.

But Pandit may not want to rest too comfortably. The apparent absence of any one-on-one between Bair and Pandit may speak volumes about her true feelings.

That’s because Bair managed to make time to meet with executives from other big banks that have received assistance from the federal government. On June 30, for instance, she met
with Wells Fargo CEO John Stumpf and Howard Atkins, the bank’s chief financial officer. And on August 11, she met with Bank of America’s new chief risk officer, Gregory Curl.

Parsons’ last get-together with Bair during this three-month stretch occurred on August 10. Three days later, the Financial Times ran a story that Citi, at the request of regulators, had hired an outside consultant to conduct a top-to-bottom management review and recommend additional managerial changes.

The outside consultant’s management review is supposed to be presented to Citi’s board and regulators sometime in October — around the time the bank reports third-quarter earnings.

So should Bair have reason again this fall to talk to Parsons, the result may be less comforting to Pandit and his management team.

One comment

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Hey, wait a minute. Am I the only one that can read the text that’s been blacked out under b8 rules?

For example:

June 2, 2009 3:00pm
Meeting with Dick Parsons, Citi

June 22, 2009 4:00pm
Meeting with Dick Parsons, Mr. Grundhofer, and Mr. O’Neill

I didn’t look any further, but I’ve seen this stuff happen before – someone thinks that running a black marker over some text on a printout will hide that text from a scanner. News flash: it won’t!