Commentaries

Now raising intellectual capital

Pandit buys time with Citi reshuffle

-

– Peter Thal Larsen is a Reuters columnist. The views expressed are his own –

Notch up a win for Sheila Bair. It’s hard to see the latest management shake-up at Citigroup as anything other than an attempt to placate the combative chairwoman of the Federal Deposit Insurance Corporation.

It should help end a regulatory turf war over Citi’s future and buy chief executive Vikram Pandit some time to show he is getting to grips with the ailing megabank. But his corporate life expectancy is still measured in months, not years.

By bringing in Eugene McQuade to run the Citibank division, Pandit has addressed one of Bair’s main criticisms — that Citi’s team of former investment bankers lacks commercial banking experience . McQuade, an industry veteran, will have the key task of getting to grips with Citi’s deteriorating retail and small-business loan books.

Bair on PE bank deals: “We will get this right.”

-

The idea of the strip-and-flip crowd a/k/a private equity firms buying distressed banks out of government receivership raises a lot of dicey issues. But with federal regulators approving three such transactions this year and more bank failures on the way, get used to the idea of PE banking.

Last month Rhode Island Sen. Jack Reed, a member of the Senate Banking Committee, sent a letter to regulators in which he raised some concerns about these deals. Now at least one regulator, FDIC Chairman Sheila Bair has responded.

  •