Crying Uncle (Sam)
While Wall Street banks pick themselves up from the mat and start putting together the billions they owe Washington for having saved the country’s financial system from utter ruin, the government’s long knives appear to still be plenty sharp for the two biggest casualties, Citi and Bank of America. Why not? These are also two of the least likely to quickly emerge from the bailout.
The FDIC is reportedly trying to unseat Citi’s CEO Vikram Pandit, Bank of America’s Ken Lewis is likely headed back to Capitol Hill next week for another grilling, and adding a little spice to the mix is news that the SEC has charged former Countrywide CEO Angelo Mozilo with fraud.
Countrywide was bought by Bank of America for $2.5 billion last July, after it appears Mozilo started dumping shares in his own company, of which he is alleged to have written, “We are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales.”
Scrutiny of the banks comes from we the taxpayer and shareholder of last resort, and may go some way to showing how little faith we have in the management of these banks boards, but not necessarily Uncle Sam’s ability to clean up the mess. Bank of America moved to replace its chief risk officer yesterday, and Citi could find some sympathy in Congress for its claims that FDIC chair Sheila Bair is overstepping her bounds in tightening the screws on Citi.