FDIC For Top Management Shake Up At Citi

Published: 09-Jun-2009

With the regulator’s increased involvement in Citi group, the Indian born CEO’s position appears to be at risk.

Even though, Citi has taken steps to clean up its balance sheet, some of the government officials are not satisfied with the bank's pace of change. FDIC in particular, is worried about the lack of experience of senior executives in commercial banking. For instance, Mr. Pandit comes from investment-banking background, but the bank's current problems stem from troubled consumer loans.

The Federal Deposit Insurance Corp is increasing pressure on Citigroup for a management shake-up. FDIC has even asked a fellow regulator recently to downgrade the government's confidential ranking of Citi's health, a step that can let regulators control the bank more firmly. Former US Bancorp CEO, Jerry Grundhofer, who recently joined Citi's board, is being pegged as the possible successor to Vikram Pandit.

However, Mr. Pandit’s allies argue that the Indian born, who took over the reigns after Chuck Prince was forced to quit due to mounting losses, can not be held responsible for the mess at Citi.

Richard Parsons, Chairman of Citi, said: “We went through a rigorous stress-test process, the results of which were agreed to by appropriate regulatory agencies and clearly reflect the significant progress made by this management team over the last 15 months to turn Citi around.”

FDIC's aggressive stance comes in the wake of the Obama administration's big overhaul of financial regulation. Several regulators, including FDIC, are expecting to get more powers.

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