BUSINESS
03/18/2010 05:12 am ET | Updated May 25, 2011

Willem Buiter: Citigroup Critic Is Bank's New Chief Economist

Outspoken economist Willem Buiter, a professor at the London School of Economics and consultant to Goldman Sachs, has accepted a position as Chief Economist at Citigroup, a bank he's certainly had no qualms about criticizing.

As recently as last April, on his blog at the Financial Times, Buiter has attacked Citi for being, "A conglomeration of worst practice from the across the financial spectrum."

Other criticisms Buiter has made about banks which bear no small resemblance his new employer include this monster:

Citigroup suffers from, "[A] survival of the fattest syndrome ... has turned banks and shadow-banking institutions into monsters of perverse incentives for excessive risk taking. Throughout the north-Atlantic region, concentration and monopoly power in the banking sector will be higher after the crisis than before it."

Which isn't to say Buiter's writings have escaped criticism. Fed Governor Frederic Mishkin has said that Buiter's writings have fired, "a lot of unguided missiles," and former Vice Chairman Alan Blinder "respectfully disagreed" with his analysis of the central bank's crisis management.

A staunch opponent of bailouts, Buiter opined:

"I cannot think of a single financial institution that is too big to fail, in the sense that it would damage some systemically important social institution.... I recognize the upside of bail-outs for those who arrange them: they look like movers and shakers, making and shaping events. It's heroic, in an industry where heroism can be rarely displayed. But in all of the examples mentioned above, the bail-out did more harm than good."

As Salon's Andrew Leonard points out, there is definitely no shortage of irony here:

Buiter will be taking a paycheck from one of the very biggest of the bailed-out too-big-to-fail institutions. Which means, whether he likes it or not, Buiter is being bankrolled with the support of the American taxpayer... and implicit backing of Larry Summers. If Citigroup hadn't been bailed out, would Buiter have gotten this job?

Or, as Felix Salmon put it, it may be better to have Buiter "inside the tent pissing out."

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