Today the New York Post in screaming front page headlines:
CITI
OF FOOLS
Negligent Bank Board Must Quit!
On January 28th of this year the following post from me appeared on the Huffington Post:
Citigroup's Self-Immolation and the Beginning of the Eclipse Of American-Style Capitalism
Consider this: Citigroup Inc. has ended last year holding at least $18 billion in mortgage-backed junk which they have had to write off. Their share price has been halved in a year causing their shareholders billions in losses. From a venerable bank, they have been reduced to a tincup institution, selling parts of themselves at fire sale prices. All this, while recent legal discovery has increased their liability exposure to the Enron bankruptcy.
For their management skills, the following awards have been visited on the Citigroup visionaries. Vikram Pandit, Cititgoup's new CEO, after just six weeks on the job has been awarded a $26.7 million stock bonus and 3 million in stock options. This for a man who when he was appointed to run trading, investment banking and alternative investments at Citigroup in early October caused Deutsche Bank AG analysts to pronounce that "... to restructure the investment bank means that changes in the Office of the Chairman, which we feel are needed, are unlikely to be forthcoming." Thus according to Deutsche Bank's prescient assessment, Pandit's appointment showed nothing more than that the past was prologue.
For his brilliance in 2007, CEO Charles "Chuck" Prince who was replaced by Pandit in December, was awarded $10.7 in stock in addition to a $13.2 million cash bonus. Wrecking franchises seems to be good work if you can get it.
Robert Rubin, the former U.S. Treasury Secretary, who after pocketing $100 million over the last nine years for being asleep at the switch, (and according to yesterday's New York Times "urged Citigroup to become more actively involved with in-vogue areas like structured credit, pools of securities backed by different assets, and commodities") told the board's compensation committee he didn't want a stock bonus this year (the previous year's payout was $6.81 million in stock plus an $8.4 million cash bonus). A true "geste d'estime" (gracious gesture) from someone with Rubin's public profile, would be to return the full $100 million. Now that would send an undeniable message and set a new standard of responsibility and accountability.
But here is the key. While all these "executives" were wallowing in "gravy" Citigroup had the effrontery to announce almost simultaneously that it was cutting 4,200 jobs! 4,200 jobs lost, 4200 families in distress. Shameless is hardly too strong an adjective. By proceeding with such unfairness, in such a one-sided and callous manner, Citigroup has become the poster child of so much that is wrong, and much of what is happening throughout corporate America.
Foreclosures, lost jobs and lost futures, for the middle class and the underpowered, while the corporate bigwigs dance off richer then ever before. It is a sign that American capitalism has grown rotten at the core. The capitalist impulse, the kind that made a Bill Gates possible, that nurtured his exemplary vision, making him rich and all of us as a society richer, is under attack by vested and influential interests that have stacked the game to such one sided advantage, that it is on the verge of losing all credibility and crushing our confidence in a system that was a meritocracy and a beacon unto others. It is obscene and a healthy society cannot permit it to continue.
The Citigroup bell has tolled!"
Sorry, I was wrong. The Citigroup bell has not tolled. After announcing a program displacing 50,000 employees, with careers destroyed, families devastated their Wall Street cronies in Washington rallied round with additional bailout billions and billions more in guarantees permitting the reigning nabobs to hold on to their many million dollar sinecures, small portions of which could have saved thousands of jobs. And the rot at the heart of American capitalism continues unabated.
Finally we are reduced to paraphrasing Lenin: "The Capitalists will sell us the rope with which we will hang them" to "Wall Street will sell us the rope with which we will hang American Capitalism."