Friday, June 05, 2009

FDIC Pushing To Purge Citi Management; Lower Its Health Rating

What follows is from an honest to goodness fantastical piece of reporting by The Wall Street Journal.

The WSJ is reporting that the FDIC is pushing to have The Panda Bear - Vik Pandit - and other Citi management replaced. Further, it seems like the FDIC was a nut hair from putting Citi on its list of Problem Banks at the end of March, but was convinced to hold off by the OCC.

Citi management responded to Sheila's endeavors by stoking the fire with a reply that basically kicks The Sheila Bear (Sheila Bair) directly in her giant balls:

"The FDIC is our tertiary regulator," behind the Office of the Comptroller of the Currency and the Federal Reserve, said Ned Kelly, Citigroup's chief financial officer.


The same Tertiary Regulator that has to deal with your sorry ass(ets) when you fail? The same Tertiary Regulator that has already entered a $300 billion loss sharing agreement with you and has guaranteed $40 billion of your debt? Oh, and, by the way, the U.S. Treasury owns (or is about to own) 34% of you. I mean, why should the FDIC have any influence? What do they care? Those kooky FDIC bastards.

Keep swinging, Ned.

Apparently Ned is not the only one wailing at Sheila with gorgeous pedicured hands. The cat fight between The Panda Bear and The Sheila Bear actually dates back to The Sheila Bear's deep sixing of Citi's agreement to take over Wachovia. Here is how the WSJ presents the gossip:

The discord between Citigroup and the FDIC dates to last fall. In September, Citigroup agreed to buy faltering Wachovia Corp. in a government-arranged marriage. Days later, however, Wells Fargo & Co. swept in with a higher offer for Wachovia. Citigroup officials felt blindsided and faulted Ms. Bair for endorsing the Wells Fargo bid over their own.

On a 2 a.m. conference call at that time, the usually mild-mannered Mr. Pandit launched into an obscenity-laced tirade about the FDIC chairman, according to people familiar with the call.

Citigroup soon filed lawsuits against Wells Fargo and Wachovia, accusing them of improperly breaking up the Citigroup deal. Citigroup executives came to blame the deal's demise as the catalyst for a plunge in Citigroup's stock price, one cause of the federal bailouts.

Repairing Relations
After months of not talking to the agency, Citigroup executives in the past couple of months have tried to repair relations with the FDIC.

Board members including Mr. Parsons, the new chairman, have reached out to FDIC officials, according to people familiar with the matter. Their message: "We're here to help," one person said. "Please use us as your avenue. We want to facilitate your review of Citi."

In public statements, Ms. Bair has declined to discuss Citigroup.

In private conversations with other regulators, FDIC officials have argued the government should be tougher on Citigroup. In what is becoming a classic Washington turf battle, the Comptroller of the Currency has countered that replacing the bank's management could be too disruptive. The agency, which oversees Citigroup's national bank division, believes Citigroup needs more time to implement its turnaround strategy.

In March, senior officials from the FDIC and Comptoller sparred over the confidential financial-health rating the government assigns to the company's Citibank unit, people familiar with the matter said. The FDIC wanted the rating lowered, these people say. Banks rated a 4 or 5, on a scale of 1 to 5, are deemed "problem banks," which means they're at greater risk of failure.

Government officials decided to keep Citigroup off the "problem" list at the end of March, which became clear after the FDIC disclosed that the 305 banks on the anonymous list had a total of only $220 billion in assets, meaning Citi couldn't be among them.

Still, Citigroup officials believe that the FDIC will push them onto the "problem" list if they don't remove Mr. Pandit and his team. They fear being on the list could limit Citigroup's access to federal programs and prompt trading partners and clients to yank business. [emphasis added]
As a brief aside, small banks must love the Orwellian sense of equality The Borg, I mean, The Administration provides.

Anyone want to place odds that The Shelia Bear was a primary source for this story? The Panda Bear is probably chewing on some bamboo, just pissed as all hell right now. This article has all the hallmarks of "anonymous backstabbing media leak in order to execute a personal vendetta" written all over it.

We at TILB couldn't be more pleased.


Let us know what you think? Can a Sheila Bear beat a Panda Bear in a mud wrestling match?