It's about time:
Bank of America (NYSE: BAC) CEO Ken Lewis is
on his way out.
Even if you're not a B of A shareholder, there's something
symbolic about this. Lewis is the last surviving Wall Street
CEO who can be tied directly to explosive losses.
Remember how they fell?
Citigroup (NYSE: C) CEO Chuck Prince steps
down after the bank began stumbling on tens of billions in
subprime losses.
March 2008: Bear Stearns CEO Alan Schwartz sells Bear
to JPMorgan Chase before it explodes.
June 2008: Wachovia CEO Ken Thompson gets booted after
the ill-timed 2006 acquisition of Golden West Financial
tore Wachovia to shreds.
June 2008:
AIG (NYSE: AIG) CEO Martin Sullivan resigns
after the insurer begins hemorrhaging money.
September 2008: Washington Mutual CEO Kerry Killinger
is
firedjust days before the bank filed for
bankruptcy.
September 2008: Lehman Brothers CEO Dick Fuld ushers
his company straight into bankruptcy.
That left just a few legacy CEOs:
Morgan Stanley 's (NYSE: MS) John Mack,
Goldman Sachs ' (NYSE: GS) Lloyd Blankfein,
JPMorgan Chase 's (NYSE: JPM) Jamie Dimon,
Wells Fargo 's (NYSE: WFC) John Stumpf -- all
of whom run banks that held up distinctly better than most --
and ... Lewis.
Oh, and this guy
Then there's Citigroup's current CEO, Vikram Pandit,
who replaced Chuck Prince in 2007, so he can't be blamed for
many of Citi's problems. He's trying to clean up other
people's messes. But you can still argue that he should be
replaced.
The most powerful argument for Pandit's ouster is simple:
The guy has absolutely no commercial banking experience.
Pandit found his way to Citigroup after selling his hedge
fund to the bank in 2007. Before that, he headed the
institutional securities department at Morgan Stanley. Before
that, he was a college professor. Commercial banking
experience? Zilch. And that's scary since so many of
Citigroup's problems stem from commercial-banking-based
segments like credit cards.
Likewise, Lewis is a lifelong commercial banker who
strayed dangerously too far into unfamiliar territory. As he
famously quipped in 2007, "I've had about all the fun I can
stand in investment banking." It just wasn't in his skill
set. Yet he made a mad dash for one of Wall Street's largest
investment banks, Merrill Lynch, which (not surprisingly)
backfired and destroyed not only his career, but nearly the
bank itself.
Lewis was a great commercial banker who tried to be a hero
investment banker. Pandit is a hedge fund manager who's
trying to be a turnaround commercial banker. Neither is a
recipe for anything good.
Is Pandit a smart guy? Absolutely. Driven? No doubt.
Committed? Heck, he works for $1 a year. But he had never
even run a mom-and-pop commercial bank before taking the top
post at Citigroup -- a bank with more than three-quarters of
a trillion dollars in deposits. Being new to the game
andCEO of one of the largest banks in the world is
dangerous, if not horrifying. And just like Lewis, that lack
of experience is bound to catch up sooner or later.
Some might say "Oh, come on. Give the guy a chance!" We
have. Pandit's most notable decision so far has been
splittingCitigroup into two segments: Citi Holdings, and
Citicorp. That made for some exciting press releases, but did
nothing for shareholders; both segments are still housed
under one roof, called Citigroup. Continued... |