Al offered a scathing rebuke to Citi's management:

Sorry, another buddy of Pandy will not solve the problem. As you can readily see from the article, the current organizational structure is one big part of the problem.

How many COOs and CIOs does Citi require to do business? The answer to a number of issues is a streamlined organization with zero matrix management. There are more dotted lines on the Citi chart than solid reporting lines.

And of course, get rid of the current top managers who let Citi get into this mess to begin with. Pandit is starting to make Prince look good.

And echoing Thomas Paine, Gerald D. called for more common sense on Wall Street:

Regarding the hire of Lippert for Citi CIO, it matters not what experience or formal education such a candidate has, but only whether or not such a candidate has the integrity and common sense to do the job. I assume thatwhoever hired him is satisfied that he has those two qualities and I have no reason to believe he lacks them.

Clearly there is an extreme lack of those two qualities on Wall Street these days and the lack of those two qualities always lowers corporate productivity. When one understands that virtually no one on Wall Street has the ability to give accurate values to derivative products, measure the risk of a derivative product and hedge an investment in a derivative product, then one understands that education and prior experience mean nothing when it comes to leading any technical financial enterprise today. And the sub-prime mortgage problem gives ample evidence of that.

Wall Street doesn't need CIOs to correct its problems. It needs financial engineers with integrity and common sense.

In 1995 I interviewed 500 of the top MBA grads in the U.S. in an attempt to find qualified financial engineers and only one could tell the truth during an interview and also tell me how to evaluate some of the simplest derivative products in the market at that time. Things haven't changed a bit since then.

These are strong words, and some of the issues raised can't be fixed by new technology, a new CIO or even new financial engineers. It would take a cultural revolution of sorts to change the multi-CIO/COO structure of large firms or the way toxic mortgages are packaged together and priced. Let's hope that Wall Street executives, regulators and Congress together apply integrity and common sense to solving the subprime and derivative valuation messes.

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