Memory is a funny thing. Sometimes we block out events we don’t like to think about. And often it’s much nicer to make up your own version of events. Which is exactly what Vikram Pandit, the CEO of Citigroup has done, according to an article in Marketplace.
In a speech he gave this week at the Lee Kuan Yew School of Public Policy in Singapore, Pandit basically congratulated himself and Citigroup’s executive team on restructuring the company after the financial crisis and ensuring its survival. But as Heidi N Moore points out, that is not quite how events actually went down, although it is obviously how Pandit would like them to be remembered.
It's true that, like Nicholas Cage in the movie Moonstruck, Citigroup got a strong, unpleasant but very necessary slap during the financial crisis - one that allowed the bank to recognize its true destiny of being profitable and loved by the American people. The only problem is, it's not exactly how things happened to Citigroup. The financial crisis was not a fuzzy, schmoopy romantic comedy, and Pandit forgot who did the slapping.
It was not him or his team who solely demanded and drafted Citigroup's radical restructuring and ensured it subsequent survival. It was the federal government in the driver's seat.
Pandit - an executive of irreproachable and sometimes impenetrable diplomacy - seems to have forgotten the indignities of a government near-takeover, and the mists of time have created a slightly fuzzier vision of history.
Moore goes into some interesting detail about precisely how inaccurate Pandit’s recollections of the momentous events of the financial crisis were. For example, in his speech, Pandit said it was clear in hindsight that “crisis or no crisis, Citi had to be restructured. The crisis was the catalyst but the need was there. The company had, in my view, lost focus. It had lost sight of its core, historic mission.”
Moore points out that it was actually not at all “obvious to Citigroup management in 2009 that the firm had to be restructured. That's why the government exercised closer and closer financial control over the firm- even as Citigroup kicked and screamed the whole way.”
In fact, SIGTARP, the Special Inspector General for the Troubled Asset Relief Program, recently stated that the government “summarily rejected Citigroup’s initial proposal and made a take-it-or-leave-it offer that Citigroup only reluctantly accepted, against the advice of Citigroup insiders who considered the Government’s terms too expensive in light of the assistance provided.”
Moore recalls that in 2009, Citigroup was so “afraid of the government” - that the firm tried everything to please regulators, including Pandit’s voluntary $1 salary. “That doesn't sound like a firm that was aware of its shortcomings,” she notes.
It would be interesting to see how other Wall Street executives recall recent events, such as Knight’s $400 million software glitch and its subsequent last-ditch fight for survival or even Nasdaq’s botched Facebook IPO.