Bair: Geithner backed Pandit at Citigroup

Former FDIC head Sheila Bair says in her Former FDIC head Sheila Bair says in her book she tried to get Timothy Geithner to replace CEO Vikram Pandit at Citigroup. (June 24, 2011) Photo Credit: Bloomberg

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Treasury Secretary Timothy F. Geithner resisted Sheila Bair's attempts to replace Vikram Pandit as chief executive of Citigroup in early 2009, according to her memoir of the financial crisis.

Pandit was "handpicked" to be CEO by former Citigroup chairman Robert Rubin, who is Geithner's "hero," she wrote in "Bull by the Horns."

Bair, who stepped down last year as chairman of the Federal Deposit Insurance Corp., sought to replace Pandit with Jerry Grundhofer, a Citigroup director and ex-CEO of U.S. Bancorp, according to the book.

"I had been pushing hard for Grundhofer to replace Pandit, and I believe Jerry would have stepped in if Tim had asked him to," Bair wrote. "But Tim would not take decisive action to replace Bob Rubin's hand-picked choice for CEO, Vikram Pandit."

Her pursuit of Pandit's ouster came as he worked to repair Citigroup after it took a $45-billion bailout in 2008. Pandit, 55, lacked commercial-banking experience while the company's management struggled to make decisions, Bair wrote. Geithner, 51, wanted to shield the bank from Bair rather than protect taxpayers from potential losses at New York-based Citigroup, according to the book.

"Couldn't we at least bring in an experienced commercial banker to run the place, I asked," wrote Bair, 58. "Tim resisted, offering a bone instead: that Vikram could hire some more commercial bankers to work for him. I doubted that many senior commercial bankers would be willing to work for Vikram, given his weak reputation, but no one was going to buck Tim."

Pandit has succeeded in turning the company around since taking over during the financial crisis by paring assets and restoring earnings, Mark Costiglio, a Citigroup spokesman, said in a statement.

"Citi has executed a strategy based on returning to the basics of banking and building a culture of responsible finance," Costiglio said. "It is a simpler, smaller, safer and stronger institution than it was five years ago, and this record speaks for itself."

Grundhofer, 68, left the Citigroup board in June 2011 and became nonexecutive chairman of the U.S. subsidiary of Madrid-based Banco Santander SA, Spain's largest lender. Geithner was head of the Federal Reserve Bank of New York, one of Citigroup's regulators, before joining President Barack Obama's cabinet.

Suzanne Elio, a Treasury spokeswoman, declined to comment. Bryan Hurst, a spokesman for Santander's Philadelphia-based Sovereign Bank unit, didn't immediately return phone and email messages seeking comment from Grundhofer.

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