As usual , NYT does an excellent job of description, analysis, and collecting together various strands to make up this long article. As an ex-customer of Citibank, and one who has had long associations with Citi staffers in India and a few other countries, I can only add some specific comments and observations to the NYT story.
My customer experiences as well as those dealing with the Citi staffers have given me two clear impressions about Citibank (maybe it's true of Citigroup as well):
- a culture of risk
- a culture of short-changing the customer to the point of being dishonest
The culture of risk also runs contrary to my expectations - I always believed that banks have to run on two principles: prudency and conservatism. After all, a bank runs its business on money taken from depositors, who expect their money to be safe in most cases.
The NYT story I have mentioned above tracks the sorry tale of Citigroup from 2007, or thereabouts. NYT also carried a story four years ago, on Whether or not Mr. Prince succeeds will speak volumes about how effectively a chief executive can change the culture of a company as large as Citigroup, as well as offer a test of whether the bank can still dominate markets and rake in profits without crossing regulatory and legal boundaries."
Obviously Mr Prince failed in that job. Maybe he was destined to fail - unless he could replace a whole generation of managers overnight, he couldn't have changed the culture. Maybe he didn't want to succeed - he was being advised by Robert Rubin, and here's NYT from the Nov 2008 story:
“Chuck Prince going down to the corporate investment bank in late 2002 was the start of that process,” a former Citigroup executive said of the bank’s big C.D.O. push. “Chuck was totally new to the job. He didn’t know a C.D.O. from a grocery list, so he looked for someone for advice and support. That person was Rubin. And Rubin had always been an advocate of being more aggressive in the capital markets arena. He would say, ‘You have to take more risk if you want to earn more.’ ”
Rubin was the Treasury Secretary during the Clinton administration, when he "helped loosen Depression-era banking regulations that made the creation of Citigroup possible by allowing banks to expand far beyond their traditional role as lenders and permitting them to profit from a variety of financial activities. During the same period he helped beat back tighter oversight of exotic financial products, a development he had previously said he was helpless to prevent." Looks like Rubin is one of the architects of the mess that US banking is in now.
Now, I read that he is (was?) an advisor to Barack Obama during the period of transition. If he continues to advise the new President of the USA, God save America, and more importantly God save the World! Nothing short of divine intervention may suffice.
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