During the past week, news media outlets have reported that FDIC Chair Sheila Bair thinks Pandit lacks the retail banking experience to revive Citi and desires him out. Meanwhile, others speculate that Treasury Secretary Tim Geithner believes that Pandit deserves an explosion at the turnaround and that a management change could do more harm than good.
Both Geithner and Bair play key roles in the sanction of a $58 billion conversion of preferred shares into common stock, intended to shore up Citigroup’s capital. Announced in February and planned to occur in April, the conversion was held up by negotiations with federal officials. But it must happen this week, according to Citi. With that, the government will own in so far as 34% of the bank. That’s a hazardous investment. The stock, trade at $3.41, is down 83% in the last 12 months.