Here’s are a bunch of things that Chuck Prince has done since he became CEO of Citigroup that could be characterized as “dumb” (many courtesy of Duff McDonald who, unlike Prince Alwaleed, is keeping count. It is by no means comprehensive). :
- He’s said some stuff that makes him sound like he has no idea what he’s talking about. (“In July, Prince injudiciously announced that Citi would continue “dancing” to the music of the buyout boom until it stopped. Less than a month later, the roof was falling in on the dance hall.”)
- He’s exhibited little-to-no follow-through (In 2005, Prince sent out a lot of emails about how the bank should “maintain positive operating leverage” but didn’t actually get around to doing it ‘til 2007).
- He got rid of the guy keeping Maria Bartiromo’s ass in his direct line of vision.
- He more or less encouraged a lot of talent, including former co-chief Bob Willumstad and Marge Magner, head of the company’s consumer-banking unit, to give JP Morgan a chance.
- Old Lane
- He fired trading chief Thomas Maheras, who people seemed to have actually liked (how else can you explain the visible tears and “You suck, Prince! Bring Tom back” chants on Friday?)
- $6.5 billion of pre-tax losses and writedowns.
You’d think such faux-pas would be cause for Prince’s termination, but it’s the two things he’s done since taking over for Weill that could and should be characterized as “genius” that are keeping him in the employed state he’s become accustomed to:
- Lowering the bar: Prince has so far lowered everyone’s expectations of Citigroup that analysts are constantly given the opportunity to say, “You know what? They actually didn’t fuck shit up quite as badly as we were expecting. You really surprised us, Citi. Pizza for everyone.” On today’s “earnings” announcement: “Their revenues actually weren’t as bad as we were expecting,” Jeffrey Harte, an analyst at Sandler O’Neill & Partners LP said. “The trading and some of the banking businesses held up better than we thought.” Prior to announcing next quarter’s earnings, Chuckie will start a whisper campaign that the ‘group has gone bankrupt and been forced into downsizing measures ranging from “no paper clips” to “TP that makes sandpaper look good.”
And Prince has so brilliantly managed people’s expectations at what he himself is capable of that he’s no longer held to actually carrying out things that would be “good” (don’t even say “profitable,” nobody’s ready to hear that) for the bank (which presumes he ever was, as one conspiracy theory about the Prince-driven train wreck is that it was Sandy Weill’s elaborate plan to create a bank that would inevitably fail upon his departure, just so he could feel “needed”). On today’s announcement of third-quarter earnings falling 57 percent? “Prince is doing the right things strategically. It’s become more of an execution problem lately.”
- A harem of fanboys: first, there’s Bob Rubin, who’s paid $17 million a year to play (what sounds like a pretty kinky) game of “corporate and diplomatic glad-handing…of the highest order” and occasionally offer suggestions, which are either bad ones that Chuck is following blindly, or good ones that Prince sees no room for in Citi’s “strategic vision” of failure. They have each other’s backs, because they both know what it’s like to be paid millions to do jack shit. Then there’s the board in general, which just this morning was said to be “comfortable” with the recent managerial changes at the company and feels that its “strategic plan is working.” Of course, it was Prince who was speaking on the board’s behalf, but it’s entirely possible that its members have deluded themselves into thinking such ridiculous things (if there’s one thing we know at DealBreaker it’s that Stockholm syndrome is very, very real). Finally, it’s virtually impossible to forget Prince’s #1 advocate, and Citi’s largest shareholder, Prince Alwaleed, whose seemingly limitless support for the CEO has undoubtedly seen this conversation to pass: “Did you burn the place down today?” “Nope.” “Great work! If I could promote you above chief executive, I would. Here’s a virgin for your troubles.”
Basically, someone should give this guy the MacArthur award. But how much longer can the charade last? Some people are saying Rubin’s (and therefore, maybe, Chuck’s) days are numbered, and James Cramer’s “sources” tell him that Prince will be fired by the end of the week. So purely basing our answer on what we know about the voices inside Uncle Jim’s head, we’re going to go with–and this is just sort of a reflex thing–never.
Game Plan: Earnings Bonanza! [CNBC]
The Hanger-on [NYM]
Citigroup turmoil turns spotlight on Rubin [Reuters]
Citigroup Net Falls 57 Percent on Fixed-Income Losses [Bloomberg]
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Thank you Bess, you tell it like it is….pull no punches.
“here’s a virgin”
….still laughing
methinks chuck prince is trying to dethrone Nardelli as the King of Fuckin’ Shit Up
Carney, this one post should earn Bess the rest of the week off, with full pay.
No….No….Bess needs to be in to keep and eye on what’s happening. John is wondering why CNBC took OTM off the air and ruined his bid for Hollywood. Just kiddin’, John. All kiddin aside you both are doing a hell of a job. Bess you get my Blue Star today.
Great f’in POST Bess!!!
While I admit it is past the time for Prince to go, I still think overall the Board at Citigroup is more than capable http://www.newsvisual.com/newsvisual/2007/10/management-expe.htm . What Prince says and what the Board thinks are 2 different things, and to be honest we have yet to hear from the Board, either in full support of Prince or in opposition to him. My bet is that Prince will be gone sooner rather than later.
Sorry, here is the correct link http://www.newsvisual.com/newsvisual/2007/10/management-expe.html
amusing scene today with Barker leaving. All the Barker/Coley lapdogs leading a lame applause send-off followed by drinks at a nearby bar. Not nearly the emotion of Maheras’ goodbye. Hard to see why Maheras stuck by them so long. Hopefully Paco will cleanse the ranks of the incompetent dinosaurs who have led Citi fixed income down a path of mediocrity (or worse) these past several years. Adjusted for the size of its balance sheet, citi’s fixed income department has been sucking it up, and it has the self-congratulatory but crappy management to blame. Prince should be gone but so should all the MDs who were at Wolfgang’s seeing off the two worst offenders.
Prince does everything but the obvious – which is resign. He promotes guys (like him) who have no line experience – Druskin & Kaden – and even promotes Bushnell, the Chief Risk Manager and then admits that Citi’s risk management is crap (go figure!). Paco has been given the poisoned chalice, being a former Citibanker who is sandwiched between an ex-Sollies boss, Forese, and the ranks under him who are ex-Sollies as well. I agree it’s time to cull the ranks of Fixed Income management MDs, who have been coasting for too long.
Lew Kaden spends a year and $800mm to get Pandit as CEO of Alternative Investments. In a day they make Pandit’s boy John Haven the next CAI CEO. What a joke. Is this guy really the second best candidate when they chose Pandit? BS. Where’s the accountability? Old Lane would be out of business if Prince hadn’t bought it. Do you really think these guys will be respected by anyone?
Rubin clearly disdains C and is just there for the money and could care less about this company. How could an ex-CEO of GS not see that this board and Prince know nothing? They should put Rubin in charge or tell him to leave. He has no respect for this company, employees or shareholders. His silence is a stain on his record. Parsons, Armstrong or Mulcahy are all weak CEOs and have no finance industry experience. It’s pathetic. Look at the senior members of this company. Not one has operating experience in the company and barely any anywhere else – Prince, Druskin, Kaden, Volk, Crittendon, Krawchek, Pandit, Haven. Does the board really think it doesn’t matter to have worked at the company or have any real experience? Krawchek as CFO was a running joke. Everyone that’s come in contact with this group has an anecdote of their poor grasp of basic banking – liquidity, clients, risk management. JPM just crushed them and everyone knows why…Jamie.
Bob Rubin paid some $17.0 million a year to keep Prince at Citibank. Prince should go and so should Rubin and be replaced with Freddy the Chimp.