Remember those western movies where nobody wants to be sheriff because the bandits always come into town and kill whoever happens to be the local lawman? It’s a genre common enough that it was parodied in “Blazing Saddles,” where a black man becomes sheriff because no-one else take the job. (And there was an episode of the original series of Battlestar Galactica that borrowed this plot device as well, although the bandits in this case were played by Cylons.)
That’s the feeling we get when we talk to people about Citigroup’s search for a new chief executive officer. With John Thain now officially in place at Merrill Lynch, the pressure is on for Citi to name a new chief but reportedly they haven’t made much progress. One sign that the search is going nowhere is that the names being bandied about are becoming truly fanciful. Some are even starting to talk call for Hank Paulson to take over the bank, according to a story in yesterday’s New York Post.
Of course, no one really thinks this could happen but it’s fun to imagine the field day the Goldman Sachs conspiracy theorists—we’re talking about you Ben Stein and Charlie Gasparino—would have with this.
It’s actually looking increasingly like it might be Vikram Pandit. This choice would signal a serious setback for Citi, since after this drawn out search settling for an insider would likely be read by the markets as a indicating a lack of outsider interests. One of the persistent rumors we’re hearing from well-placed sources inside of Citi—although not well placed enough to actually be in board meetings—is that many would-be candidates have been deterred by the reputational and legal risks of running the bank.
Under Sarbanes-Oxley, for instance, the new chief executive would have to certify Citi’s financial results and the quality of its internal controls. We’re told that at least a couple of candidates have shied away because their conversations have not made them comfortable with the idea that Citi fully comprehends it’s exposure to credit markets. This means that the new chief could be faced with the unappetizing prospect of endorsing financials he couldn’t be certain about and overseeing a bank that continues to experience a series of share-price battering losses.
Who's On Deck? [New York Post]