Mike Corbat may not have much cared for his job as CEO of Citigroup, but he was still supposed to stick around for another couple of years and give Marianne Lake a fighting chance of convincing Jamie Dimon to become Secretary of Commerce or run for mayor or light an M-80 behind him and let his heart take care of the rest and allow her to take her rightful place as the first female leader of a major U.S. bank. Unfortunately, Citi’s woeful risk management infrastructure did what it does, over and over and over again, and reminded regulators that Citi and Corbat hadn’t really done all they promised, sotto voce, to do to fix those systems, and that maybe a highly public reminder to do so was in order. And since Citigroup replaces its CEOs when its regulators take public notice that they’re not up to snuff, Lake’s rendezvous with destiny took a wrong turn, almost as if Citi was processing the transaction.

The expected rebuke from the Office of the Comptroller of the Currency and the Federal Reserve accelerated planning for Chief Executive Michael Corbat’s retirement, according to people familiar with the matter. Regulators didn’t ask Mr. Corbat to step down, the people said. Rather, he came to believe that an expensive, multiyear systems overhaul designed to address regulators’ concerns was best left in the hands of his successor, Jane Fraser, they said….

For years, regulators have privately pressed Citigroup and Mr. Corbat to fix the bank’s risk systems, according to people familiar with the matter. A public rebuke would significantly ratchet up the pressure…. Regulators have faulted Citi’s management for not giving priority to the risk-management overhaul, the people said…. “One thing has become very clear to me…we need to think about infrastructure and controls very differently,” Mr. Corbat wrote to staff in August. “We can’t think of them as just something that is important to our regulators.”

Regulators Prepare to Reprimand Citigroup for Failing to Improve Risk Systems [WSJ]