Wall Street Folly

• Big Banks Mask Risk Levels
• Wall Street Bonus Tax Should Be Considered, Liu Says
• Los Angeles Faces Threat of Insolvency
• Hedge Funds Rose 2.7% in March, Strongest Month Since September
• Citi’s ex-grandees strain to keep cool
• Citigroup executives apologize for not averting financial crisis
• Judge Faults Prosecutors in ‘Squawk Box’ Case
• Tiger Woods Shoots His Best Masters First Round; Couples Leads Read the rest of this entry »

Tags: Accounting games, Bank of America, Bob Rubin, Bonuses, Chuck Prince, Citigroup, Compensation, Goldman Sachs, Golf, Hedge funds, JP Morgan, Los Angeles, Morgan Stanley, Municipal debt, Tiger Woods, Windowdressing

We love the Elf Yourself / Jib Jab elves.  Here we present our deposed Wall Street CEO creation, including former Lehman Brothers CEO Dick Fuld, Former Bear Stearns CEO Jimmy Cayne, Former Merrill CEO Stan O'Neal, and Former Citigroup CEO Chuck Prince….

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Tags: Bear Stearns, Chuck Prince, Citigroup, Dick Fuld, Jim Cayne, Lehman Brothers, Merrill Lynch

Even the beleaguered Bob Rubin won't accept one.  Meanwhile, Citi is the subject of a lawsuit — which was actually filed last year, but was recently amended — in what the NY Post describes as "a new Citigroup scandal engulfing Robert Rubin and his former disciple Chuck Prince"….

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Tags: Chuck Prince, Citigroup, Credit Crunch, Lawsuit, Robert Rubin

Too little, too late….

In an interview with the Financial Times,
Mr Weill said he and the board should have fostered competition among Citi’s
top managers for the chief executive post rather than handing the job to Mr
Prince.

The technique has been used by large
companies such as General Electric, which selected Jeffrey Immelt as Jack
Welch’s successor after a race with two other executives.

Mr Weill did not mention Mr Prince by name
but said: “I certainly have responsibility for working with the board in
devising a plan of succession and I would not give myself very good grades on
that. At the time, I thought I was doing the right thing but it did not turn out
to be, did it?

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Tags: Chuck Prince, Citigroup, Robert Rubin, Sandy Weill

Just listed:  Chuck Prince’s recently remodeled five bedroom Greenwich home on 2.34 acres is up for sale and can be yours for a meager $6.15 million….

The Tudor-style “manor house” sits on
2.34 acres with a swimming pool and was built in 1987, said Tom Gorin, president
of Cleveland, Duble & Arnold Corp. of Greenwich. Gorin planned to show it to
a potential buyer from Australia today.

“It’s got big rooms, but it’s
understated,” Gorin said. “It no longer meets his needs.”

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Tags: Chuck Prince, Citigroup, Real Estate

Yesterday we noted the Page Six report of former Citigroup CEO Chuck Prince’s lunchtime Four Seasons outing with the boys (former Bear CEO Ace Greenberg and Blackstone founder Pete Peterson).  Prince worked the room greeting the many luminaries present, but noticeably avoided one of them — his Citigroup predecessor, Sandy Weill.  Now we have a better understanding about why the frostiness, and it’s front page news in the Wall Street Journal in a story chronicling Chuck Prince’s downfall.

For years, Mr. Weill had refrained from
speaking ill of his hand-picked successor. Yet the former Wall Street titan,
obsessed with holding down costs when he was in charge, steamed as Citigroup’s
expenses and employee counts surged. Known for his loyal lieutenants, he was
dismayed as his top executives, including his president Robert Willumstad, fled
the financial giant. Known for a healthy ego, Mr. Weill even bit his tongue as
Mr. Prince repeatedly blamed his slow start on dealing with overhanging
regulatory issues and investigations.

"Sandy was uncharacteristically quiet through all the turmoil," says
one former Citigroup executive. "He wanted to stay loyal to Chuck. Of
course bad-mouthing Chuck would amount to admitting Sandy had made a mistake by
anointing him."

On Oct. 15, when Citigroup officially
announced larger-than-expected third-quarter losses, Mr. Weill was beside
himself. He complained about the growth of the balance sheet and expense
structure, two of his hallmarks of financial discipline. As for the low stock
prices, he said, people were "voting with their pocketbook."

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Tags: Alan "Ace" Greenberg, Alwaleed, Chuck Prince, Citigroup, Credit Crunch, Revolving Door, Sandy Weill

Chuck Prince isn’t letting his newly unemployed status get him down.  The recently deposed Citigroup CEO was seen out and about, lunching at the Grill Room at the Four Seasons with former Bear Stearns CEO Ace Greenberg and Blackstone Group founder Pete Peterson…. 

Seated right in Prince’s path was his predecessor at the financial giant, Sandy
Weill. All eyes watched Prince make his way around the room, greeting titans Leonard Lauder, Bruce
Ratner, David Martinez, Bill Rudin, Richard Holbrooke, Strauss Zelnick, Walter Cronkite and James
Wolfensohn. But he avoided Weill, leading to speculation of bad blood.

Hot Entrance – Page Six New York Post

Tags: Alan "Ace" Greenberg, Bear Stearns, Blackstone, Chuck Prince, Citigroup, Restaurants, Sandy Weill

Here’s the press release that came out after the resignation of CEO Chuck Prince was announced:

FOR IMMEDIATE RELEASE
Citigroup Inc. (NYSE: C)
November 04, 2007

Citi’s Sub-Prime Related Exposure in Securities and Banking

New York, NY – Citigroup Inc. (NYSE: C) announced today significant
declines since September 30, 2007 in the fair value of the
approximately $55 billion in U.S. sub-prime related direct exposures in
its Securities and Banking (S&B) business. Citi estimates that, at
the present time, the reduction in revenues attributable to these
declines ranges from approximately $8 billion to $11 billion
(representing a decline of approximately $5 billion to $7 billion in
net income on an after-tax basis).

These declines in the fair value of Citi’s sub-prime related direct
exposures followed a series of rating agency downgrades of sub-prime
U.S. mortgage related assets and other market developments, which
occurred after the end of the third quarter. The impact on Citi’s
financial results for the fourth quarter from changes in the fair value
of these exposures will depend on future market developments and could
differ materially from the range above.

Citi also announced that, while significant uncertainty continues to
prevail in financial markets, it expects, taking into account
maintaining its current dividend level, that its capital ratios will
return within the range of targeted levels by the end of the second
quarter of 2008. Accordingly, Citi has no plans to reduce its current
dividend level.

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Tags: Chuck Prince, Citigroup, Credit Crunch

For the second time in a week the CEO of a major Wall Street banking firm has bitten the dust.  Chuck Prince fell on the knife and tendered his resignation on Sunday afternoon, preempting any necessary action by the board. Bob Rubin will take over the Chairman’s position and Sir Win Bischoff will serve as acting CEO.  A special committee has been designated, comprised of Mr. Rubin, Alain J.P. Belda, Richard D. Parsons, and Franklin A. Thomas, to search for a new CEO.  In addition, a new unit has been set up for their sub-prime debt assets:

“In addition, a new unit, the sole focus of which will be on managing the assets related to sub-prime mortgage securities and their resultant exposures, has been established. This unit will be separate from the other parts of our capital markets and banking business,” Mr. Rubin said.

And huge writedowns are coming according to the Wall Street Journal::

Meanwhile, Citigroup is poised to report billions of dollars in additional writedowns on mortgage-related securities, according to people familiar with the matter. Estimates of the writedowns ranged from $8 billion to $11 billion. That would far surpass the roughly $2.2 billion in mortgage-related writedowns and trading losses that Citigroup reported in its third-quarter earnings last month.

Bloomberg is reporting that the company had $55 billion in sub-prime investmentsand $43 billion of Senior asset backed CDOs on Sept.30; they won’t be cutting the dividend:

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Tags: Chuck Prince, Citigroup, Credit Crunch, Revolving Door

It sounds like Chuck Prince could be out by Monday according to a report out minutes ago from the Wall Street Journal:

Citigroup Inc. Chief Executive Charles Prince will offer to resign on Sunday, according to people familiar with the matter.

The development comes as board members are expected to gather for an emergency meeting this weekend, people familiar with the matter said. The meeting comes amid worries of further writedowns and pressure on Mr. Prince.

Robert Rubin, the former Treasury secretary who is the chairman of Citigroup’s executive committee, is being considered as a possible interim replacement, but he has balked at taking on the responsibility, those people said. A Citigroup spokeswoman declined to comment.

Citi’s Prince to Offer to Resign – Wall Street Journal

Tags: Chuck Prince, Citigroup, Credit Crunch, Revolving Door

According to two Dow Jones sources "familiar with the matter" , there’s a special board meeting this weekend.  The topic of the meeting isn’t clear.  High on the speculation list is whether Chuck Prince gets to keep his job or gets shown the door, or more writedowns.  Or maybe both….

Tags: Chuck Prince, Citigroup, Credit Crunch, Revolving Door

The upper ranks at Citigroup were shaken up last night with Vikram Pandit’s star rising even higher after his Old Lane hedge fund was aquired by the bank earlier this year.  Tom Maheras, co-head of investment banking and once considered a Chuck Prince successor, is out.  Chuck Prince is still dancing for now, not part of the upper level shakeout:

The personnel moves were announced as part
of a new corporate structure in which Citigroup will merge its
investment-banking operations and its alternative-investments businesses. The
combined unit will be run by Vikram Pandit, a former Morgan Stanley executive
who joined Citigroup earlier this year when the bank bought his Old Lane
Partners hedge fund. Initially viewed as a potential successor to Mr. Prince,
Mr. Pandit will rise another step in Citigroup’s hierarchy just months after
joining the bank. (See Citigroup’s statement.)

Meanwhile, Thomas Maheras, who has been
co-head of investment banking with responsibility for capital markets and
trading, is leaving the company. Mr. Maheras, a 23-year veteran of the bank,
also had been considered a potential successor to Mr. Prince and is highly
regarded in the ranks of Citigroup.

"My job is to put the best lineup on
the field. I think this is the best lineup going forward," Mr. Prince said
in an interview.

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Tags: Chuck Prince, Citigroup, Revolving Door