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Sep 18
2009

Nobody plays nicer with the government than Citigroup

Posted by MQuinn in compensationCitigroupbailout

MQuinn

There probably aren't many jobs more humbling on Wall Street than chief executive of Citigroup.

Nary a day goes by where someone isn't speculating about when you're going to get fired. Your company lost nearly $30 billion last year. It received $45 billion in bailout money plus hundreds of billions of dollars in government backing. All that gave the U.S. government a 34 percent stake in your bank. Oh, and during all of that, one of your employees - trader Andrew Hall -- managed to earn $100 million based on his contract, which isn't going over well with the public.

And you're only getting $1 a year and no bonus until your bank returns to profitability.

So, how do you handle all of this? You play nice with the masters of your fate.

On Thursday night, the lucky man who gets to endure all this, Vikram Pandit, bluntly said that $100 million is too much for an employee to earn when Uncle Sam is keeping you afloat. (Of course he blamed prior management for the contract that resulted in the eye-popping sum.)

Most bank CEOs have come out and said something about Wall Street compensation practices, but danced around on whether bonuses are too much.

It's not the first time Pandit has given the government exactly what it wanted.

Earlier this year, he backed cramdown legislation that allowed bankruptcy courts to modify loans on behalf of distressed borrowers, something his peers had been fighting.

At a Congressional grilling of Wall Street CEOs in February, Pandit apologized for Citi's planned purchase of a new corporate jet, which it backed down from.

"We did not adjust quickly enough to the new world," Pandit said. "I get the new reality, and I will make sure that Citi gets it as well."

This week, Pandit said he will no longer use the company's aircraft for personal use after previously agreeing to reimburse Citi for any such use.

When you're in hock to the government, it's best to be a model citizen.

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