The next flare-up:
The Federal Deposit Insurance Corp. is pushing for a shake-up of Citigroup Inc.’s top management, imperiling Chief Executive Vikram Pandit, people familiar with the matter said.
The FDIC, under Chairman Sheila Bair, also recently pressed a fellow regulator to lower the government’s confidential ranking of Citi’s health — a change that would let regulators control the firm more tightly.***
The FDIC traditionally hasn’t been nearly as assertive in management of a large firm. But Ms. Bair’s agency is heavily exposed to Citigroup. The FDIC is helping finance a roughly $300 billion loss-sharing agreement with the company.
It also insures many of Citigroup’s U.S. bank deposits. Citigroup has issued nearly $40 billion in FDIC-backed debt since December, according to Dealogic, a financial-data provider.
Some government officials believe that Citigroup should be given more time to implement its new capital plan, but it is unclear which regulator might ultimately prevail because the bank depends on large amounts of federal aid.
Since late 2007, Citigroup has had more than $50 billion in write-downs and loan defaults. It’s in substantially worse shape than many of its peers, many of whom have been able to raise billions of dollars in fresh capital recently.
I’m wondering what the last year would have looked like without the FDIC.