We continue following Citigroup CEO Vikram Pandit’s testimony in Washington today, where he is mainly questioned by Elizabeth Warren, chairwoman of the Congressional Oversight Panel. Our thoughts in brackets.:
11:39 a.m.
[A panelist asks how Citigroup got to the point where it required a $45 billion bailout. The short answer: too much leverage.]
The panelists want to know what measures Pandit has instated to fix Citi.
Pandit rattles off a list, checking off:
Taking $13 billion of cost out
Creating earnings
Changing the bank’s risk profile
Managing the regional businesses on the basis of cash on the ground
11:55 a.m.
Pandit says he endorses the notion of granting regulators the authority to unwind a broken financial institution. “Let’s get to that resolution authority so that this never happens again,” hesays.
[When the panel starts asking for advice, you know you’ve handled your business. They’re like putty in Vikram’s hands now.]
[We’re on the topic of mortgage modifications—a hot-button issue given the nearly 10 percent unemployment and the housing crisis.]
Noon
[Here’s how much the tone has changed since Pandit started testifying: We’re ohhhh so close to someone from the COP asking Citi to refinance a mortgage.]
Pandit says Citi is actively modifying second liens and believes that reducing principal and interest is a key method for keeping people in their homes.
12:04 p.m.
Citi is a fundamentally different company, Pandit claims.
[No more softballs — Warren is going for the jugular.]
“Why not break it up?” she says.
“We are only as big as what is required to serve our clients in a competitive market,” Pandit says.
[Pandit is saying Citi has been in break up mode for a while.]
“We are selling 40 percent of the company,” he notes.
[Warren’s not letting him off the hook on why they needed extra money.]
Warren asks: Why’d you need additional financing after the original TARP infusion?
[Oh no!! Vikram’s resorting to the old (hedge fund) short-sellers-are-bringing-down-the-market excuse.]
“So this is not Citi was special — this is just Citi had bad luck?” Warren asks.
