Citigroup's Pandit: On the Way Out?

A $1 Salary with No Bonus

Pandit continues to weather criticism that he does not have the right skills and isn't moving fast enough to turn around the troubled and intensely complex global bank. He was initially reluctant to sell off assets and trim Citigroup's sprawling financial supermarket. And his career has been marked primarily by investment banking experience, rather than commercial and retail banking, which lie at the core of the bank's operations. In February, Pandit cut his salary to $1 with no bonus, vowing that he would not earn more until the bank—which has accepted $45 billion in government bailout money—returns to profitability.

The FDIC has good reason to want Citigroup well-managed and in good health: The agency insures $29.9 billion of Citigroup's deposits and other accounts, plus it has guaranteed $34.6 billion in Citigroup bonds. Moreover the FDIC backs a slice of a $306 billion pool of risky assets held at the bank. Following the government stress tests, Citi was ordered to fill a $5 billion shortfall, less than rivals Wells Fargo (WFC), and Bank of America (BAC).

A holdover from the Bush Administration, Bair was one of the first to urge more aggressive mortgage modification strategies to arrest losses in the housing market. Many other regulators from the prior Administration—including, some argue, Treasury Secretary Timothy Geithner, who was then head of the New York Federal Reserve Bank—have egg on their face for not having provided enough oversight of the banks' mortgage, securities, and derivatives business or for not having moved quickly enough last fall to stem the problems. "She's taken seriously because she's not sitting pat and saying this is going to clean itself out," says senior analyst John Jay of the Aite Group. "She's taking a much more aggressive stance and because she is the gatekeeper, the custodian for all the taxpayers' money that is being put out for the benefit of Citi. She has to be bold enough to stand up and raise her hand."