Vikram Pandit won’t be in Washington today for a summit of “fat cat bankers” at the White House. Instead, the Citigroup C.E.O. will be left behind in New York, hammering out the details of his plan to pay back $20 billion bailout dollars, and thereby free his company from the constraints of Kenneth Feinberg, the dreaded Pay Czar.
But is it personal or professional?
Last week’s announcement that Bank of America would pay back their bailout money, coupled with Mr. Feinberg’s decision to severely curtail executive pay at the companies under his control, only underscored that Mr. Pandit was the biggest banker left in a highly public purgatory, and ratcheted up the pressure on him to somehow escape the government’s amercement.
To get out of time-out, Mr. Pandit and his government regulators took a months-long process and crammed it into a week, convincing the government that the company can survive such a huge payment once they offer up new stock totaling tens of billions of dollars. (The rush to re-pay–by both BofA and Citi–might seem odd, given that a widespread lack of equity helped necessitate the bail-out in the first place.)
Predictably, Citigroup shares dropped upon the announcement of the deal, since the stake of current shareholders will be diluted by the new offering. The Times suggests the payback may be “a hollow victory.” But the company’s biggest investor, Saudi prince Walid Bin Talal, said he likes the deal and doesn’t plan to unload his considerable holdings.
Of course, wriggling free of the Pay Czar doesn’t guarantee much. Goldman Sachs paid back its government loans in June, but–six months later–still couldn’t escape the clamp of public opinion. And, on that score, the president isn’t doing much to help.