Who is responsible for the financial disaster at Citigroup (C)? Sandy Weill and Robert Rubin, who created the company? Former CEO Chuck Prince, who made a number of decisions, or, put another way, made very few decisions that let his managers put dangerous assets on the balance sheet? Or Vikram Pandit, who has run the company for a year-and-a-half and has been slow to cut costs and sell assets to build the balance sheet?
To a large extent, it is none of the above. Many of Citigroup's directors have been on the firm's board for years. They have had the responsibility to oversee bank management activity. The board even had a risk management committee, which was meant to ask questions about the safety of bank risk procedures.A look at the membership of the board shows that it has a number of current and former corporate CEOs who should have known better than to let Citi's management pile derivatives onto the balance sheet without at least disclosing the actions to them. The board includes the heads of Alcoa (AA), Xerox (X), and former CEO of US Bancorp.
According to the Financial Times, "Citigroup came under growing pressure to overhaul its board on Tuesday after it revealed that two long-serving directors survived a shareholder vote largely thanks to a balloting rule that is due to be scrapped."
It would not be unfair for the government and shareholder to ask why any of the bank's directors, including chairman Richard Parsons, are still serving on the board. All of them are partially responsible for the firm's demise.
Douglas A. McIntyre is an editor at 24/7 Wall St.