This news item verges on funny.
Readers may have taken note of the fact that Citigroup was ordered by the FDIC to conduct a review of management. The floundering bank hired Egon Zehnder. The New York Times indicated that the resulting report was awfully favorable, given that the bank is one of the biggest messes in the international financial arena. If management is not to blame, then who is?
The management review, requested by federal regulators after months of turmoil, gave Citigroup’s senior executives good marks over all and took a satisfactory view of the leadership of Vikram S. Pandit, the chief executive, said the person and others with knowledge of the situation. Still, the report took a harsher stance on some of Mr. Pandit’s top deputies.
As we remarked yesterday, “Stress tests redux. If this is the conclusion, clearly there is something wrong with the scorecard.”
It’s pretty obvious what happened here. Egon Zehnder is a search firm. Search firms have recently gotten into the very curious business of doing senior management assessments in recent years. No one would deem it logical to engage a mergers and acquisitions banker to evaluate how well a business was performing, yet we have people with similarly narrow competence making broad judgments that are beyond their expertise, their claims to the contrary. But this shamanism is well accepted in boardrooms these days, since having outside parties vet decisions is yet another way to shed responsibility.
So how does this look from the Egon Zehnder end? Follow the money. Citi is a big meal ticket. The FDIC, who asked for this review, is in no way, shape, or form the client. The purpose of this exercise is to deliver a credible sounding report without annoying Citi so Zehnder can use this entree to deepen its relationship and win search mandates, or at least more management reviews.
The problem is that a report that would not ruffle Citi was unlikely to be seen as credible by anyone with an operating brain cell, including the FDIC. From today’s Wall Street Journal:
Some officials at the agency have expressed doubts about the rigor of the report, which was based partly on interviews of Citigroup executives who were asked to rate the effectiveness of their colleagues, these people said. While the findings still are being reviewed, the skeptical reaction could cause the FDIC to give the report little weight during the next regulatory assessment of the New York firm’s management….
The report awarded strong overall marks to Citigroup’s management team and to Chief Executive Vikram Pandit in particular….
The FDIC began sifting through the findings this week.
People familiar with the situation said the FDIC signed off on Citigroup’s selection of Egon Zehnder to conduct the management review….
Now, though, some FDIC officials are skeptical of the findings. One person close to the agency described the outside report as “a total whitewashing.” Some agency officials also are having second thoughts about the qualifications of Egon Zehnder, which largely runs executive searches for clients.
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* Lending fraud
* Ratings fraud
* Securities fraud
* Accounting fraud
and now…
* Evaluation fraud
Did I miss anything?
Having an outside, _for-profit_ ANYTHING ‘appear’ to vet a companies ‘something’ is idiocy; the incentives powerfully mitigate against a negative report . . . (which is exactly the idea.) If said _for-profit_ outfit turns in a finding of “You stink,” does anyone think they’re going to be hired again by that firm, OR ANY OTHER? No, and HELL no. This is why, for example, the Consumers Union came into existence, to do its Reports of products because house reports and for-hire reports always said said products were ‘most excellent.’
The only way to get real evaluations is to have an insulated, outside party do them, either a non-profit with its reputation as its main asset, or *ahem* a public or quasi-public agency. Anything else is just a more or less subtle variation of gaming the game.
“Readers may have taken note of the fact that Citigroup was ordered by the FDIC to conduct a review of management.”
What, What, What is the point of this “review?”
It is obvious that Citi management is venal, clueless, or venal and clueless.
The report could tell us those obvious points.
OR it could tell us what it did, which is laughable – and another example of a waste of money.
Here’s a clue FDIC – good managers don’t loot their companies for bonuses and bankrupt their companies.
There is actually a growing body of scientific research that validates the efficacy of shamanic healing and relates it to some of the speculative implications of quantum physics.
All in all, shamans as a group probably have a much better track record than these white collar clowns. :)
this whole deal casts an incompetent shadow over the FDIC’s mgmt. a leadership review? check their ticker, lady.
Look,
It’s nothing but the biggest PONZI SCHEME. Trust Me I know. I’ve been a bill collector for 15 yrs. The foreclosure trustees and judges are on the take. As well as Bk attys. I’m not crazy just a frustrated bill collector who tried to stop all of this over 5 yrs ago. Their still trying to hide. The new Jordan vs WF case decision in Ohio is proof of who I say is behind most of the 4/clsres could giv a sh** less.
Wanna know whose behind it? Look at who Logs Gerald Schapro and David Kreismn represent. Several different mortgage companies. Probably one of the top trustees in the country. Look deeper. They also are on as board of Dir for NARS-National Asset Recovery Services. A debt collector agency that lies about what their contracts contain. That lie lie lie. Therefore, since their in the BANKING CARTEL CLUB the judges will cover for them…Wonder how much this pays above and beyond their salaries? Bet you can’t get a JUDGE to tell you how much they have invested in their Blind Trust Accounts! Get real! Prove documentatin in hand attys. Copies shouldn’t be allowed! Somewhere, someone is making an income that isn’t being paid on these. Or else why wouldn’t they pull info from DTC?
Other Egon Zehnder evaluations:
Captain of the Titanic: Cutting edge leadership, knows how to get down to basics, doesn’t sweat the little things.
George Bush: Don’t let the crayons fool you, this guy is sharp. Fool him once shame on you, fool him, well…whatever. You get the point.
Dick Cheney: a real straightshooter
Vladimir Putin: Soulful, just look into his eyes.
Timothy Geithner: Very earnest, and house trained, mostly.