Citigroup Finally Considers Largescale Change

Today's business news is all a-twitter over the Citigroup-Morgan Stanley brokerage joint venture.

Forgive me if I yawn.

What, exactly, is all the excitement about? Two has-been financial giants with huge long term viability issues toss both their mundane, yesteryear personal retail, full-service brokerage businesses into a common pot?

For Vik Pandit, it's too little, too late. As the price chart for Citigroup in yesterday's post illustrated, the bank has lost nearly 80% of its equity price in the past twelve months. Surely, as others have also noted, Pandit would have gotten much more value for his shareholders had he done this early last year, rather than now.

This is precisely the sort of long term damage that results from in-denial, head-in-the-sand approaches to the actual condition of a business. By insisting on keeping Citigroup's unwieldy, difficult-to-effectively-manage business assortment intact, Pandit simply destroyed more shareholder value faster than he would have otherwise.

For this, alone, it should be time for him to go. And what more convenient time for the board, than in tandem with the guy who mistakenly hired Pandit, Bob Rubin.

Yes, there's also talk of selling Citigroup's Banamex unit. But with Citigroup effectively owned by the Federal government, dismantling it any further is probably academic.

With both Morgan Stanley and Citigroup having significant Federal government ownership stakes, I have trouble understanding how the brokerage joint venture is much different than two related businesses reorganizing units serving similar markets. This is one of the effects of Treasury's actions.

If anything, it probably argues that such combinations and consolidations should continue, until wholesale banking, retail banking, etc., are centrally managed, but dispensed to Americans via different old, familiar brands, e.g., Morgan Stanley, Goldman Sachs, BofA, Wells Fargo, Citigroup and Chase.

The names might differ, but the credit allocation policies, interest rates and such will be unvaried.

It's simply hard for me to take seriously the notion that two government-dependent commercial banks, each unable to prosper, let alone survive on its own, can effect much exciting, useful change for their shareholders anymore.

Let's be honest, even if the Wall Street Journal and CNBC won't. This is a government-owned sector now. It's no longer truly private enterprise.

Citigroup's actions are, at least, explained as being coerced by government officials who are now more owners than regulators.

How do you report that and still believe there's any private enterprise angle to these stories anymore?