Blogs and Stories
Fuming: Sandy Weill
Louis Lanzano / AP Photo
Privately, the former CEO who created the financial superpower is fuming that he hasn’t been consulted during the firm’s freefall—and some people close to him believe he cashed out of the stock a long time ago.
As CEO of Citigroup, years before the bank spit out huge losses that most recently led to a partial government takeover, Sandy Weill was known for many things: his belief in the financial-supermarket model that combined investment banking and commercial banking; his aversion to taking unnecessary risks, later ignored by his successor, Chuck Prince; and maybe most of all, his obsession with the day-to-day, sometimes minute-by-minute, fluctuations in the company’s stock price. How obsessed was Weill? Well consider the following anecdote relayed to me by a former associate during his days running Citigroup. It was around the year 2000. Citigroup’s share price was many times higher than what it trades at today. And there was Weill sitting at his desk staring intently at his computer screen as the price of the stock, trading under the symbol C, danced around its high of $56 a share. The executive began telling Weill about some important matter affecting the firm, but Weill couldn’t get his eyes off the screen. Other than an occasional “Uh huh” Weill’s eyes and attention were glued to Citigroup stock gyrations.
The current CEO Vikram Pandit added insult to injury, rarely consulting with Weill on policy matters except when he needed to raise money back in January 2008.
As most investors know, shares of Citigroup are well off that high—in fact, they are hovering around $1.25. If the past is any guide, Weill isn’t just pissed, he’s apoplectic. As the creator of the company and one of its single largest shareholders, he must have a lot to lose, or he has already lost a lot like many other shareholders, many of whom are former executives and board members who believed the various plans by his successors to save the company, from Prince to the current CEO Vkiram Pandit would work, only to discover they didn’t.
That said, it’s unclear just how much money Weill did lose during Citigroup’s collapse—and it’s becoming one of the biggest mysteries in the market these days. It’s particularly intriguing as Hank Greenberg, the former longtime head of AIG, whose massive government bailout has the stock trading even further south than Citi, has recently stated he lost around $2 billion, indeed much of his fortune, by maintaining investments in his old firm.
Did Weill believe in the new management that succeeded him? Based on a review of public documents and interviews with friends and former associates, it’s hard to tell. Friends of Weill tell me he felt particularly dissed that the Citigroup board didn’t reach out to him after they ousted Chuck Prince, and give Weill some role restructuring the company he created. Prince, of course, was Weill’s hand-picked successor, so maybe the board didn’t think Weill was suited for the job of fixing what he played a role in breaking—a point I have made several times over the years. Even so, Prince was ousted for doing something Weill had avoided for years—investing in risky assets. (By contrast, after purchasing Salomon Brothers, Weill immediately disbanded its arbitrage desk, which took big bets in the bond markets.) If anyone would have known how to stop the bleeding at Citi, it might have been Sandy Weill.
The current CEO Vikram Pandit added insult to injury, rarely consulting with Weill on policy matters except when he needed to raise money back in January 2008, when Weill joined a group of investors who purchased some preferred stock in the company, which, according to published reports, was small but significant because Weill’s involvement was used by Pandit to show that the man who built the firm had confidence in its new leadership. People who know Weill say that after a year of inaction, failing to sell assets and unload the bad debt on Citi’s books, Weill no longer has the same confidence in the new leadership, Pandit included.
For all these reasons, people who know Weill say they doubt he still has much of his fortune tied up in the company stock. Here’s what we know: The last public filing for Weill stock ownership came out in February 2006. It said he held 16.555 million shares. With a stock price hovering off its highs but at a still healthy $46, Weill’s holdings in Citi had a value of more than $760 million. If he hadn’t sold a single share, those same holdings would be worth a tad more than $20 million today.
The Right Dumps Carrie
Jacob Bernstein is a senior reporter at The Daily Beast. Previously, he was a features writer at WWD and W Magazine. He has also written for New York magazine, Paper, and The Huffington Post.
What's Joe's Problem?
Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.
Geithner's Stock Plummeting
Jeff Madrick is a contributor to the New York Review of Books and a former economics columnist for the New York Times. He is editor of Challenge Magazine, visiting professor of humanities at Cooper Union, and senior fellow at the New School's Schwartz Center for Economic Policy Analysis. He is the author of Taking America, The End of Affluence (Random House) and The Case for Big Government.
The Best Job No One Wants
Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
Wall Street's Grinch Speaks
Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
Wall Street Will Walk
Charles Gasparino is CNBC's On-Air Editor and appears as a daily member of CNBC's ensemble. He is a columnist for the Daily Beast and a frequent contributor to the New York Post, Forbes, and other publications. His forthcoming book about the financial crisis, The Sellout, is scheduled to be published later in 2009.
Charlie, U good looking guy! U know John Reed had just as much to do with the foundation of Citi as the Sandy man. Am I right? The International Citi was all John. And that is why CNBC can't nationalize Citi. But I guess to the victor belongs the spoils. So Sandy gets the spoils. Where is John these days? I bet he sold his Citi stock at the right time too!
Just cause you're slumming round the Beast don't mean you don't have to give John Reed no respect. After all, didn't they have to bring him back to run the NYSE after their little scandal? Nobody wants the Sandy man back, unless you do. Do you?
You're still the cutest guy on CNBC.
Nancy
I can never decide whether Gasparino is a douchebag or a tool. I have determined that he is both sprinkled with a whole lotta AquaNet.
Forget about Sandy. Let him be as petulant as always. All he did was tear the place down and dilute the good will. He should take responsibility for undermining Citi in the first place.
To Gasparino, Maria Bartiromo, et al., the highest coin of the realm was to name-drop a pearl that had been laid upon them by Weill. My secret hope is that "Sandy" told them to buy heavily in citi and that they are choking on the advice.
What is there to cash out, the stock is trading under $2.00 a share.
He was having a nice big lunch today at Smith and Wollensky's ...seemed cheery enough. Guess life isn't too awful but then again I didn't noticed if he ordered the $25 per stone crabs.
This comment has been removed by The Daily Beast's editors.
Is it just me or are really watching an episode of 'the Real Housewives of New York?'
from NY mag this week:
Concerned about the company's stock price, Weill personally asked Pandit to buy back shares along with him, in a show of public confidence. Pandit agreed, according to a person close to Weill. But when Weill started buying back stock and Pandit didn't do it right away, Weill complained loudly to friends. Pandit stopped returning Weill's calls altogether, referring him to Callahan. (According to two people close to the situation, Pandit and Weill have spoken exactly twice since Pandit took over Citigroup; Pandit has since bought $8.4 million in Citi shares, although at a lower price than Weill did.)
http://nymag.com/news/businessfinance/55035/
I heard he put his CPW apartment up for sale and may not be paying his contractors on time for renovation work. It's possible that he's bankrupt -- especially if he had loans against his C stock and wasn't hedged properly.
John Reed was living,and living well,in Majorca,most of the year.I know he was hoping to become President of M.I.T.at a point in time.....not sure that's on his bucket list anymore.
Charlie--Another great article telling us exactly what YOU DON'T KNOW. You insightful devil, you, you seem to have the "I don't know" segment of the business beat down to a fine science. Do you actually know anything, Charlie?
Guess you also don't know why Weill turned the company over to Chuck Prince, the Citi corporate counsel who kept Sandy out of jail and took a mere three years to drive the company to the brink of extinction. And why did the Board go along with Prince's appointment? And what is Chuckie-Boy doing now--surely there must be other companies out there who can use his brand of exceptional executive insight? The list of "I'm reporting on what I don't know" stories is virtually limitless, Charlie! We want MORE!
Greedo, greed and ego
Ahole, attorney and asshole
You played the game well, stole company wealth
and shareholder value? It's now in poor health
Greedos, you're nothing! You're suits with no spines
And Ahole, your words, they were just legal crimes
Charile:
The size and scope of CITI I doubt Mr. Weill could have saves this failure. I am still wondering Charlie why the "bad assets" have not been brought out in the open. It seems the "off balance sheet" activities are killing the entire industry. I beginning to wonder if the entire world of banking is in shambles.
I am appauled by the above writings of the fellow readers. I find it being cowards they would face you in person with these statements.
Charlie: your fear of a 5000 dow jones average and the failure of your stock market news network is effecting your storytelling. you are wrong and a bit freaky in your vague references to nobodies. stick to facts, it may help save your career when cnbc piddles out.
Someone else said it first, Charlie is a douchebag
As someone who has held onto his Citi shares, I wish Weill would ride to the rescue. Bring him back.
Take a look at the John Stewart video which is on the dailybeast today. He recaptures the wisdom of Gasparino, Santelli, Cramer, Bartiromo, et al. Gee, maybe their track record of reporting and prediction isn't quite up to the standard they claim they represent.
Charlie rocks. Great to see him get so many candy-ass Daily Beast readers so excited. Obama's tone and proposed policies exhibit a level of naivety, that while shocking to some, does not surprise me a bit. Prediction: Obama will come to reality, and move to the right, as Bill Clinton did. He will be pilloried by the hygienically troubled followers of Michael Moore, and most on the right, but save his presidency. Gasparino-Santelli in 2012
Thank you.
As a first time user, your comment has been submitted for review. It can take anywhere from a few hours to a day or two for your comment to be reviewed, depending on the time of week and the volume of comments we receive.
Please log in to leave comments.