Unbelievable. Given current events, a top executive leaving Citigroup is the clearest example of a dog-bites-man story and normally doesn’t warrant further comment. Unless it’s Sallie Krawcheck.
In late September, Krawcheck, head of Citigroup's wealth management unit, announced she was stepping down. The reason, according to the Wall Street Journal, was months of tension with Chief Executive Vikram Pandit. A blog post by Journal writer Robert Frank explains further:
“Krawcheck was a fierce advocate for her clients, demanding that Citigroup reimburse wealthy clients who were sold bad investments like in-house hedge funds and auction-rate securities.”
Come again?
“Opponents say Krawcheck was too provincial, focusing too narrowly on her own clients at the expense of the larger bank. And Citigroup has been better than many firms in reimbursing clients for their losses from hedge funds and of auction-rate securities. At a time when Citigroup’s balance sheet is stretched, they said, such measures are especially praiseworthy.”
It’s come to this. One of the largest and most venerable wirehouse firms believes that simply doing the right thing should now be considered especially praiseworthy. As Frank notes (and I completely agree) it’s more about the absolute stupidity of letting go of a fierce client advocate at a time when Wall Street needs bad PR like an alcoholic needs a drink.
Granted, Krawcheck’s a controversial figure and has been for a while, but even the firm admits the reason for the separation is that she focused too much on the interests of the clients. Does Wall Street grasp the mess it’s in? Is it any wonder they’re now in this position?
I’ll keep my schadenfreude in check. But with boomer clients pulling assets from the market at an unprecedented pace, here’s reason No. 543 why it’s a good time to be independent.