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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerThe New York Times reports that Citigroup Inc. (NYSE: C) may make Robert Rubin Chairman until it can find a CEO. This temporary solution is analogous to what Merrill Lynch & Co. (NYSE: MER) did by making Alberto Cribiore, a director, its interim non-executive Chairman.
Rubin, who has made $150 million at Citigroup since he left the Treasury Department eight years ago, has traded a sterling reputation at Goldman Sachs Group (NYSE: GS) and Treasury for a nice chunk of change at Citigroup. Unfortunately for him, making bank at Citigroup has tarnished his reputation -- despite his efforts to distance himself from Citigroup's problems. Meeting with clients and walking around without shoes offering advice -- known in his contract as "no operational responsibilities" -- does not seem to have buffed Rubin's reputation.
If the New York Times is correct, it remains to be seen how Rubin's role will change. It could be that his primary job will be to take the lead on recruiting Prince's successor. Will he take on an interim non-executive Chairman's role like Cribiore? I imagine he'll seek to evade legal responsibility for Citigroup's problems. Otherwise, he could end up spending more time than he'd like dealing with shareholder lawsuits.
A Wall Street source suggested that one reason Prince may leave today is to give Citigroup a shot at attracting former Goldman executive John Thain to Citigroup's CEO post. Thain has been CEO of NYSE Euronext (NYSE: NYX) since December 18, 2003 -- during which time he took NYX public -- on August 13, 2004 -- leading its stock up 570%.
He graduated from MIT -- as did former Citigroup CEO John Reed (although they earned different degrees) -- and Harvard Business School and is considered to have the knowledge of Citigroup's complex businesses and charisma required for the job. My source also thinks Thain has done what he can at NYSE Euronext -- and would welcome the challenge of fixing Citigroup.
Thain forged ties with Rubin which would help with the recruiting if Rubin leads that charge. If Thain does join Citigroup and excels in the job, it could help clean off some of the taint that's encrusted on Rubin's formerly sterling reputation.
And as a Citigroup shareholder, I would be happy with Thain as CEO.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup stock and has no financial interest in the other securities mentioned.
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