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 It was only a matter of time, really. The rumors that Citigroup Inc.'s (NYSE:C) CEO Vikram Pandit would be booted and replaced by Jerry Grundhofer have been circulating since March. So The Wall Street Journal's story that the Federal Deposit Insurance Corp. Chairman Sheila Bair wants Pandit out isn't really all the surprising. Long before Bair called for Pandit's head, Rochdale Securities LLC analyst Richard Bove predicted Grundhofer would be elected to the board to replace the beleaguered CEO. The Journal notes that Bair is determined to get him out as soon as she possibly can by pressing "a fellow regulator to lower the government's confidential ranking of Citi's health -- a change that would let regulators control the firm more tightly," and by threatening to place the bank on their problem list if Pandit and his executive team are not removed. However, not everyone in and out of Washington agrees, notes the Journal story. The only reason Pandit hasn't been removed, as The Wall Street Journal points out, "the Comptroller of the Currency has countered that replacing the bank's management could be too disruptive. The agency, which oversees Citigroup's national bank division, believes Citigroup needs more time to implement its turnaround strategy." Additionally, you can see similar sentiment bubbling in the blogosphere. For example, Clusterstock, points out, it's not completely Pandit's fault that Citi is in such a dire position, but Pandit may not be the right person to fix up Citi right now. Grundhofer happens to have a track record of fixing up troubled banks. So why does Bair want to remove Pandit now? As Dealscape pointed out in April: "The short answer is systemic risk. Over the last year Pandit has been criticized for not dismantling Citigroup fast enough to mitigate its risk to the greater economy. In fact Pandit's strategy has varied from divesting international assets to potentially acquiring retail banks, such as Wachovia Corp. and Chevy Chase Bank (both of which failed), to maintaining a universal bank model, to breaking the bank into a good bank-bad bank and trying to cut risk though major divestments. He also hasn't helped his cause by claiming to take a salary of $1 and not divulging that other compensation in fact totaled $38.2 million for 2008. Yes, and Citigroup was bailed out twice, totaling $45 billion in bailout funds. "Bair isn't alone in wanting Pandit out of the position. Some Citi shareholders such as AFSCME, or American Federation of State, County and Municipal Employees think that Pandit has had his chance and it is time for him to step aside: " 'I think he had his chance to make a mark. I'm not sure he was the right person. ... He did not move fast enough. He thought through his vision, but he didn't execute it. It wasn't until the fall that he made a move and if he had done it six months before Citi could have sold those assets at a value,' Rich Ferlauto, director of corporate governance and pension interest at AFSCME, or American Federation of State, County and Municipal Employees, AFL-CIO, told Dealscape in April." - Maria Woehr
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