Music Stops for Chuck Prince
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Flashback July 10, 2007
Chuck Prince: No End Soon to Buyout Boom “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing".
Flash Forward November 2, 2007
The party is over and the music has stopped for Chuck Prince. His last dance is a two-step out the door. Citi's Prince Plans to Resign
Charles Prince, the beleaguered chief executive of Citigroup Inc., is planning to resign at a board meeting on Sunday, according to people familiar with the situation.In after hours stock action shares are up 2%+- to $39+-.
Just a few weeks ago, board members including Robert Rubin, the influential chairman of Citigroup's executive committee, expressed support for Mr. Prince and said that his job wasn't in jeopardy. "I think Chuck's going to be here for a lot of years," Mr. Rubin said in an interview last month.
Any change of heart may also have been spurred along this week after the board of Merrill Lynch & Co. ousted its embattled CEO, Stanley O'Neal.
In reporting its third-quarter earnings, Citigroup warned that it endured a surge in late payments on consumer mortgages in September, costing the bank $3 billion in higher losses and reserves against future bad loans and hurting the value of loans Citigroup hopes to sell to investors. Chief Financial Officer Gary Crittenden said the trend is likely to continue.
Citigroup also booked $1.56 billion in pretax losses tied to loans and subprime mortgages that were to be repackaged and sold to investors.
Equally important, the bank said its capital levels had dwindled to below the company's internal target ratios. Executives said the company would stop repurchasing its own shares until it rebuilt its capital, a process it hopes to complete by early next year. Some analysts and other experts think Citigroup will have to take more drastic actions, such as selling off assets or slicing its dividend payouts.
Prince's retirement solves nothing actually. And of all the issues at Citigroup, capital levels is the most critical one. With capital concerns come side issues such as a Question of Solvency at Citigroup.
Let's play American Pie in honor of Chuck Prince.
We all got up to dance,
Oh, but we never got the chance!
`cause the players tried to take the field;
The marching band refused to yield.
Do you recall what was revealed
The day the music died?
Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/
