"Surprise would be an understatement," says one Citigroup (C -5.5%) executive when the top brass learned - 24 hours ahead of the markets - of the Fed rejecting the bank's capital return plan. Traveling on business in Korea, CEO Michael Corbat - who was on the conference call when the Fed relayed its decision - cut his trip short to get back to NYC for a board meeting. Following the meeting, he sat down with FRBNY boss Bill Dudley.
"It's too early ... why are you returning capital when you need it," is the message the Fed is trying to get across, according to a source, who adds the central bank looks like it wants Citi to continue selling off noncore operations.
Will heads roll? “Since becoming CEO, I have spoken with many of you about the need to hold ourselves accountable for what takes place at our firm," said Corbat in a staff memo today. "I am accountable for getting this right.”