the-insider

Citigroup: The End Draws Near

I have said this before to other columnists and I will say this once again - how can you guys say that the universal bank business model does not work, especially, in the light of why Bear Stearns and Lehman failed and why Goldman, Morgan Stanley are bank holding companies now? In fact, if there's one thing Vikram Pandit got right after inheriting the mess, it was his bold announcement that this company would not be broken up in pieces and that this was the right model. He was intensely criticised for raising so much capital so quickly ($40 bn by end of Feb) but he seemed to have called the following credit crisis absolutely right.

I want to remind all his critics that point to his lack of experience in consumer banking - if that were true, wouldn't his first instinct be to actually break the company immediately instead of taking the time to understand how short-term funding costs have a tremendous impact on a pure play investment bank?