Citigroup CEO Vikram Pandit is lobbying — okay, let's just say it, begging — Treasury Secretary Tim Geithner to let him pay out retention bonuses to employees at Phibro, the bank's Connecticut-based energy-trading unit, which is pretty much Citigroup's only money-making operation at the moment. If Citi doesn't pay the bonuses, Pandit has told the Treasury secretary, the Phibro employees will leave, and Citi will probably fall apart completely. Geithner is reportedly mulling the situation over, or pretending to.
We at Daily Intel do not have granular knowledge of the situation inside Citi or the federal government, but we strongly suspect the administration will come to the conclusion that there is no way they can give these guys their bonuses. Not that they don't deserve them. In fact, they probably do. But we're one suspects the administration doesn't want another debacle like AIG, and this one has the potential to be so much worse.
Why? Because, for one, Andrew Hall, the head of the Phibro unit, owns a castle.
No really, he does. An actual castle. It is called Schloss Derneberg. It's outside Hanover in Germany, it is 1,000 years old, and Hall bought it to house his vast collection of contemporary art. Hall loves art: He actually tried to install an 80-foot-long concrete sculpture on the lawn of his Greek Revival mansion in Southport, Connecticut, but the neighbors complained.
That Vikram "I Get The New Reality" Pandit even had the temerity to ask for a retention bonus for this dude is kind of mind-boggling. Does he think that Congress, the media, and the American taxpayer will not notice they giving an injection of taxpayer cash to a guy who already has obvious, nay, flamboyantpreponderance of money, as detailed in an easily accessible Wall Street Journal story from just last year? (Which also says incidentally that in 2005, Hall was paid $125 million, around five times that of then-CEO Chuck Prince?) This is the kind of thing that Gary Ackerman dreams about. And so we reiterate: There is no way. Which Hall will probably fine with. He doesn't want to deal with this crap, anyway.
In the Phibro situation, Mr. Hall, who runs the energy-trading unit, has been agitating to leave Citigroup to avoid the pay curbs, people familiar with the matter said.
Even last year, the Journal reported "after 15 straight profitable years, Mr. Hall has considered breaking out on his own. Last year, for the first time, he began managing outside money for clients including investment giant Blackstone Group and others."
So let him go. Spin off the unit, sell it to Japan, hire a monkey to trade oil futures at Citi. Anything to spare us from the histrionics that are sure to ensue once cable news finds out about the castle.