On Friday, Robert Rubin resigned from his position as senior advisor to Citigroup (NYSE:C) and indicated that he would not seek re-election to the bank's board. His tenure at Citi has tarnished the reputation he built as a talented, nimble leader at the head of Goldman Sachs (NYSE:GS) and as Secretary of the Treasury for the Clinton administration.

Rubin appears to have made major missteps at critical junctures in the bank's downfall. For example, he endorsed the idea that Citi should take on more trading risk in 2004 and early 2005. He was also a strong supporter of bringing in Vikram Pandit as CEO, despite legitimate concerns about Pandit's qualifications for the role. Those concerns now look justified, since Pandit has been unconvincing at the helm of Citi.

(Prior to naming Pandit to the top job, Citigroup paid an absurdly inflated $800 million to acquire his hedge fund, Old Lane Partners … before shuttering the fund less than a year later.)

The ultimate golden boy stumbles
Rubin's performance at Citi is confounding to an outside observer. Prior to joining the financial behemoth, Rubin was the ultimate golden boy, with an unblemished career at the highest levels of finance and public service. His autobiography, In an Uncertain World (which I highly recommend) suggests that he is extremely bright and thoughtful.

Ultimately, though, when a corporate employee is compensated at Rubin's level ($115 million over nine years) and interacts directly with the chief executive, he or she must take responsibility when the company stumbles. In Citi's case, "cratered" is a better description; furthermore, its current woes cannot be explained merely as the product of external circumstances. As the following table shows, its performance over Rubin's tenure has been dramatically worse than that of its peers:


Market Value Rank (October 31, 1999)

Market Value Rank (January 9, 2009)

Total Return to Shareholders

Citigroup (NYSE:C)




Bank of America (NYSE:BAC)




Wells Fargo (NYSE:WFC)




JPMorgan Chase (NYSE:JPM)




Bank of New York Mellon (NYSE:BK)




Source: Standard & Poor's Capital IQ.

Rubin's departure will leave CEO Vikram Pandit with one less ally on the board. Faced with increasing pressure from Citi's largest shareholder -- the government -- Pandit urgently needs to show that he is equal to the task of extirpating Citi from its disastrous position. While he was unwilling to move forward with a breakup of Citigroup after becoming CEO, that path looks increasingly likely now -- whether or not Pandit is the guide.

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