Mr. Pandit - Citigroup's New CEO

Perhaps the board should have split the company in two and found two CEOs, each with the requisite knowledge. It's been a long time since synergies were claimed between the institutional and consumer businesses.

It's difficult to know whether Mr. Pandit will be a successful CEO at Citi. However, it is clear that his incredible overreach in starting a hedge fund has paid off. Morgan Stanley has precious few alumni who've started successful hedge funds (unlike, famously, Goldman Sachs). That's because the employees Morgan Stanley by and large don't conduct the kind of trading and investing that hedge funds do (it's hard to think of another reason that there are so few successful alumni). Mr. Pandit, nevertheless, coming from a background that deemphasized risk taking in favor of client business, started a sizable hedge fund that was quickly sold to Citi for $800 million. Though the hedge fund is still young, the results are consistent with what one would expect given the modest investing background of the founders. Meanwhile Citi, having bought Mr. Pandit's services by overpaying for the hedge fund, would have been in an awkward position had he left over the selection of someone else as CEO.

One wonders whether, had Mr. Pandit been at Morgan Stanley this year, whether the results there would have been different, or whether he, instead of Zoe Cruz, would have been blamed for the subprime and other credit losses.