Thursday, March 8, 2012

NY Times' Peter Eavis calls Citigroup's Pandit's bluff on transparency

In a NY Times Dealbook article, Peter Eavis observes that Citigroup's Pandit likes to talk about transparency, but fails to back up this talk with action.

Citigroup‘s chief executive, Vikram S. Pandit, likes to talk about transparency, and on Wednesday he repeated his call for new ways to compare the risks at different banks....
Taking questions at the Citi Financial Services Conference at the Waldorf-Astoria in New York, Mr. Pandit was asked whether the bank’s risk management had improved since the financial crisis. 
As part of his response, he reiterated his belief, stated in an opinion piece in The Financial Times in January, that banks and regulators could make new types of disclosures that would allow investors to compare risks across different banks. “Let’s make sure we get a level playing field and let’s get the information out in the market place so they can decide,” he said Wednesday.

As regular readers know, the starting point for new ways to compare the risks at different banks is to require all banks to provide ultra transparency and disclose on an on-going basis their current asset, liability and off-balance sheet exposure details.

With this data, market participants will be able to assess the risk of each bank and make meaningful comparisons between banks.

Without this data, banks will remain 'black boxes' and market participants will continue to be unable to assess their risk or make meaningful comparisons.

That’s an admirable aim, but ... until investors get a better idea [of Citigroup's exposure details]... they have reason to call on Mr. Pandit to first apply more transparency to his own bank.

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