When Sandy Weill, the former chairman and CEO of Citigroup, got in trouble, then-New York Attorney General Eliot Spitzer warned the company he was going to shut it down unless Citigroup appointed someone he could work with, Cramer said.
Prince at the time was the general counsel and "a very upright and honorable man." Prince was the "go-to guy" to fix up the bank's culture, but "no one ever expected him to be the operating guy," Cramer said. The idea that Citigroup defaulted to a lawyer to run a bank, and the fact that Prince is still running it even after Spitzer has gone on to Albany as New York governor, is "foolish."
"Citigroup has been at the cutting edge of everything that is bad," Cramer said. It was the last big lender to the private-equity companies, which is "just terrible." Plus, it was "one of the most active in putting together these mortgage products that are just awful," he added. Also, Citigroup, which Cramer owns for his Action Alerts PLUS charitable trust, has been a very aggressive lender to a lot of people who shouldn't be getting loans, and it moved into Japan at the absolute high.
"Then the last thing he said was that hedge funds are the key things," Cramer said. "Hedge funds peaked precisely when he bought them."
Instead of buying Vikram Pandit and John Havens' Old Lane hedge fund, Prince should have bought the money mangers themselves. "You should never buy a hedge fund," he said. "All a hedge fund is is managers, but I don't think Chuck Prince knew that."
Cramer said he knows he's come on strong speaking out against the Citigroup chief executive, but at the same time, when he saw that Old Lane has gone down nearly 6%, he's begun to think what exactly it will take to get Prince fired. "Corporate America is such an unfair place," he said. "Lots of executives stay on. This isn't like the NFL, where you get fired after a couple of losses."
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Great post on citi.
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