Citi's Troubled Board Raises All Kinds of Questions

The huge problems of Citigroup raise big questions about the quality of boards of directors, including how big should they be, how can directors be forced to focus and how can they remain in a kind of somnambulant daze?

CEO Vikram Pandit, in charge for about 18 months, has seen the mega-bank lurch from one mess to another. He wanted to keep the "super-bank" modus and now is abandoning it. He's lost beaucoup market cap. He needed Wachovia to help sort out its sagging retail banking but quickly lost it to Wells Fargo. He's needed a big federal bailout money. The list goes on.

He's hardly alone at Citi. Past CEO Sandy Weill, godfather of the "superbank" concept, failed to stop a pile of regulatory woes and other scandals. Charles Prince left after making bad, overleveraged plays. As the blog Finlay On Governance puts it: "Common to these problems has been Citigroup's board of directors, which increasingly resembles a first-class sleeping car on a train wreck that just keeps happening."
Curious enough, since Citi's big, 15-member board has stars galore. They should be secure enough about their egos and positions to ask hard questions. Some reportedly have, including Citi directors Anne Mulcahy of Xerox and Andrew Liveris of Dow Chemicals. Famed Richard Parsons of AOL-Time Warner, is said to be holding the board together in his quiet, behind-the-scenes manner. He's rumored to be ready to replace current board chairman Sir Win Bischoff when the latest sell-off of one-third of Citi's assets, including credit cards, insurer Primerica and subprime CitiFinancial, gets underway.

But once again, what's the point of the board if these management problems keep cropping up? Is 15 directors too many? You want independent directors to act as facilitators, communicators and father or mother confessors. Where have they been? Why does Finlay's description of Citi's board seem spot on?

There's ample fat to chew over here once the dust settles.