At a time when mercilessly pilloried bankers are keeping their unhappy feelings to themselves, Citigroup CEO Vikram Pandit has decided to vent. He distributed a memo on Friday to employees criticizing a bill that could impose heavy taxes on payouts at firms receiving federal bailout dollars.
Pandit’s memo takes aim at the legislation passed on Thursday in the House of Representatives that slaps a tax of up to 90 per cent on bonuses given to employees of companies that receive federal funds. The legislation was rushed through the House this week following outrage over $165 million in retention bonuses being lavished on execs in American International Group (AIG).
“Our industry has recently seen a tide of negative sentiment rising in Washington, DC, regarding compensation. Of course, some of it is warranted. But I take exception when there is a discussion about spreading the blame to each and every employee in the financial services industry,” Pandit wrote in the memo.
“At our company, we removed the people responsible for Citi’s financial distress.”
Pandit added: “The work we have all done to try to stabilize the financial system and to get this economy moving again would be significantly set back if we lose our talented people because the Congress imposes a special tax on financial services employees. It would affect countless number of people who will find it difficult, if not impossible, to pay back the bonuses that they earned.”
Senate Republicans blocked Democratic efforts on Thursday to bring up the Senate version of the tax bill to recoup most of the $165 million paid out by AIG last weekend and other bonuses in 2009. Democrats will try again next week to take up the tax bill and hope to complete it before April 4.
Pandit has already said he will take a salary of $1 and no bonus until Citigroup, which has accepted $45 billion in bailout money, returns to profitability. But most people like to dwell on the fact that Pandit, who took over Citigroup in 2007, sold his hedge fund Old Lane Partners LP to the company for more than $800 million. Citi closed the fund in 2008.
Even while the AIG bonus furore was being played out in Washington, reports surfaced this week about Citigroup’s plans to spend an eye-popping $10 million on new offices for Pandit and the bank’s senior executives.
Pandit’s new office will be located one floor down from the one he inherited from “Chuck” Prince in December 2007 at 399 Park Avenue. The second floor, which contains offices, boardrooms and executive-dining quarters, will be completely renovated to make way for 17 private offices with sub-zero refrigerators, icemakers, “Safety Shield 800” blast-proof window film, “soft seating,” space for administrative assistants and two conference rooms, according to a report by Bloomberg.
Citigroup, however, says the construction is a necessary “space-saving initiative.”
