Sheila Bair, former chairman of the FDIC, spoke with "Bloomberg Surveillance" Tuesday about Vikram Pandit's departure from his post as CEO of Citigroup. Bair said that "this was a very positive move and the board discharged its responsibilities and I think they should be commended."
Bair went on to say: "I did have concerns about Mr. Pandit's qualifications to serve as the CEO of the largest commercial bank, because he had never been a commercial banker."
Bair on whether the banking industry is now in the clear:
"No I think there are still a lot of headwinds. As I say in my book, I think that we did not clean out and restructure the industry in 2009 creates a drag now. There's a recent McKinsey report out now about this: if you prop up the inefficient institutions with the ones that managed well, you interfere with the markets being able to drive more efficient outcomes, and that's what we did. And I think the sector is still too bloated. That combined with economic uncertainties—I'm glad that they are profitable, I certainly wouldn't want it the other way around given the government exposure for these large institutions, but profits are being driven heavily by momentum that is not sustainable. A lot of it is coming from QE3."
On Pandit's departure:
"I think the board is doing their job. The most important job for a board is to pick the chief executive officer, and they need to do that in a way that has the right fit of skills and responsiveness that will help meet the challenges of the corporation. I think the board is doing their job and they wish Mr. Pandit well and they wish Mr. Corbat well, but I think they are exercising their prerogative or obligation to define appropriate management and leadership for the corporation."
