Former Morgan Stanley Chief Mack on Pandit: ‘Clearly There Was Unhappiness With the Board’

Wall Street legend also unhappy Obama ‘trashed us’

Yet another Wall Street heavy has weighed in on Vikram Pandit's surprise resignation from Citigroup. John Mack, former chairman and CEO of Morgan Stanley, spoke with Bloomberg Television about Pandit's departure, saying that "there was a view clearly by shareholders that change was a good thing."  Mack said, "Clearly there was unhappiness with the board" and “at the end of the day the CEO has to have a close relationship with his board.”

Mack said that although he voted for Obama in the last election, he supports Romney, saying that he Obama told him and colleagues at the White House that "we need to work together.” Mack said, “and then the meeting is over and he trashes us to the press."

Mack on Pandit's departure from Citigroup yesterday and whether it was the right way to handle a CEO transition:

"Sometimes you can't do with the right way. You have to take advantage of what is going on. What was going on, clearly, there was unhappiness with the board for a lot of different reasons. You sit and you want to plan it out, but clearly they had done work on succession in advance of this so you have to give them credit for that. They moved very quickly after the announcement to address shareholders and employees. The chairman did that, which I thought was a really positive. It is difficult to lay out a road map that always works perfectly every time. The most important thing is that they were ready for this, they had succession and announced it immediately."

On Citi's stock doing well following the announcement and whether who has the CEO seat is relevant:

"I think it is relevant. I think it's all about leadership. There was a view, clearly by shareholders, that a change was needed to happen and the stock did move up."

On how people will judge Pandit:

"You have to go back and think about his entire career, not just a slice of it at Citi. He is a very bright individual, very smart about the business and understands the business. I think he made a lot of progress, and also taking that intellectual power that he had and worked on a more personal side of how to talk with people and boards and to be a leader. If you look at what he did, in many ways, he did the right things. But he inherited something. He did not step in and create it, it was there and he tried to fix it. Markets move quickly. When markets move and there is so much animosity towards the banks, there is a lot of pressure put on boards. Communications with the board become paramount. You had a lot of changes. Clearly he stepped in when Chuck [Prince] left. There was some resentment on the price paid to his hedge fund that was bought…There were negotiations with the government when they were selling GM shares and I think that created tension. Then the question becomes, when the board is under pressure, and they should be because we should all take the responsibility seriously and they do, communications is key. Then you have say on pay. It was one thing after another If you look of the comments about Smith Barney and the write-down, that just added more fuel. At the end of the day the CEO has to have a close relationship with his board and he has to understand what is on their mind and the issues, and you need to be able to respond to it. You cannot just give them short answers. You need to get deeply involved with your board and make sure you are working with them and they know what's on your mind."

On why Pandit was continually judged or punished for what Citi paid for Old Lane Partners:

"I think certain people resent it…It's much easier to target an individual. Just the way life is."

On Michael Corbat's role as CEO:

"He has a tough job. I think all of these CEOs of large financial institutions have a tough job. Number one, we're still not out of the crisis. There are still a lot of issues. No. 2, the regulatory environment, as it should be, is very diligent on making sure safety and soundness. There is a constant review of performance, risk, boards, and that will continue. Just put yourself in the global economy, and all of these firms are in the global economy whether it is in Asia or the problems with the euro, they have offices and people all over the world so it is very difficult."

On last night's presidential debate and whether Obama was successful in drawing a distinction between the wealthy and the rest of the country:

"I think he has been successful and that is why he keeps doing it. It resonates. I think that candidate Romney has done a great job in laying out he will not raise taxes on the middle class, that he's not cutting taxes on the 1%, but the president has done a superb job of doing it, and that is why he continues to do it."

On why there isn't appreciation when it comes to the 1% and those who embody the American dream:

"I think it's simple. If you are unemployed and you see others doing really well for very long period of time and you see friends and families and people you deal with in the community losing their jobs -- I assume the number is 23 million, that was thrown out yesterday around 8% unemployment …after a while to say how about me? I can understand that. Let's be totally honest, a lot of people that have done very well have not handled that wealth very well. That is part of the issue with Wall Street. I think it's really changing. I think that the kind of money that was made in the way it was flaunted is wrong. I grew up in North Carolina, and I know what it is like to grow up in a small town and have a lot of friends, but there was not a lot of money being made there. People look at me when I was running a company and said look how much money Mack's making. We have an American dream, and we have to give an opportunity for everyone to do well and when one group does extremely well and there's a large group not as doing well, we need to make changes."

On whether Wall Street requires a culture change, and how to make that happen:

"Let's go back and do a little history. I came to Wall Street in 1968 and started working for $8,000 per year. I had offers for more money and turned them down. I came to Wall Street because I like the business. As I got into the business, I liked it even more. We didn't make a lot of money, but over time as we have global markets, technology, deregulation, the markets took off. We happened to be at the right place at the right time. We took on more risk. We became global. We used technology, and the money was really unbelievably generous, to say the right word. Now we've grown and gone through a huge crisis. We've looked back on the mistakes we of may come and we start saying safety and soundness is number one…At the end of the day, the one area that has to be squeezed is the compensation number."

On whether Wall Street banks need to be broken up:

"There are pieces of things that you do need to change. Going back to Morgan Stanley, we did not think Discover card was being valued the way it should be…When you talk about breaking up banks, you of a couple of issues. Number one, you need to fund yourself. If you break them up, it's going to be difficult…No. 2, it has to be global. We are in a global economy and global world.  You can't do one thing in one country and something else in another."

On why Wall Street supports Romney:

"There are a lot of reasons. I remember during the crisis we were summoned to Washington and we all went to the White House. We had a meeting of the president came in and said we need to work together. I am the only person standing between you and the mob out there. I said ok, this is going to be a good meeting. We're going to be together and he is going to help us. And then the meeting is over and he trashes us to the press. That is a little thing. But we need to work together and pitting one group against another to help solve problems does not solve problems. I think there is a view from Wall Street…Look, I voted for the president and the last election. I am not a Republican or Democrat, I vote for the individual, but I am really disappointed at how he has worked in solving some of these problems. He has been divisive."

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