Citi Finally Does Something Right

No, I'm not talking about getting high marks for its managers from some bogus consulting firm that the board hired to conduct a government-mandated review. Although, according to the WSJ, Citi passed the preposterous test, which involved asking managers such tough questions such as "how effective are your colleagues?" No wonder the FDIC is skeptical about the rigors of the review.

What I'm giving Citigroup high marks for is offloading its Phibro unit to Occidental. Ever since the furor erupted over Andrew Hall's $100 million pay package, I have been advocating that the bank get rid of the unit. It's not that I don't think Mr. Hall deserves to get paid a boatload of money when he generates sizable profits. It's that I don't think anyone working for a firm that essentially went bankrupt and only has a pulse due to government assistance should be paying out those sums to anyone, no matter how profitable their individual unit was. Rather than deal with the political backlash of having to defend Mr. Hall's pay, it's just easier to get rid of the unit so the firm can concentrate on the more important business of managing its multi-trillion dollar balance sheet. Oh sure, Mr. Hall's unit made some money for the bank over the years, but it was a drop in the bucket compared to Citi's enormous losses. Furthermore, it is a proprietary trading business, which means the unit could easily misfire and lose a bunch of money too. Most importantly, the idea of bailing out Citi was to protect depositors and avoid the catastrophic consequences of the disappearance of a large lender to consumers and businesses. It was not to protect large pay packages to employees and support a commodities casino business. No, that was merely the government's intention when it bailed out Merrill...