Another Subprime Casualty

Last week everyone was talking about the departure of Merrill Lynch’s CEO, and this weekend it was Citigroup’s Charles Prince. He stepped down as Chairman and CEO after Citi announced losses in the billions of dollars, due to asset price writedowns and credit-related losses. Win Bischoff was appointed interim CEO, until the company finds someone to replace Prince. Robert Rubin, Former Treasury Secretary, was named Chairman of the board. Prince’s tenure was one marked with management experiments, shareholder dissatisfaction and risky strategy – a mixture that didn’t work out well in the end. Citi’s stock trades now at a price 17% lower than where it stood when Prince took over in 2003. Risky bets on subprime mortgage securities may result in $8 to $11 billion in writedowns for the bank, in addition to a $6.5 billion hit it took in Q3.