Citigroup CEO adjusts to the "new normal", says economy is on road to recovery (Photo: Smriti Rao)
Ben Bernanke says the recession is over, the DOW swaggers to the top of 10,000 and Obama assures us the worst is behind us. Job numbers released this Friday by the Bureau of Labor Statistics back them up showing a net job loss for November of just 11,000.
The nation’s unemployment rate also dipped slightly from 10.2 percent last to 10.0 percent this November. Signs that Citigroup CEO Vikram Pandit says point to an economic recovery.
“It’s interesting to see the number of job losses is narrowing steadily,” said Pandit. “There’s expanding economic activity, corporate activity, and housing declines are lower. All these trajectories are going in the right direction,” he said.
Speaking at a media roundtable at Citi’s Headquarters at Two Court Square in Long Island City, Pandit expanded on the bank’s efforts to aid the recovery and to minimize the foreclosure crisis in one of New York’s worst hit areas- Queens.
New York’s housing market suffered a particularly severe fallout in the wake of the housing crisis in the U.S., with over 50,000 new foreclosure filings in 2008 alone, a 30 percent increase over the preceding year.
In Queens, more than 5000 properties received foreclosure notices according to the Furman Center for Real Estate and Urban Policy – the leading academic research center in New York City devoted to the public policy aspects of land use, real estate development and housing.
St.Albans and South Jamaica were the worst hit – with more than 540 homes from these two areas going under the hammer in 2008. But Pandit says despite the dismal numbers, things could have been worse.
“In New York City we should consider ourselves fortunate,” he said. “There are issues here too- but compared to the rest of the country- we are in a much better position,” he said, referring to Citi’s foreclosure prevention program that includes modifications, extensions, forbearances and reinstatements. A program Pandit credits with helping people retain their homes.
“In NYC, our numbers are good,” said Pandit. “Out of every 77 people with mortgage problems, 76 have managed to retain their homes,” he said.
He urged Citi customers to leverage this program by going to their local branches and asking for help with their mortgage modification. “A lot of times people are reticent to ask for help,” he said, “but we urge you to call in our helplines or go to the branch.”
For home-owners with language barriers, Pandit urges them to seek help via local community-based organizations who can then direct them to this program.
Loan modification however is just one aspect in Citigroup’s restructuring as it adapts to the “new normal”, Pandit said.
With $1.9 trillion in assets, Citigroup is the third-largest U.S. bank. Pandit, who has shrunk Citigroup by about 25 percent, said the problem at his institution wasn’t size but strategic clarity.
After spinning off the Travelers insurance business and reducing the amount of risky trading that Citigroup does, Pandit said the bank has narrowed its focus.
“We’re about 25 percent smaller as a company,” he said. “The most fundamental part of our change was to take a company focused on products to a company focused on clients.”
He said Citi hopes to achieve a culture that practices responsible finance that recognizes that “banking is a means to an end and not an end in itself.”
Pandit has a special relationship with Queens. He moved here from India when he was 16. In the swanky, glass fronted Citi Headquarters, the Columbia graduate beamed that the county and the city ought to look at the future with optimism.
While refusing to comment directly if there were any layoffs in store for Citi employees at Long Island City, he reflected that it had been “an interesting year.”
“We have done a lot as a company to put our house in order. We have raised capital, directed operating leverage by cutting costs – we feel like we are in a fundamentally different place.”
While Citigroup is confident that it can keep the company profitable and repay the $25 billion it received from the U.S Treasury’s Troubled Asset Relief Program, it remains to be seen if it’s customers with refinanced mortgages share Pandit’s rosy outlook for the future.
This piece first appeared in The Queens Chronicle
