Citgroup's Toxic Dunghill: Gone Fishin'

I think the money shot in the New York Times' morning tictoc about the fall of Citigroup is the one about the too-cozy relationship between the cowboy bond-trader and the green-eyeshade risk policeman (think Robert deNiro and Charles Grodin lashed together in Midnight Run). The Times reports:

It was common in the bank to see Mr. Bushnell [the regulator] waiting patiently — sometimes as long as 45 minutes — outside Mr. Barker’s [the trader's] office so he could drive him home to Short Hills, N.J., where both of their families lived. The two men took occasional fly-fishing trips together; one expedition left them stuck on a lake after their boat ran out of gas.

(link--and I wonder, did he have to wait in a plastic chair, like a Bronx trial judge outside the office of his local mob boss?) . That kind of detail is the answer to a reporter's prayer and rightly so, but recall: the presence of this detail in the story means that somebody told it which means that somebody saw it and understood its importance when it was happening. Interesting to wonder what else he saw and what he did about it. Tell the boss? Sell short? Run for the exit?

The piece also offers an inglorious (apparent) farewell for Robert Rubin, who tells us that he was only tickling the ivories in the parlor and had no idea what the girls were doing in the cribs upstairs. Too bad: coming out of the Clinton years, I counted myself among the legions of Rubin admirers, but it's hard to believe he will be occupying a position of high visibility in the Obama regime.

Footnote: I admit I gasp to hear that Charles O. Prince, chief executive, said that "our job is....to incent people." Is he too busy to say "incentivize"? I am incentsed.

Upate: As Felix Salmon points out, all those nasty things said about Bob Rubin this weekend don't just say themselves.

The Old-Fashioned Way

I used to know a banker who said "I won't lend on anything I can't see from my front window." He's looking mighty good this morning. Here's a snippet from the Citibank conference call, announcing its $9.83 billion loss:

Within our bank cards portfolio, approximately two-thirds of the losses occurred in five states -- California , Florida , Illinois , Arizona and Michigan . And the loss rates on customers with mortgages in those states increased by fourfold versus the loss rates in the rest of the country .... Loss rates in the branch-originated mortgage business remained relatively stable, where face-to-face interaction with customers and long-standing relationships have historically resulted in lower losses. The CitiFinancial real estate mortgage portfolio, for example, is comprised primarily of full documentation, fixed-rate loans with low loan to values.

Via Calculated Risk.

The Lyndon Johnson Corollary: the best fertilizer for a farm is the owner's footsteps walking over it.