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News: Analysis & Commentary
Commentary: Bob Rubin Isn't the Answer to Citi's Real Problem
On one level, the Oct. 26 news that Sanford I. Weill has snagged Robert E. Rubin to Citigroup Inc. is not so surprising. Weill, a dealmaker extraordinaire, was not about to let a competitor get its hands on the former Treasury Secretary--the biggest catch to come through Washington's revolving door in a decade. Rubin's value is obvious to the financial-services giant: While ethics rules prevent his lobbying Treasury, Citigroup gains the talents and gravitas of Rubin, as well as his priceless global Rolodex.
Yet Rubin's dramatic hiring doesn't solve Citi's No. 1 management issue: Who will run the global colossus when Weill, 66, and John S. Reed, 61, retire? Ever since late 1998, when Weill and Reed asked Citigroup President James Dimon to resign, Citigroup has had no heir apparent and no single operating executive to get things done while the two bosses try to agree."BIZARRE." Rubin insists that he's not CEO in waiting. So, what will he do? His three new titles--Citigroup director, chairman of the executive committee of the board, and a member of the new office of the chairman--only make it harder to figure that out. "It's bizarre," says David A. Whitsett, a University of Northern Iowa professor and expert on organization culture. "I've never seen anything like this."
Rubin's presence, however, may have a soothing effect on the difficult marriage of convenience between Weill and Reed. During his years in Washington, he was known as a conciliator who helped find common ground between different camps. He could do the same at Citi.
At present, Weill's grip on the helm seems firmer than Reed's. He courted Rubin and was a key behind-the-scenes player in finally toppling the Glass-Steagall banking regulations that (technically, at least) stood in the way of Citigroup's ambitions. For now, Reed appears content to let Weill bask in the limelight. Meanwhile, the publicity-shy Reed is headed for the hot seat. On Nov. 9 and Nov. 10, he and other Citi execs are expected to testify before the Senate Permanent Subcommittee on Investigations, which has been probing Citibank money-laundering.
Heightened scrutiny of Reed may give Weill a leg up in the crowded executive suite. But even if he has the chance to take over, he might think twice about it. To carry out the vision that Weill and Reed created, Citi still needs a hands-on CEO who can be there for years to come. That's probably not a job for Rubin, 61, either. But his calming presence will make it easier for Citi to fill the job.By Leah Nathans Spiro and Paula Dwyer