The economy and foreclosures dominated a roughly 20-minute roundtable discussion that Citigroup CEO Vikram Pandit had with local media at the Two Court Square Citigroup building in Long Island City recently. In addition, Pandit, who has been at the helm of Citigroup since December 2007, also spoke about changes in the company since the economic crash and its outlook for the future.
“We have done a lot as a company to put our house in order,” Pandit said on Wednesday, December 3. “We have not only raised a lot of capital, reestablished national strengths, created operating leverage by cutting costs – we have reduced the risks in our balance sheet, and we feel we are in a fundamentally different place than we were a year ago as a bank.”
Pandit said that addressing foreclosures was one of the main goals for the company. Nationally, Pandit spoke about Citi’s 12 to 1 ratio of keeping people who were facing foreclosure in their homes – a number that equates to more than 700,000 people staying their homes. Locally, those numbers were even stronger, with a 76 to 1 ratio of keeping people within New York City in their homes.
“That’s one of the first things that we focused on – keeping people in their homes is good for everybody,” Pandit said. “It’s good for the people; it’s good for the bank; it’s good for the economy.”
Pandit spoke about the company’s multi-faceted approach to helping people facing foreclosure. He mentioned the high number of bank branches in New York City where people could walk in to request help, telephone numbers for people to request assistance and working with community and non-profit associations – some whom Citi has funded – to bring help directly to the residents in need.
“There’s no foolproof way of doing it, but you have to do it by trial and error and lots of different points of contact,” Pandit said.
Another topic brought up during the discussion was that even after the economic stimulus package has been put in place, many businesses in Queens, which is a borough made up of a majority of small businesses, are still having a difficult time gaining access to capital and credit.
“Some of that is starting to change in the marketplace,” Pandit said. “Small and middle businesses have been hardest hit to some extent because the lending to them came indirectly through something called the shadow banking system. Small business loans, loans for inventory, accounts receivables were all packaged and sold as securities through the securitization market. Well, that market is not where it used to be.”
In addition, Pandit said that banks are now more limited in packaging loans, and they face an increased regulatory environment where regulators want you to have more capital and be more careful so it becomes “a constraint for banks to be as flexible in providing those loans as they have been in the past.”
“I think every one of us are trying to do their part in this, and it’s starting to change, but it’s a topic that’s of great interest to us and people in Washington as well, and we’re looking at all kinds of different ways in which we make up for the shadow banking system not being there to solve the transmission problem [and] somehow to get loans to the smaller businesses,” Pandit said. “We have a few more things we’re working on and hopefully during the next four weeks to put things into practice.”
Meanwhile, Pandit said that he was seeing some encouraging signs in the current economy including the number of job losses narrowing steadily, the economy growing last quarter and housing prices not declining as much as in the past.
“All of those are good signs,” Pandit said. “Now, what all of us want to see is have those signs translate into job creation. In order to get to job creation, you have to start with job losses stopping and then getting to job creation.”
In addition, Pandit spoke about the Citigroup’s commitment to Long Island City, which he said started many years before he came to the company, with the 50-story Citibank building at One Court Square and the new 15-story tower just next to it at Two Court Square.
“[My predecessors] really saw this as a prime site being right across the river, and it’s interesting that a similar focus now is being put on by people that are building apartments now on the river,” Pandit said.
In addition, Pandit said he has no plans for Citigroup to leave the area, and it is committed to being part of the neighborhood.
“Our largest consumer businesses are here – the consumer car businesses run out of here – and many of the people that run our retail bank are here as well so it’s a key part of our U.S. consumer strategy to be here,” Pandit said.