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The replacement of Pandit at Citi is a very good thing for CRE. His appointment 5 years ago never made any sense to me. He was a moderately successful hedge fund operator with absolutely no experience at running any part of a large commercial bank, and no experience running a large, complex, worldwide organization. He took over from a lawyer who also had no operational experience who had no idea how to run the bank, and he had taken over form a deal junkie who had built an very disparate and complex conglomerate of financial services companies. Rubin, it turns out seems to enjoy the perks of his title but did little to rationalize the operation of the bank into a strong commercial bank. Bringing Pandit in to deal with this mess in the midst of the crash of the capital markets seemed at the time to be a terrible decision by the board, which has been proven to be the case.

Giant American commercial banks are extremely complex organizations, but they are a bank, not a hedge fund and not something just any smart guy can run. Commercial banking is at its core, the allocation of capital to a vast array of borrowers and being the custodian of depositors funds for safe keeping.  Large banks like Citi are critical to the smooth functioning of commercial transactions throughout the world, and they are critical to the smooth functioning of the real estate market, both residential and commercial. Without well run large commercial banks there is no smooth functioning of the residential mortgage market, and so there could not be a way to finance the development of housing. Likewise, there cannot be construction lending available for large projects without the sound banking system and the strong functioning of  the large banks.

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