We used to admire Sanford I. Weill for his career in the financial services industry and for his role in creating Citigroup (C). We were most impressed with the fact that Citigroup was able to grow its EPS in 2001 and 2002 during the implosion of the dot-com bubble. We were impressed with the fact that Sandy Weill brought together leading financial services firms like Citibank (the world’s most recognized name in consumer banking), Smith Barney (a premier wealth manager), Salomon Brothers (a leading bond trading and investment banking organization) and Travelers Insurance (a leading diversified insurance institution). Because of the blowback from the dot-com crisis and corporate scandals, Sandy Weill decided to step aside as CEO of Citigroup in 2003 and retired from Citigroup as Chairman in 2006.

Sandy Weill named Charles O. Prince, who had little hands-on operational experience except for an 18 month stint as Citigroup Corporate and Investment Bank to succeed him as CEO. While we believe that Citigroup now offers better return prospects to investors than J.P. Morgan Chase (JPM), we think that Sandy should have swallowed his pride and asked James Dimon of Bank One to have succeeded him as Citigroup’s CEO in 2003 instead of Charlie Prince. We believe it was a mistake for Sandy Weill to fire Jamie in 1998 because Dimon wouldn’t promote Weill’s daughter Jessica and because Weill thought Dimon was too ambitious.

Jamie was Sandy’s protégé, Jamie’s father Theodore was a colleague of Sandy’s and Sandy convinced Jamie to come work for him at American Express because he would have fun. Until Weill fired him, Jamie was Sandy’s most loyal lieutenant. We believe that if Jamie Dimon had succeeded Sandy as Citigroup’s CEO in 2003, Citigroup would have remained profitable during the crisis, would not have relinquished its leadership of the banking sector in terms of market cap and assets and would have been able to pick up distressed banks like Bear Stearns and WAMU.

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