Why Mr Vikram Pandit can never get the Nobel Prize

The New Academic Building of LSE, (funny thing that the name would never really allow this building to ever grow old, though as of now it is genuinely new!) is a place which has such elaborate security placed, that you feel that it is LSE’s latest in-house maximum-security prison. While other buildings of the London School of Economics allow you to stroll in and out as and when you like, in the NAB (as it is colloquially called), you need to impress a set of grave black coat gentlemen and a sliding glass partition with your ID proof before you can step in. So it came to me as no big surprise to find a lot more restrictions in place when Mr Vikram Pandit, CEO of Citigroup decided to come over to LSE to talk about the future of the banking industry.

Actually I should have replaced the full-stop in the previous sentence by an exclamation mark. Imagine a banker talking of banking in this scenario! I can imagine politicians, professors, career advisors, psychologists talk of relevant stuff regarding the crisis. But to know from a banker how to patch up the hole that he so meticulously dug, was like getting to know from a thief how to keep your wallet safe.

Of course there was a more nationalistic reason for me lining up for the lecture-Vikram Pandit is an Indian, and I remember vividly how a couple of years back when I was in Delhi; newspapers and news channels in India made a hero out of him on getting to know of his ascendancy to the top job.

The Sheikh Zayed Theatre, (if it is not obvious, the clumsy title has more to do with the identity of the building’s largest donor, than anything ascetic) was chock-block full. Howard Davies, LSE’s director comes to the stage in his impeccable best and all of a sudden breaks into such nostalgia, that we in the audience are made to believe that perhaps Davies and Pandit were indeed childhood chums. The front rows of the magnificent hall were filled with distinguishably dressed people, and you can sense that amidst tailor made suits, glittering watches and an air of aristocracy, they represented the class that Mr Pandit belonged to.
Mr Pandit walks to the dais in measured steps, starts talking out of his notes in an accent that betrays his Indian origins and reveals his true American colours. Ofcourse he is delighted to come to LSE and interact with budding economists, he says. And then he starts talking.

He talks, talks and talks.

He talks of changing world financial structure; of constructing an even-playing field for intermediaries, regulatory reform, global coordination and a new financial architecture.

Peppering it occasionally with mentions of the greatness of Citibank; how huge, wide, big and successful it is. Sounding more like a Citibank commercial being played within every ten minutes of talk on the financial crisis.

And then he sits down beside Howard Davies, both having a snug, comfortable smile on their faces as if it is a job well done. We in the audience are forced to break into applause after having assailed with half an hour of complicated terms and concepts in Finance, knowing that perhaps there was certainly something in that web of grandiloquent ideas that we were too naive to spot.

“So how do you propose regulatory reform, Mr Pandit?” braved a student in the audience during the question and answer session. “After all, you happen to be the ones who are paying them.”
Mr Pandit answered by first shifting his weight from one arm of the chair to another. Then he said. “We appreciate that it is a daunting task, and the fact that it would require complex mechanisms in place, that will look into the more difficult issues. With respect to risk taking measures, there needs to be more active participation of the public sector and the way in which these regulatory organisations respond, by widening their net so that the bedrock of capitalism is restored.”

Howard Davies quickly shouts, “Next question” to prevent any more sense to be made out of that insight.

“Mr Pandit, what do you think of Citigroup becoming nationalised.”
Again came a reply that was a cocktail of words like- appreciation, participation, complexities, coordination, regulation and collaboration.

While Mr Pandit kept shifting on his seat from one arm to the other, I lost track midway and suddenly daydreamed of an interview I remembered seeing recently of another banker on television during the 10'O Clock news. The banker was Nobel Peace Prize winner, Mohammed Yunus. He stared straight at the TV presenter and said confidently, "We have lots of money. We are doing pretty well." To which the anchor replied, "Not many people I know of, actually manages to say that these days! How do you manage to do it Mr Yunus......"
Come to think of it, I reasoned out; both Vikram Pandit and Mohammed Yunus were at the heads of their respective banks. But one came in a striped coat that made way for a dotted blue tie, and glittering cuff-links; while the other was in the interview wearing a simple white jacket and a ‘kurta’. One was talking currently of things that even an Economics student would find difficult to make sense of. While Yunus was talking in a language that my mother who is otherwise mortified of Economics, could very easily appreciate.

Both talked of change. Of reforming a system. But Yunus spoke more simply. And more creatively. He spoke of the fact that there is something fundamentally wrong with the financial system that exclusively caters to just one section of society and pretends as if the other never existed. The reason Grameen Bank is making multi-million dollar profits is because the bank knows who it is lending to. The person with the loan is surrounded by a community that regulates and checks on defaults. Yunus reasoned out that in the current scenario, all what the banks had were only a bunch of legal documents and a set of AAA ratings. They had no clue who they were actually lending to. It was a ghost economy. We need to now make a financial system that runs on the real economy. With real people. But if we do not learn from this crisis, and return back to the original model after bailing out the banks, we would be planting seeds for another and much greater crisis. Human beings have great potential. Bring that potential into the market place. It will lead to more purchasing power, more consumer spending, more reliable banking.

“And that’s exactly what Citibank is doing", concluded Mr Pandit, breaking my reverie. "We currently have 109 branches all over the globe with two third of our staff belonging to their home country, and so we have a set of local banks, that cater to regional needs, and we connect all these ‘local’ banks across the globe to make a truly global bank called Citibank.” drawing an arc in the air while trying to connect his 109 local banks.

My friend sitting in the row ahead turned towards me in reaction to that, and sheilding her face with her hand gave me a sarcastic smile. She knew what I was thinking. And I knew what she was thinking.
Citibank might be one great bank that out of pure coincidence had to be bailed out. Mr Vikram Pandit may continue to expound and chase his lofty ideas of global coordination and comprehensive regulatory architecture. Audiences in lecture theatres and board rooms may continue to get impressed and give standing ovations. And Mr Pandit may still end up remaining to be the head of his ‘global-cum-local’ bank.

But there is no way the Nobel Prize could possibly land on his lap.
That is perhaps an entitlement of people who can think much simpler.