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Armstrong gets Strong-armed off Audit?

April 18, 2008 at 3:10 PM 

BOARDROOM JUNGLE

 

Mike Armstrong, former CEO of ATT, was removed as audit committee chairman of the Citigroup board. Incompetence or scapegoat?

 

Anyone who knows Mike Armstrong and his stellar career knows the answer. It is a latter day rush to blame, pure and simple; the investment community and activists’ pressure on the board was undeniably the reason for this precipitous move. No matter. If true board minutes were released, they would read like this: in our examination of our risk management practices we have discovered that our asset/liability models can no longer forecast the true risk inherent on our balance sheet (and off balance sheet) with any degree of reliability. If ever there was a black box, this is it. There are literally hundreds if not thousands of products, segmented and syndicated to an unknown number of counterparties, all of which have different but related risk models. It is hopelessly beyond the ability of senior management and its advisors to manage. It is complexity to a higher degree than we can conceptualize. We are clueless as to how regulators will try to resolve.

Tags: michael armstong (1) citi (8) audit committee (5) risk (17)

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