Citigroup Inc. said Richard “Rick” Stuckey, named in January 2009 to oversee $241 billion of the bank’s most toxic mortgages and bonds, will retire later this year after cutting the pool by half.
Stuckey, 54, stepped down as head of the Special Asset Pool unit on April 26, the New York-based bank said in an internal memo confirmed by spokeswoman Shannon Bell. He will remain an adviser during a transition before retiring “in the latter part of the year,” the memo said. Stuckey was succeeded by Aloysius T. “Ish” McLaughlin, who oversaw sales of newly issued investment-grade bonds, according to the memo.
Chief Executive Officer Vikram Pandit formed the Special Asset Pool to dispose of unwanted loans and securities as regulators pressured the bank to shrink following its $45 billion bailout in late 2008. Stuckey, who helped unwind bad bets by Long-Term Capital Management LP following the hedge fund’s collapse in 1998, cut the pool to $126 billion as of March 31.
“Rick has made incredible progress in managing down the assets in the pool,” Michael Corbat, 49, head of the bank’s Citi Holdings division, said in the memo. The Special Asset Pool is a part of the $503 billion-asset Citi Holdings, which also includes CitiFinancial, auto-lending, student-lending and other businesses tagged for eventual sale or closure.
McLaughlin, 44, began his Wall Street career in 1995 as a trainee at Salomon Inc., which was bought in 1997 by Citigroup predecessor Travelers Group Inc. He led sales of newly issued asset-backed securities from 2000 to 2005 and added responsibility for investment-grade corporate bonds in 2005.
Since the bailout, McLaughlin also has helped coordinate Citigroup’s use of the federal Term Asset Backed Securities Loan Facility, according to the memo. The program, known as TALF, was set up last year to help restart the market for packaging auto- loans, credit-card debt and commercial mortgages into securities.
Stuckey has been with Citigroup or its predecessors for 28 years, according to the memo. Like McLaughlin, he came from Salomon, according to his Financial Industry Regulatory Authority record.
Many of the loans and securities in the Special Asset Pool were covered by the $301 billion of government guarantees that Citigroup got along with cash infusions in late 2008. To escape the most onerous restrictions that came with the bailout, Citigroup repaid $20 billion of the money in December and terminated the guarantees.
After that, Citigroup decided to transfer $61 billion of assets from Citi Holdings to the Citicorp division, which encompasses branch banking, investment banking, trading, corporate cash management and other “core” businesses that Pandit plans to keep. The transferred assets included $18 billion from the Special Asset Pool, according to a presentation on the company’s website.
In the first quarter, the bank also sold $6 billion of loans and securities from the Special Asset Pool, Chief Financial Officer John Gerspach said in an April 19 conference call.
Sandler O’Neill & Partners analyst Jeff Harte wrote in an April 27 report that the Special Asset Pool is “expected to run off much more rapidly” than other businesses in Citi Holdings as “loans are repaid and securities sold.”
From 1991 to 1993, Stuckey was co-head of Salomon’s derivatives unit with Myron Scholes, the Nobel Prize-winning Stanford University professor who was a partner in Long-Term Capital.
In 1998, he was assigned to a team created by 14 Wall Street firms to manage the unwinding of Long-Term Capital’s assets after the hedge fund suffered $4.6 billion of losses.
In November 2007, after the ouster of former CEO Charles O. “Chuck” Prince, Citigroup created a Sub-Prime Portfolio Group to manage most of the bank’s $43 billion of subprime mortgage assets, and Stuckey was assigned to run it.
In August 2008, he was transferred by trading chief James Forese to head government risk Treasury, before being reassigned five months later to the Special Asset Pool.
To contact the reporter on this story: Bradley Keoun in New York at firstname.lastname@example.org.