Citigroup's Stuckey to Run Subprime Unit After Losses

Discussion in 'Wall St. News' started by ASusilovic, Nov 6, 2007.

  1. Nov. 6 (Bloomberg) -- Citigroup Inc. named Richard Stuckey to manage most of its $43 billion of subprime mortgage assets, choosing the same executive who nine years ago helped unwind Long-Term Capital Management LP's bad bets.

    Stuckey, 51, will run the Sub-Prime Portfolio Group, created after the largest U.S. bank by assets said Nov. 4 that it will write down as much as $11 billion of subprime debt and Chief Executive Officer Charles O. ``Chuck'' Prince III resigned. Stuckey will oversee most of the bank's securities linked to homeowners with poor credit, according to a memo sent to employees and confirmed by Citigroup spokesman Dan Noonan.

    Rescuing the bank's subprime holdings may be a harder challenge than Long-Term Capital, said Lawrence White, professor of economics at New York University's Stern School of Business. New York-based Citigroup owns subprime mortgage securities that rarely trade and are hard to value. The Long-Term Capital hedge fund was holding derivatives tied to interest-rate and equities that readily trade.

    ``The opaqueness as well as the stinkiness are greater,'' White said.