Um, the business-press is talking to itself again.

Coverage of this morning’s forced resignation of Charles Prince, Citigroup’s chairman and chief executive, reads like journalists writing for each other and their sources

All sorts of reasons are offered for Prince’s ouster — his poor operational skills, his personality, the fact that he’s not Sanford Weill, the Great Architect and Helmsman himself, who retired in late 2003. All theories are correct, I’m sure. But I would call them hyper-sophisticated.

The Wall Street Journal blames Prince’s inability to unite Citigroup’s diverse businesses in the story headlined: “In Citi Shake-Up, Broader Troubles:”

Charles Prince couldn’t unite the pieces of Citigroup Inc.’s sprawling empire, and his successor will face many of the same challenges that have stymied the outgoing CEO….
Citi’s core problem — and Mr. Prince’s core failure — isn’t just the recent market losses. It’s also the conspicuous lack of successes elsewhere to compensate for them. That potential was the big strategic idea behind the “universal bank model” created by Mr. Weill a decade ago. The universal bank could generate more revenue from clients by offering a slew of related financial services. Meanwhile, the collection of varied businesses is supposed to provide a cushion, with downturns in some areas balanced by upturns in others.

The New York Times, in
Bankers’ Lesson From Mortgage Mess: Sell, Don’t Hold,” says the problem is that banks didn’t offload the crap, um, I mean, the subprime-based securities they created fast enough, but instead, if you can believe it, actually held on to them. Crazy.

The trouble stems from the banks’ significant involvement in collateralized debt obligations, which raise money by selling bonds to investors and using the proceeds to buy other bonds, many of which are backed by subprime home loans.

Or, alternatively, on second thought and upon further review, the Times concurs that problem is the vastness of Citi’s empire, under: “Fixing Citigroup Will Test Rubin

[Investors] main complaint has been that Citigroup is trying to be too many things — a commercial bank, a brokerage firm, an investment bank, a credit card company. Mr. Weill promoted the idea that the different businesses would make the others stronger, by offering one-stop financial shopping to customers.

But its operations in more than 100 countries have spread management thin and made it difficult to keep tabs on risks. Its technology systems are outdated. Its cowboy culture and internal politics have proven difficult to rein in, and its sheer size makes it hard to move the profit needle.

Bloomberg agrees that Prince screwed up Weill’s “profit machine.”

That’s here: “Weill’s Profit Machine Breaks Down on Citi Writedowns (Update4)

Nov. 5 (Bloomberg) — Citigroup Inc., the profit engine built by Sanford “Sandy” Weill, has seized up.

`Chuck Prince took over with all the tools,’ said Peter Sorrentino, who helps oversee $13 billion at Cincinnati-based Huntington Asset Management, including Citigroup shares. `Citigroup hasn’t delivered. They didn’t knock it out of the park when things were good and now they find themselves staring at the barrel of some of the more onerous losses that this whole episode will deal out.’

The Financial Times, which reports that even Weill came to regret his choice of successor, says the problem was that Prince lacked Weill’s skills, making the “Credit meltdown the final straw for executives

He lacked Mr Weill’s passion and ability to motivate, say former executives who complained that he did not allow business heads to run their own operations, did not trust his colleagues and failed to take advice.

The outlets are too close to the story, I think, and a larger point is lost.

The root of Citigroup’s problems—let’s remember—is that the mega-bank and its brethren in the financial system, from former industry darlings Countrywide Financial and Ameriquest, to Citigroup’s own CitiFinancial, all the way to Lehman Brothers, Bear Stearns and back to Citigroup again—made too many loans to financially vulnerable borrowers, then turned those bad loans into bad securities.

Who says? Prince himself, as the Journal reports:

It is my judgment that given the size of the recent losses in our mortgage-backed-securities business, the only honorable course for me to take as chief executive officer is to step down,’ Mr. Prince said in a statement yesterday.

The paper further notes:

The company said yesterday it formed a new unit to focus solely on managing its exposure to subprime-mortgage securities.

The truth is Citigroup was built on a slurry subprime foundation, just as Michael Hudson reported in Southern Exposure four years ago. Citigroup was both a huge subprime player, and subprime was a huge part of Citigroup.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.