Kneale: Citi Is Re-Decorating Too ... So?

Step aside and take solace, John Thain: The public flogging you just endured for spending $1.2 million to jazz up your now-vacant office at Merrill Lynch could subside once the sanctimonious mob moves on to other Wall Street titans who would dare redecorate their digs.

Next likely target: Citigroup . Though it is ailing mightily, Citi only recently began sprucing up an entire floor of offices for its senior-most executives at its headquarters in Manhattan, at 399 Park Avenue. That includes a new office for chief executive Vikram Pandit. If a disgruntled staffer leaks details of any new accoutrement and their price tags, the bank could come under new fire for its supposedly profligate ways.

Just down the street, J.P. Morgan Chase is close to completing a gut renovation of all 50 floors at its headquarters at 270 Park. Cost of the project, which began 18 months ago: A quarter of a billion dollars. Let any cushy details from that facelift surface, and JPM Chief Executive Jamie Dimon could have some ’splaining to do.

No doubt some other Wall Street giants have redone their offices, too. Let the witch hunt begin for the next CEO we can pillory for his fatcat ways.

The big problem with all this is it criminalizes capitalism. It plays right into the ill-conceived agenda of Wall Street’s harshest critics. And it diverts attention away from the real issue—how to stabilize the world’s biggest banks amid more than half a trillion dollars in losses and dire predictions from George Soros and others of another trillion or two still to come.

So what? Carping at CEO perks is a far easier pursuit. Most of our regulators and politicians know almost nothing about how to fix this financial collapse, yet all of them can tsk-tsk and fingerwag about a million-dollar office redo. (Never mind that it amounts to one-millionth of a trillion-dollar crisis.) Go ahead, New York state Attorney General Andrew Cuomo, we dare ya: Subpoena Vikram Pandit’s designer on your way to running for governor.

Let’s admit up front that Thain’s office upgrade, initiated in January 2008 before the worst of the meltdown had begun, is in especially poor taste given the $45 billion in taxpayer funding that has been pumped into Merrill’s new owner, B of A , in recent months.

“Optics is very important,” says an executive at one large rival bank. “They’re beating up on (Thain) too much, but unless the carpet is peeling up, this isn’t the time to be redecorating.” He adds: “In a world of quick sound bites, you just have to be so careful. If it takes you four sentences to explain, you’re not gonna win.”

Trouble is, sexy sound bites can truncate the truth and leave out mitigating factors. That $1.2 million for Thain’s office amounts to the revenue that Merrill collects in 10 minutes (based on doing business 365 days a year, 24 hours a day). And the guy now says he will repay B of A. I just hope he takes all that pricey carpeting and fancy furniture with him when he leaves.

Plus, remember that old saying? You gotta spend money to make money. When some pension fund manager with billions to invest comes calling in New York, seems like he or she should be wined and dined in fine surroundings—not offered a Styrofoam cup of coffee in some dingy cubicle.

Similarly, before the Frankenstein fingerwaggers take up torches and start chasing down Citigroup’s Vikrim Pandit, they should note that his office redo is part of a “dense-packing” that will put more people into less space. It will reduce Citi’s total floor space, worldwide, from 100 million square feet to 92 million, says one person privy to the dealings.

A full-scale renovation of the headquarters building’s entire second floor, which will house 13 members of the executive committee and 90 or so other staff, began only four months ago (bad timing, that). It will put all senior people together and open up more communal areas to yield more collaboration. Don’t we want these guys talking to one another more?

Oh yeah, and Pandit’s newly redone office will actually be smaller as a result. Says one person close to the matter: “They’re reusing all of the furniture—no new credenzas, no new desks, no new chairs.” Also, Citi aims to rent out the third floor as it gathers the brass on two.

J.P. Morgan’s massive rebuild of its 50-year-old office tower, meanwhile, will put 30% more people in the building, tuck them into smaller offices and reduce energy consumption by 30%.

That, alas, may not be enough to placate Wall Street’s many outraged second-guessers, pious as they are. This is class warfare, and the Wall Street bashers and the enemies of wealth creation are on a rampage.

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