Ned Kelly, who sold Baltimore's Mercantile Bankshares to PNC Financial after he replaced Baldy Baldwin as CEO, was bumped from being Citigroup's chief financial officer to vice chairman after he clashed with the FDIC and tried to resign, the New York Times and Wall Street Journal are reporting. From the Times:

Tensions had already been simmering between the bank and the F.D.I.C. for months. But they reached a boil in early June after Mr. Kelly expressed growing frustration with the agency, publicly calling it a “tertiary” regulator behind the Federal Reserve and the Office of the Comptroller of the Currency.

By the end of the month, the F.D.I.C. abruptly placed the finance chief’s role high on a running list of concerns it wanted the troubled bank to address, a move that bank officials read as a signal they needed to replace Mr. Kelly, according to two people briefed on the situation. Citigroup officials also feared that the F.D.I.C. would put the bank on its list of troubled institutions if they did not act, these people said, a step that would raise its deposit insurance expenses and deter some customers from doing business with the company.

By then, Mr. Kelly had already come to believe that his remarks were turning into a flashpoint in the bank’s dealings with the agency, the people briefed on the situation said, and that he had become a “hindrance to the company.” Shortly before heading to his Virginia farmhouse for the Fourth of July holiday, he tendered his resignation to Mr. Pandit — a move that was quickly rejected.

Instead, Mr. Kelly was given a new perch as vice chairman overseeing strategy and deals, making official what had been his informal role as one of Mr. Pandit’s most trusted advisers. Just after Citigroup’s board signed off on the switch, F.D.I.C. officials were formally notified around 7 p.m. on Wednesday, according a person with knowledge of the situation.