by Patricia Sellers

Have we really hit bottom? Sandra Horbach, who heads the consumer and retail group at private equity giant Carlyle Group, says we have.

Horbach and I chatted on stage this morning at the Women’s Alternative Investment Summit down on Wall Street. “Trailblazers Discuss the State of the Market,” the organizers called our session, suggesting that we both have survived cycles and seen a lot. Yes, we have. Horbach, who started her career at Morgan Stanley (MS), spent 18 years at Forstmann Little before moving to Carlyle in 2005. (Meantime, I’ve been at Fortune for 25 years.)

At Carlyle, where she oversees a portfolio that includes Dunkin’ Donuts, Horbach operates out of an office right next to one of the all-time maestros of managing through tough times: Lou Gerstner, who turned around IBM (IBM) after stints atop RJR Nabisco (RAI) and American Express (AXP). “There are good-time CEOs and bad-time CEOs,” Gerstner has told Horbach many times–and yes, she heeds his advice.

As a senior advisor at Carlyle, Gerstner was gloomy and cautious earlier than most investors, Horbach explained. And in line with his thinking, Horbach’s consumer/retail group has bought no companies–zero–in the past couple of years. While credit was tight and asset values were tumbling, “bad-time CEOs” ruled the roost. Or at least these sorts of take-no-prisoner cost-cutters were favored to run Carlyle’s portfolio companies.

But about six months ago, Horbach says, Gerstner and a few others at the firm began urging a shift from defense to offense–to look for growth and start doing deals again. So, yes, the “good-time CEO” is back in vogue. Though, importantly, a new breed will be in demand. That is, CEOs who understand how to build the top line and do add-on acquisitions. Horbach predicts that we’re in for a “revenue-less recovery.”

Later on Postcards: more insights and outlook from Horbach. Stay tuned!

“Investment banking is funny. You do one transaction, then you do another of the same type and then a third. Maybe then you’ve got a business. Do ten, and it is a business.”

- Fred Joseph, former CEO of Drexel Burnham Lambert, who died of multiple myeloma, at 72 on Friday. Given the junk-bond boss’s status in the Business Hall of Shame, you might think Joseph would earn a harshly critical obit. Not so, as the New York Times illustrates today.

Joseph passes on as more of a builder than a destroyer of wealth maybe because we’ve seen, since Drexel’s implosion 20 years ago, more despicable scandal–Enron, Madoff, etc.–and more catastrophic collapse, Lehman Brothers (BCS) above all. The son of a Boston cab driver who earned two degrees from Harvard, Joseph told Fortune in 1988 that he was guilty of just one thing, “surprising naiveté,” amidst Drexel’s insider-trading scandal. He testified against Michael Milken, his partner, who went to prison and became a symbol of greed.

Milken, more visibly than Joseph, had a post-scandal resurrection–funneling his billions into philanthropy, cancer research, and global problem-solving via the Milken Institute, which still draws old Drexel execs to its powwows. These guys (yes, they were guys at the top of Drexel) had faults beyond “naivete,” obviously, but it shouldn’t detract from the fact that Joseph, as well as Milken, were ingenious in eyeing untapped markets and transforming corporate finance. “Our early niches were restructuring troubled REITs and working on equity offerings for companies that were small or troubled,” Joseph told Fortune in the 1988 first-person account of his rise and fall. “That later developed into high-yield bond offerings that we found filled a very important financing need. In those days, there was no long-term fixed-rate capital for most unrated corporations except private placements with insurance companies.”

Soon Drexel was doing junk bond deals for the cable-TV industry, then the airlines. “Sometimes we did it with new products,” Joseph said, noting that Drexel created initial-offering high-yield bonds and then high-premium convertible bonds. “We did two dozen of those deals before anybody else really got into them,” he added. “Timing and communication were always key.”

by Patricia Sellers

Ted Dimon Sr. started a new job yesterday.

Not just any job. Formerly a broker at Merrill Lynch, Dimon joined the brokerage unit of JPMorgan Chase (JPM). His son happens to be CEO of the parent company.

Word is, Jamie Dimon steered clear of the deal to hire his 78-year-old dad, who arrived with five other Merrill brokers in tow. According to people close to father and son, Ted Dimon Sr. initially reached out to Barry Sommers, the CEO of Bear Stearns Private Client Services, in the spring of last year, after JPMorgan Chase bought Bear on the cheap as the Wall Street firm was collapsing. Talks revved up in the past four months, as Merrill has been adjusting to its own integration into Bank of America (BAC) and new leadership under former Citigroup (C) exec Sallie Krawcheck.

It’s been musical chairs across the industry lately. (The Wall Street Journal reported yesterday that UBS’ (UBS) new wealth management boss, Bob McCann, who hails from Merrill, is hiring a team of top guns from his old firm.) For the elder Dimon, the rhythm could not be more different at 277 Park Avenue, where his office is directly across the street from his son’s. (“As I look from the third floor over Park Avenue, I have a bird’s-eye view of when Jamie gets in the morning,” Dimon Sr. said through a JPMorgan spokesman this morning.) Whereas BofA Merrill Lynch employs 14,979 financial advisors (as brokers like to be called), JPMorgan’s Bear operation is a boutique with just 380 such salespeople. Jamie Dimon, who is 53, wants to expand the business, though. He’s talked about upping the number to 1,000.

We hoped to chat with Ted Sr., but he’s apparently too busy building client assets. (He started his new job on the day the Dow hit a 13-month high.) We do have a sense of how the father-son dynamic will work at JPMorgan Chase. In Last Man Standing, the recently released biography of Jamie Dimon, author Duff McDonald says that when Ted Sr., the son of Greek immigrants who became a stockbroker 50 years ago, was working for Salomon Smith Barney under Jamie and Sandy Weill, “there might be a company name on his business card, but Ted Dimon Sr. reported to no one.” He was a “free agent,” and Jamie confirmed that “he would never say I was his boss.”

It was Ted Sr. who introduced Jamie and Sandy Weill decades ago when Jamie was a teenager and the families socialized together. If you’re familiar with the Shakespearean saga that followed, you probably know that Jamie wrote an economics paper at Tufts University, where he went to college,  about the 1974 merger of Hayden Stone (Weill’s company) and Shearson, Hammill (where Ted Sr. worked). Impressed with Jamie’s analysis, Weill hired the brash whiz kid to work for him.

And they went on to assemble the financial-services empire that became Citigroup. Their relationship unraveled over personal rivalries and jealousies. Weill fired Dimon. And Dimon went on to be CEO of Bank One and then, in 2005, JPMorgan Chase.

Now Ted Dimon is staking his future at JPMorgan, which outranks Citigroup, BofA, and even Goldman Sachs (GS) in stock-market capitalization. No dummy, that Dimon.

My Fortune colleague Carol Loomis passed on this YouTube video of a talk that Morgan Stanley (MS) CEO John Mack delivered last week at Wharton. It’s a remarkably candid play-by-play of living through the global economic meltdown.

Mack talks about being pushed by Tim Geithner, then head of the New York Fed, to do a deal with JPMorgan Chase (JPM) or Citigroup (C) or another partner that might stabilize the teetering firm and, with it, the cratering financial system.

Mack refused to be told what to do. As he says in the video, “Stand up for what you believe in. Do what you think is right. Be prepared to suffer the consequences. But don’t be pushed around when you know in your heart of hearts it’s the wrong thing to do.” He and Morgan Stanley survived by lining up a $9 billion investment from Mitsubishi UFJ Financial Group. And Morgan Stanley turned out to be one of two survivors, along with Goldman Sachs (GS), among the Wall Street giants.

Carol doesn’t mind–and I hope Mack doesn’t either–my sharing an email that she wrote to him this afternoon…and his prompt reply:

Loomis: I just watched your Wharton talk on YouTube. This is one of the best 26 minutes I have ever spent. I predict you will soon have more hits on
YouTube than Susan Boyle.

Mack: Carol, Thanks, but I would prefer to listen to Susan Boyle. John

P.S. Click here to see the video and read about Mack’s “Inside the Bunker” talk on Wharton’s website.

I know lots of executives in the banking industry, but I had never heard of Cindy Armine. Until, that is, a couple of months ago when I had lunch with Armine, who is the chief compliance officer at Citigroup (C). Several things blew me away: her humble beginnings (she didn’t go to college), her amazing trajectory (from clerk to top cop), her candor about her flaws as a manager–and her eagerness to fix them. Armine, 48, agreed to share her story in this Postcards Guest Post. “The Art of Boxing in High Heels” has something to do with shoes. But it’s really about raising your game–wise advice to any manager, male or female.

by Cindy Armine, Chief Compliance Officer, Citigroup

Photo courtesy of Citigroup

Three years ago, I decided to reinvent myself–I guess because I hadn’t put a lot of thought into inventing myself at the get-go. I’m not your typical C-suite executive. I grew up in a Sicilian-American working-class family. My dad was a New York City detective and my mom was a waitress. So as you can imagine, college was not in the cards. I was expected to get married right out of school. My career “plan” was to be the next George Martin or Sam Phillips–a famous record producer.

I was 18, in 1980, when the dream burst. My engineering job at a New York City recording studio was leading nowhere. So I interviewed to be a clerk in Smith Barney’s compliance department–because my mother worked as a waitress in a coffee shop in Smith Barney’s building downtown.

I got the job and threw myself into my work. Compliance–which basically ensures that a business follows all laws and regulations–requires a mix of discipline, ability to adapt quickly, and willingness to wear lots of hats: trusted advisor, problem solver, diplomat. I dutifully multitasked and I thrived. Over the years, I moved up to Chief Compliance Officer at Smith Barney, and then at parent Citigroup’s U.S. Corporate & Investment Bank and Global Wealth Management unit.

In 2005, I was nearing my annual performance review and thinking what kind of leader I wanted to be–vs. what kind of leader I was. I had the brawn and the brains. But I realized that as a senior leader who was now (gulp) a role model, I should focus not just on results but on the people who help me get them. I decided I needed to be a kinder, gentler me. So I hired a coach.

As I thought about my reinvention, I was inspired by my mother: She had changed course after a fractured wrist ended her career as a waitress. She became a bookkeeper–a lucky break, so to speak. When my new executive coach finished interviewing a range of colleagues, he said to me, “You’ve got a great knockout punch. Let’s see if you can box.” OK, I thought, I can change course too.

Over the next year, we worked on my “boxing” skills–learning to pause, count to 10, and harness my take-charge style. I learned when to step in–and when to hold back. And when to let others take the lead. Really, I learned a lot about empowering others and reinforcing the value of their work.

And I became a better manager–and a new person in other ways. I realized I needed an outlet for the energy that I used to channel into my knockout punches, so I started exercising. I lost 45 pounds.

You have to understand, I’m five-foot-two. And while the weight loss made me feel terrific, I was concerned, in a strange way, about losing my presence. And so, as I found myself preparing to interview for the top position in Compliance at Citi, I did something totally out of character. I wore high heels.

I had not worn high heels in more than 20 years. Their impact was revelatory. These shoes did the same thing for me, psychologically, as the weight loss. That moment I put on my Ferragamos, I was confident. I was totally comfortable with the “new” me.

I got the job. And I’ve been on a shoe spree ever since.

So now, I confess, I have more than 30 pairs of high-heeled shoes. Recently, I gave a beautiful pair of vintage Hermes heels to my mentee. I told her about that fateful day when I threw on my pair of heels and that I wanted her to have the shoes as a reminder: No matter where you are in your life or career, you can learn to box–and all the better in high heels.

by Patricia Sellers

Lloyd Blankfein hasn’t loved buddying up to Washington this past year. After accepting–and repaying–$10 billion in TARP funds to help rescue the global financial system, the Goldman Sachs (GS) CEO has had to raise his presence in D.C., as well as in the press, to defend the firm’s record profits and opulent pay. “We went from a bankrupt model to ‘too big to fail,’” said Blankfein, referring to Goldman’s scuffed image, in an interview this morning with Fortune managing editor managing editor Andy Serwer.

Blankfein, you would think, would want little more to do with D.C. But apparently he’s thinking otherwise. When asked if he is planning to take a job in Washington after Goldman, the CEO responded with a story about advice he received when he made managing partner at the firm 21 years ago. “A majordomo told me, ‘You should think of your career this way. If someone writes a nine-paragraph obituary, make sure that no more than two paragraphs are about Goldman Sachs.”

The “majordomo” was Jon Cohen, who is now an advisory director at Goldman and back then was a right-hand man to the late John Weinberg.

Without mentioning “Government Sachs,”–the nickname used by people who contend that Goldman has gotten favorable treatment from regulators–Blankfein went on to tick off a list of former Goldman colleagues who have gone on to big government positions: former Treasury Secretaries Hank Paulson and Bob Rubin, New Jersey Governor Jon Corzine, and Steve Friedman and John Whitehead. “All had second, if not third acts, in their careers,” Blankfein noted.

Not that the Goldman chief is going anywhere soon. He just turned 55 and probably has at least left five years running Wall Street’s mightiest firm. But given that he supported Hillary Clinton and then Barack Obama for President, it’s conceivable if the Democrats hold power: Blankfein for Treasury Secretary in 2016?

by Patricia Sellers

Maybe it’s a sign of recovery in the financial services industry: Wall Street’s two most renowned women dropouts have settled on what to do next. Yesterday on Postcards, you read Sallie Krawcheck’s bizarre tale of her bumpy road on the way to Bank of America (BAC). Today, news broke that former Morgan Stanley (MS) co-president Zoe Cruz is starting a hedge fund.

Cruz, who spent her entire career at Morgan Stanley (starting as a summer associate in 1981), got fired by CEO John Mack almost two years ago, taking the hit for the firm’s huge trading losses. This morning, the Wall Street Journal reported that she has begun recruiting employees for her new firm, to be called Voras Capital Management. The name refers to a mountainous region near where Cruz grew up in Greece.

Famouly press-shy, Cruz declined to talk about her plans. In fact, she has not spoken publicly for many years–except for one interview that she did with me in September 2007, shortly before her ouster at Morgan Stanley. Cruz told me then that she never planned her career. “When you don’t plan, things are easier,” she said. She was interested in one thing, she explained: “Leading an organization to be No. 1.”

Now hoping to launch her hedge fund with at least $200 million, Cruz is starting from scratch for the first time in her life. That name, Voras, suggests where she hopes her business will go: “Voras” is Greek for “north.”

by Patricia Sellers

Sallie Krawcheck

A hot job offer dangles before you. How do you know if it’s right? Sometimes you feel it in your gut. And sometimes you get a big, bloody warning sign. Like Sallie Krawcheck did before she opted to join Bank of America (BAC).

Krawcheck, the former Citigroup (C) star who joined BofA in August to head its Global Wealth and Investment Management unit, told a story last evening in an on-stage conversation with my Fortune colleague Carol Loomis at Manhattan’s Museum of American Finance. While she ducked all questions about who might replace departing BofA CEO Ken Lewis (she’s rumored to be in the running, but she’s a longshot), Krawcheck had the audience rolling as she talked about another job that she almost took–until things went awry.

This other job, explained Krawcheck, 44, was “a leadership opportunity at a troubled financial-services company.” The initial meeting with the prospective employer required a flight out of New York. “For the first time in my life, I overslept and almost missed the plane.” No time for a shower, she threw on her clothes. “I think my pajamas were on underneath,” she said.

She thought to herself: “This doesn’t feel very good.”

Krawcheck made it to the meeting, however, and it went well. The second meeting took place, conveniently, in Manhattan. This was a beautiful spring day. Wearing a new suit and new shoes, she recalled, “I couldn’t have been feeling more pleased with myself.”

That is, until Krawcheck, while walking down Madison Avenue to her meeting, caught the heel of her new shoe in a crack in the sidewalk.

“I went flying down onto a grate,” she said. “I stood up, spit out a tooth. Blood was everywhere.”

Still, she was determined: “I can make the meeting. I can make the meeting!”

“I did not make the meeting. Nor did I eat solid food for the next six weeks.”

“I ended up with six stitches, one broken tooth, a hairline jaw fracture, a dislocated jaw and whiplash.”

Yes, the meeting happened, eventually. In fact, the fit between Krawcheck and this financial-services company seemed ideal. She accepted the job offer.

And then, when she went to sign the employment agreement, “I promptly threw up. And I thought, I don’t think this is right for me.”

And that’s how Sallie Krawcheck, No. 30 on Fortune’s Most Powerful Women in Business list, passed up one big opportunity before accepting another at BofA.

“I would give up all the money I have if I could be 50. You can always make money.”

–David Rubenstein, managing director of the Carlyle Group, in the New York Times. One of America’s more low-key buyout kings, Rubenstein celebrated his 60th birthday last month, prompting him to reflect that “I could be like the pharaohs and say, ‘Bury me with my money.’ Or I could start giving it away.” The billionaire recently gave $10 million to Lincoln Center, one of  the 30 major institutions he serves with his time and money.

Rubenstein’s giving philosophy reminded us of another big giver: In 2008, New York City Mayor Mike Bloomberg was the largest individual philanthropist, donating $235 million (even more than the $205 million he gave in 2007). The best measure of a philanthropist is that the check to the undertaker bounces, Bloomberg said. –Jessica Shambora

Addendum: Morgan Stanley sources say that Wallid Chammah, widely viewed and ID’d below as a contender to be CEO of Morgan Stanley, took himself out of the race a year ago, after he and his family moved to London. James Gorman’s rivals for the top job, in fact, were outsiders. Spencer Stuart recruiter Tom Neff gave the board a list of names known to include  usual suspects such as ex-Merrill Lynch chief John Thain, former Wachovia CEO Bob Steel, and BlackRock (BLK) chief Larry Fink.

John Mack is passing on the reins at Morgan Stanley (MS). The new CEO will be James Gorman, who will take charge at year-end, the company announced this afternoon. An Aussie who spent much of his career at McKinsey and Merrill Lynch (BAC), Gorman, 51, is currently Morgan Stanley’s co-president, overseeing the asset management businesses, plus operations and technology.

In what had shaped up to be a two-man succession race–at least as it came down to Morgan Stanley’s inside players–Gorman beat co-president Wallid Chammah, who is newly named chairman of Morgan Stanley International.

For Mack, who will turn 65 in November, now is hardly the time to leave Wall Street triumphantly–by virtue of the simple fact that heroes hardly exist there anymore. Mack, a never-say-die chief executive, brought Morgan Stanley back from the brink a year ago, however, when he talked with both Citigroup (C) CEO Vikram Pandit and Wachovia’s (WFC) then-chief, Bob Steel, about survival by merging. “I’m not thinking about selling the firm,” Mack told me last September. “I’m thinking about investing in the firm in a big way.”

With Morgan Stanley stock diving below $7 a share, Mack hung on for dear life, raised capital, and bought a big stake in Citi’s Smith Barney unit. Morgan Stanley has not made money this year–in July, it posted its third consecutive quarter of losses. And Mack’s risk-taking swagger has suffered lately as he’s avoided the kinds of bets that have paid off big for the other surviving Wall Street firm, Goldman Sachs (GS). But Morgan Stanley has stabilized and the shares now sell for $28.64.

Mack’s storied career proves that a high-powered executive can falter and come back. I chronicled his struggles in “The Trials of John Mack” in 2003. That story is about Mack’s painful departure from Morgan Stanley in 2001 (when he left the firm after 27 years, amidst disagreements with then-CEO Phil Purcell) and his bumpy run at Credit Suisse (CS). Mack was later pushed out by the board there, and he returned, to Morgan Stanley in 2005. Little did he imagine the history-making run he’d endure this time. In a few months, after ceding the CEO role to Gorman, he’ll remain as chairman.

by Jessica Shambora

If 2009 has a buzz word, it’s “transparency.”

The consensus is that we got into this mess because a lot of people didn’t know what they were signing up for: adjustable rate mortgages, arcane investment vehicles, credit cards with hidden fees. People didn’t know because the products were too complicated to understand. Or they weren’t transparent. Or both.

We’ve written about this here on Postcards: Sallie Krawcheck, ex-Citigroup (C) and now the boss of Bank of America’s (BAC) global wealth and investment management arm, rails against this racket of making financial products too complicated. (“If you can make them complex enough, then it’s difficult to copy them,” she says, explaining big business’s motivation). She calls for greater simplicity and transparency to level the playing field for consumers and investors.

The Internet can help level the playing field too. Last week, I met with the Peter Pham, the CEO of BillShrink.com, a Redwood City, Calif.-based start-up that aims to bring transparency to all your hard-to-figure-out bills. Research shows that 80% of people overpay for credit-card and cell-phone services. BillShrink claims to have found savings of $225 million for the site’s 650,000 U.S. visitors in July.

Pham, who was an early employee and head of biz dev at Photobucket, a photo sharing site that News Corp. (NWSA) acquired in 2007, explains the appeal: “The idea is that you don’t have to ask yourself when you get your bill, ‘Am I getting ripped off?’”

Compare mobile phone plans at BillShrink.com

BillShrink, which raised $8 million from Bessemer Venture Partners and Trinity Ventures, started chasing the problem last year, focusing first on cell phone bills. You might have seen T-Mobile (DT) spokeswoman Catherine Zeta-Jones on TV, offering wireless customers “mobile makeovers.” Those makeovers come courtesy of BillShrink.

Using algorithms that monitor more than 10 million wireless plan combinations, BillShrink analyzes your phone bill to tell you which plan and phone give you the best value. BillShrink provides the service to you for free. The company gets a commission for its referrals–which, CEO Pham vows, are unbiased.

If you try BillShrink, you’ll get all kinds of data about your cell-phone behavior. For example, I learned that 72% of my minutes are spent calling the same five numbers. (You lucky people know who you are.) I also learned that I talk most often at 8pm (when I’m walking home from the subway after work).

After it offers this analysis, BillShrink gives you a list of cell-phone plans and shows you how much you’ll save by switching, taking into account the cost of breaking your contract with your current carrier. It turned out that based on my habits, T-Mobile does have the best plan for me. But as soon as I used the filters to tell BillShrink that I have an iPhone and am therefore married to AT&T (T), I got word that I was already on the best plan.

Eager to tap new markets, Pham has expanded BillShrink into tracking more than 200 credit cards, to make sure you’re not getting taken advantage of there. The BillShrink site has a “Credit Card Bill of Rights” that reflects new credit card legislation (some went into effect last week) and tells you if your cards are complying.

A “gas station” comparison tool is in beta. Next up: Savings & CDs. BillShrink won’t stop trying to help you until you understand exactly what you’re signing up for. Making the right choices from there is all up to you.

“I saw it as gonzo, over-the-top writing that some people might find fun to read. I was shocked that others saw it as being supporting evidence that Goldman Sachs had burned down the Reichstag, shot the Archduke Ferdinand and fired on Fort Sumter.”

- Goldman Sachs (GS) chairman and CEO Lloyd Blankfein in “The Rage Over Goldman Sachs” in this week’s Time magazine. Blankfein is talking about last month’s damning story about Goldman in Rolling Stone. For a guy who thinks hard about the image that he and his firm project (see Blankfein’s Best Advice), he sure isn’t cutting many breaks. Just read today’s page 1 story in the Wall Street Journal charging that Goldman favors big clients in divvying out stock tips.

This week’s Time story, however, goes a long way toward humanizing the world’s most powerful investment banker—a supremely quirky fellow who grew up poor in Brooklyn, made it to Harvard at 16, and didn’t refashion himself for Fortune 500 leadership until mid-career.

At heart, as Time (and Fortune) writer Bill Cohan notes, Blankfein is a trader who believes that the best of his kind are risk-takers who recalibrate better than others do. “The best traders are not right more than they are wrong. They are quick adjusters,” Blankfein says. Now, as the populist ire against Goldman endures, Blankfein is readjusting nonstop.

Home Depot (HD) hammered it home this morning–earnings beat expectations, and the stock is up 3%, to just under $27. Nice surprise after Lowe’s (LOW) disappointed yesterday. The No. 2 home-improvement retailer reported a 19% profit dip in its second quarter and, even more worrisome to investors, a 9.5% decline in same-store sales.

So what is Home Depot, the market leader, doing right? The new Fortune, hitting newsstands this week, delivers some intelligence on that. My colleague Geoff Colvin did a comprehensive interview with Home Depot CFO Carol Tome, who has seen it all. I remember when Tome joined Home Depot from Riverwood International Corp., a packaging and paper products company, 14 years ago. (I was a student of Home Depot back then.) We’ve followed Tome via our Most Powerful Women tracking and watched her weather the tumult as the mega-retailer has gone through four CEOs. Tome has worked for Bernice Marcus, Arthur Blank, Bob Nardelli, and Frank Blake.

Now Blake is Home Depot’s chief, and Tome has an expanding purview. (She’s also on the UPS (UPS) board, where she chairs the audit committee, and last year she joined the board of the Federal Reserve Bank of Atlanta, where she’s deputy chair.) Blake and Tome and their team are doing a lot of smart things. Since you probably don’t yet have your new Fortune in hand and since the Tome interview won’t be on Fortune.com and CNNMoney.com until Thursday, here’s a preview of what the savvy survivor says about “Renovating Home Depot”:

Recognize what you’re good at. “We have a three-legged strategy, and you will recognize this from Jim Collins’ book Good to Great. What are we passionate about? We are passionate about our customers. What are we the best at? Product authority. And what drives our economic engine? Productivity and efficiency. It is no longer driven by square-footage growth. We’re still going to open stores–we’re opening 13 stores this year. But it’s not about that any longer. It’s about how do we get more sales per square foot in the existing stores.”

Rethink your people strategy. “We introduced something we call power hours inside our stores. In the hours when traffic is heaviest, we stop all activity that is not customer-facing–pack-down activities, say–and spend 100% of our time taking care of customers…Even if you’re in the receiving area, if you’re in the vault, you come out on the floor.”

Remember that  the devil is in the details. “The professional contractor is a very important customers to us–3% of our transactions and about 30% of our business. We serve coffee at the pro desk. By changing the brand of coffee–not stopping the coffee, because coffee is important–but by changing the brand, we will save our company $500,000. It doesn’t take too many $500,000 decisions to make a penny per share.”

P.S. Credit Suisse (CS) analyst Gary Balter today reaffirmed his bullish view and raised his estimates on Home Depot, noting that HD’s U.S. quarterly same-store sales, while down 8.5% company-wide and down 6.9% in the U.S., beat Lowe’s for the first time in memory. Guess that cheap coffee isn’t turning off too many Home Depot customers.

by Patricia Sellers

Sallie Krawcheck has landed back at another troubled bank giant. Citigroup’s (C) onetime CFO, who later headed global wealth management there and clashed with Citi CEO Vikram Pandit, has accepted a job at Bank of America (BAC).

Her new position—leading BofA’s global wealth and investment management business—comes as a surprise, since she has been off the radar since Pandit demoted her last September and she left Citi soon after. Last Wednesday, Krawcheck and I had lunch, and she shared, off the record, several big opportunities that she had turned down–because they didn’t “hit the bulls-eye,” she told me. And particularly in this treacherous environment, “there’s no use rushing,” she added.

I got the sense that Krawcheck was poised to decide on something soon–though not this soon. And my bet was that she might start her own asset management company with backing from private equity investors.

So I was wrong about her plan, but I’m sure about this: By choosing BofA, Krawcheck is staking her career on a slow-going turnaround. BofA’s stock has risen from a $3 low to $15, but it’s down from $55 last fall after CEO Ken Lewis agreed, under pressure from the government, to rescue Merrill Lynch. That said, by taking the job at BofA, Krawcheck could be setting herself up for something bigger, which she could hardly achieve at her own firm. That is, a chance to be a Fortune 500 CEO.

Especially in light of the ongoing shakeup of BofA’s board (bucking to pressure from the Obama Administration, the board is replacing its directors), the heat is on CEO Ken Lewis to hasten the turnaround or give up his position to a successor. Along with the news about Krawcheck’s hiring came an announcement that one longtime succession candidate, consumer and small-business banking boss Liam McGee, is leaving the company.

McGee’s departure leaves a couple of succession candidates. One is Brian Moynihan, who arrived at BofA with its 2004 Fleet acquisition and has recently headed the global corporate and investment banking unit, plus global wealth management. He’s newly assigned to oversee BofA’s mighty consumer bank, including its small business and credit card operations.

Another possible successor is Barbara DeSoer, a nose-to the-grindstone operator whom my Fortune colleague, Geoff Colvin, interviewed last November. DeSoer has earned high marks for integrating BofA’s Countrywide Financial acquisition and cleaning up the big mortgage minefield. (Another BofA succession candidate who was on Fortune’s Most Powerful Women list, chief risk officer Amy Brinkley, paid for those disastrous investments and was ousted in June.)

Following all this tumult, BofA has two newcomers to watch closely: corporate and investment banking chief Tom Montag, who came with last year’s buyout of Merrill Lynch and was at Goldman Sachs (GS) before that. The other is Krawcheck. Given her youth–she’ll be 45 in November–and her time off the grid, the onetime most powerful woman in banking won’t have an easy time proving herself at battered BoA. Then again, Krawcheck’s reputation as a champion of individual investors–“the last honest analyst” as Fortune once dubbed her–is in line with the zeitgeist. And certainly in line with where BofA needs to go.

Here’s Krawcheck in a conversation with Elliott Spitzer and Fortune’s Allan Sloan, taped last Monday at CNNMoney’s studios:

Has Wall Street regulation worked? As a landmark stock-research settlement–requiring brokerages to spend $460 million over five years on reforms–expired this week, the key man behind the deal, Eliot Spitzer, and two experts, former Citigroup (C) CFO Sallie Krawcheck and Fortune’s Allan Sloan, convened at CNNMoney’s studios to talk about the progress. I sat in on their conversation. You can view segments on CNNMoney by clicking the links at the end of this post or viewing the entire 27-minute video here.

The panelists agreed on one thing: The best evidence that the reforms actually aided individual investors is that we haven’t heard much lately about dishonest stock analysts. (Bad research has mainly come out of rating agencies, which have conflicts of interest that need fixing.) That said, as often happens, the reformers did more than needed, ushering in disclosure rules and red tape that have confused consumers more than helped them with their investment choices.

In Krawcheck’s view, at least. Spitzer, whose Dudley Do-Right reputation collapsed with the sex scandal that knocked him from the New York governor’s post, pushed back. He likens investors who gripe about excessive regulation to patients who leave the hospital after a cure and say, “But you gave me three antibiotics that I didn’t need!” Krawcheck liked the analogy. But over lunch yesterday, as she I recapped the roundtable, she said she wished she had replied to Spitzer: “Too many antibiotics make the patient immune.”

Krawcheck, who oversaw Citi’s global wealth management unit after her CFO stint, says that financial regulation everywhere has become so complex that consumers often don’t understand what they’re getting, whether they’re buying a mortgage (as she did recently) or a mutual fund. “More is not always better. Better is better,” she says. Wall Street firms, she contends, purposely create complex products that are practically impossible to understand because they want to confuse competitors–so as to prevent them from copying and gaining ground.

Where is Krawcheck, 44, going next? Since Citi announced her exit last September–following clashes with CEO Vikram Pandit–the banking world’s onetime Most Powerful Woman (and Dell (DELL) board member) has been elusive and mostly silent. That’s changing. She told me at lunch that she’s come close to accepting a couple of jobs–all in financial services–only to decide that they didn’t “hit the bulls-eye.” Particularly in this treacherous environment, she says, “there’s no use rushing.”

My bet: Krawcheck will land somewhere–or maybe announce she’s starting her own firm–later this year.

P.S. Click on these links for part 1, 2, and 3 of CNNMoney anchor Poppy Harlow’s interview with Krawcheck, Spitzer and Sloan.

by Patricia Sellers

As CIT gets a lifeline to stave off bankruptcy–a $3 billion deal with bondholders is reportedly in the works–the CEO who got the company into trouble is hanging on. But Jeff Peek’s reputation is in tatters.

This is the third time in eight years that Peek has failed to grab the golden ring and redeem his reputation. First at Merrill Lynch (BAC), then at Credit Suisse Group (CSGKF), and now at CIT (CIT), Peek showed a naivete, along with a tendency toward inaction.

That combination of leadership flaws did him in each time.

At CIT, many of Peek’s missteps related to ill-conceived expansion into subprime mortgages and student loans. But his latest and greatest error was trusting that the government would deem CIT “too big to fail” and give it desperately needed capital, on top of $2.33 billion in TARP funds. As the global financial crisis worsened and banking rivals raised money from private investors, Peek waited and focused on lobbying Washington. The government refused to rescue CIT. Now Peek will likely rely on an expensive and onerous bond deal that some analysts believe will simply delay the company’s bankruptcy.

Naivete certainly characterized the end of Peek’s career at Merrill Lynch, where he grew up in investment banking and spent most of his career. Peek had hoped to be CEO of Merrill–and believed he had the backing of chief executive David Komansky and the board. But the board promoted Stan O’Neal, a fierce cost-cutter, instead. “I won the popular vote and lost in the electoral college,” Peek told me in 2003. “I’ll pay more attention to the board of directors next time. When my CEO says, ‘Don’t worry, I will worry.” (O’Neal, practically Peek’s polar opposite, got rid of Merrill’s old guard, including Peek, and spread so much fear across the company that the board ousted him in 2007.)

Eager to hold a major leadership position, Peek landed at CSFB, where CEO John Mack, whom he had never met before, had gone in 2001 to revive his own career. (Mack had quit Morgan Stanley (MS), where he’s now CEO, over a power struggle with then-chief executive Phil Purcell.) Moving to CSFB turned out to be an ill-fated decision for Peek, who was well-liked and ever polite but paled as a tough decision-maker next to the impatient, hard-charging Mack.

Overseeing asset management, Peek sought to build the business. His responsibility shrank, however, as Credit Suisse sold Pershing, a stock clearing-house, that he and Mack both lobbied to keep.

“I didn’t come to be here for 18 months, I came to be here for the rest of my career,” Peek told me in July 2003 as he was leaving CSFB and heading to CIT as president, with his sights set on the CEO job there. “This gives me the chance to run my own show,” he said of his new job at the finance giant, never imagining what trouble he would encounter there.

So now we have evidence that Goldman Sach’s (GS) Lloyd Blankfein and JPMorgan Chase’s (JPM) Jamie Dimon are the rock-star CEOs in financial services. Two days after Goldman announced blowout quarterly profits, JPMorgan soundly beat the Street today.

Investors predicted it. JPM’s stock is flat today, trading around $36–that’s evidence enough. But one thing few investors knew is that Dimon spent a month, until July 2, in Asia–confident enough, obviously, to take the time away with his wife and three daughters along for the ride.

This trip (which included Japan, China, Thailand, and India) wasn’t exactly hush-hush. Dimon was working furiously–meeting with employees, clients, government officials and the press in key markets–and in unrelenting contact with his execs the whole time. But his Asian journey was also not something the company advertised. And Dimon turned down our request to talk to him on the ground.

In lieu of Dimon’s Asia report, I’ll share with you another viewpoint that’s equally good. It was coincidence last Thursday when I got an email, here on Postcards, from Jing Ulrich, the managing director and chairman of China Equities. Ulrich happened to be in New York and hoped to meet. We got together yesterday.

“The single biggest concern is whether there’s an asset bubble in China,” she told me, referring to what she’s been hearing since she arrived in the U.S. a couple of days after Dimon. Indeed, the consumer is buoyant. Car sales are up 48% over last year. New loans have surged 360%. Home sales have boomed to record levels.

Late last night New York time, China’s second-quarter GDP was released: Growth improved to 7.9% year over year, from a 6.1% gain in the first quarter.

How can China keep this up?

“That’s a typical reaction,” Ulrich said to me yesterday when I asked the question. She went on to diss the doomsayers who have predicted China’s fall time and time again.

China’s biggest problem, which ignited the government’s aggressive stimulus program, has been a drop in exports. While a return to pre-crisis trade levels doesn’t look imminent, says Ulrich, the declines appear to have stabilized.

Ulrich, who hosted 1,000 investors at JPMorgan’s annual China Conference last month and had Dimon as the keynote speaker, insists: “The trajectory will continue to be up.”

“’More’ is not the answer here. ‘Better’ is the answer here. ‘Much less’ is the answer here.”

– Sallie Krawcheck, former CFO of Citigroup (C), discussing the need for simplicity in financial disclosures in a video interview with CNNMoney anchor Poppy Harlow. Krawcheck gets personal here: Six weeks ago she refinanced her home and encountered “mind-boggling” paperwork, she says. The financial-services industry, she notes, “had high returns on complexity for years.” Complexity bred profitability–and confusion for consumers and investors.

A champion for the individual investor since her early days as an analyst (who covered the financial-services industry), Krawcheck seems, in this video interview, tempted by the idea of a job in the Obama administration. If she went to Washington, she’d presumably take a key post in the area of regulation/investor protection. But she has three children in school in New York City, so a move would be a big deal.

Meanwhile, she’s been rumored to be a candidate to run the U.S. wealth management unit at UBS (UBS). That’s unlikely–too close to her last job at Citigroup. –Jessica Shambora

She still has her mojo.

A lot of people were surprised, even confounded, when analyst Meredith Whitney, the bear of all bears, stuck her neck out early yesterday and put forth the Street’s highest estimates for Goldman Sachs’ (GS) second-quarter profits. Whitney predicted that Goldman would report $4.65 a share. The consensus estimate was $3.48. Goldman announced this morning that it earned $4.93.

And you’d think the stock would pop on that news, wouldn’t you? Attesting to Whitney’s mojo (which, as I noted in yesterday’s Postcard, we’d been questioning), CNBC’s Jim Cramer wrote this morning that “Meredith Whitney pretty much ruined the Goldman Sachs trade” by putting that super-high estimate ahead of the earnings call. Goldman shares rose seven points yesterday to nearly $150. It’s down slightly  today. “Whitney wrecked it,” Cramer griped about the do-nothing stock.

Whitney thinks Goldman stock has plenty of room to run. Ever bearish on the economy, she’s convinced that Goldman, above all financial-services firms, will benefit from global woes, which are rising. In yesterday’s report, she says that Goldman will make out big on the surging muni market. Goldman is a major underwriter of muni debt–albeit behind Citigroup (C), Bank of America (BAC), JPMorgan Chase (JPM), and Morgan Stanley (MS)–and the No. 1 book-runner of Build America Bonds. These are a new type of municipal bond, part of the Obama administration’s $787 billion stimulus plan. Cities, states, universities and government entities use BABs, as they’re known, to finance infrastructure projects. This is a potential $50 billion annual market, Whitney says, and Goldman currently holds a 25% share.

Meanwhile, state budget gaps are sure to balloon as tax revenues fall faster than expected–and  unemployment rises to 13%, Whitney predicts. Goldman is poised to benefit from the widespread pain. With her upgrade yesterday (making Goldman her only “Buy” as well as her sole upgrade since she quit Oppenheimer in February), Whitney lifted her estimate of Goldman’s full-year 2009 profits to $16.59 per share, from $10.80. In 2010, she expects Goldman to earn $19.65 a share. That’s substantially above the Wall Street consensus.

Her price target that accompanies her new “Buy” recommendation on Goldman: $186. That’s 25% above the current price. One Postcards reader, Matt in Baltimore, commented yesterday that it “would have been impressive if she had declared a ‘buy’ rating for Goldman back when it bottomed out at 52$ a share in Nov. 2008.” True. Whitney said precisely that yesterday morning on CNBC’s Squawk Box, adding that she’s only recently gained clarity on how Goldman is making money–the fixed-income bonanza. And once other analysts recognize it too, they’ll raise estimates.

So there she stands, a bull on Goldman Sachs, though still in bear clothing. Whitney’s husband, meanwhile, has been running with the bulls, literally. Six-foot-seven, 260-pound John Layfield, best known as onetime pro-wrestling champion JBL on WWE Monday Night Raw, is in Pamplona, Spain. While she was shaking up the market, he was doing the famous run. Another kind of mojo entirely.

All eyes are on Goldman Sachs (GS), which announces earnings tomorrow. What goosed the stock…and then the banking sector and then the entire market today? Meredith Whitney’s upgrade.

It mattered–and helped send Goldman up nearly 5% to $149–because the famously bearish financial-services analyst, who helped bring down Citigroup and the banking sector two years ago, has been negative ever since. She announced her upgrade of Goldman at 2:24 a.m. At least that’s when the email from her company, Meredith Whitney Advisory Group, popped into my inbox this morning. This is Whitney’s first upgrade since she broke away from Oppenheimer in February to go on her own. It’s also her only “Buy” rating among eight stocks she follows.

So yes, Meredith Whitney finally turned…on one stock only. Don’t dare call her a bull on the market. She says in today’s Goldman report that her positive outlook “is deeply rooted in our sustained bearish stance on the U.S. economy and state of U.S. financials at large.”

She likes Goldman because she’s predicting “a tsunami of debt issuance” from federal, state, and local governments to shore woefully underfunded budgets. That, plus a surge in corporate debt issuance (to at least 60% of peak cycle levels, she says) will benefit Goldman, which along with Morgan Stanley (MS) is the last Wall Street giant standing. Survival of the fittest, precisely. The weak fall and the strong get stronger.

As for Whitney, she’s showing her muscle. Last week here at Fortune, we were talking about her as we began to assess the crop of candidates for this year’s Fortune Most Powerful Women in Business list, due out in mid-September. Last year Whitney ranked No. 35 on the list. We were wondering if she’s still got her mojo. Guess she does.

P.S. Whitney has sells on three stocks: Wells Fargo (WFC), Capital One (COF), and Citigroup (C).