New Citi Chair: Bankers Aren't "Villains"

(CBS/AP)  Citigroup Inc.'s new board chairman, Richard Parsons, said financial institutions are being targeted for creating the nation's financial crisis, but they aren't the only ones responsible.

"Everybody participated in pumping up this balloon. Now the balloon has deflated," he said Monday. "Everybody, in reality, has some part of the blame. But it's much more in the culture to find a villain and vilify the villain."

Besides banks, there was reduced regulatory oversight, loans to unqualified borrowers were encouraged and people took out mortgages or home-equity loans they couldn't afford.

"We had a big party in this country," said Parsons, a longtime Citigroup board member who succeeded Win Bischoff as chairman at Citigroup.

Parsons' job now is to help turn around the troubled banking giant, as he did as CEO of Time Warner Inc. Citigroup has suffered five straight quarters of losses, including $8.29 billion in the fourth quarter alone.

It has received $45 billion in bailout aid, and the government also agreed to cover a portion of losses on hundreds of billions of troubled assets and loans as Citi looks to right itself.

Parsons said as a board member since the mid-1990s, he shares some of the responsibility "for where we find ourselves."

"That's one of the reasons I took this job," he said.

Parsons met briefly with reporters a day before his scheduled speech at the University of Hawaii, which he attended from 1964-68 and where he met his future wife.

He'll never forget his first class at Hawaii. The 16-year-old New Yorker decided to wear a suit and tie.

"I sat next to some kid who had a bathing suit and surfboard (that) he left outside," Parsons said. "He was getting sand on my suit. I was like, 'What's up with this?'"

Parsons said it took about a year to embrace Hawaii's culture and atmosphere, which was drastically different from his native New York. And, "after a year, I went local and became sort of a kamaaina (resident)," Parsons said.

He said Citigroup is one of the only true global banking franchises.

"Any time you have these financial crises, the bad news seems to overwhelm all the good news," he said. "But within the envelope, Citigroup is still a very powerful, vibrant, highly profitable, good bank."

Parsons said he's working with management, the Obama administration and regulators to deal with the bank's bad assets.

He said President Barack Obama is trying to steer a fine line between identifying with frustrated taxpayers and getting banks to do what they are supposed to do.

According to a CBS News/New York Times poll, 58 percent of Americans disapprove of Mr. Obama's plan to revitalize the nation's banks, while only 33 percent approve. Those numbers stand in contrast to Mr. Obama's otherwise robust approval ratings.

Another source of public outrage is executive compensation, which may seem like "megadollars" to some, he said.

"It's much more complicated than that," he said. "There's no doubt the compensation structure that Wall Street has implemented needs to and will undergo some serious change and modification going forward. That said, to demonize the bankers alone for creating this financial meltdown is both inaccurate and shortsighted."

Parsons, who served as an economic adviser on Mr. Obama's transition team, attended the University of Hawaii a couple of years after Mr. Obama's parents. Parsons never met Mr. Obama or his parents while at Hawaii.

Parsons studied history, played basketball on the freshman team and was six credits shy of receiving his degree before leaving for Union University's Albany Law School, where he finished at the top of his class.

The 6-foot-4 Parsons, who celebrated his 61st birthday on Saturday, said he may have been able to take Mr. Obama in a pickup game of one-on-one back in the day. But he isn't so confident today.

"When you get older, you have to resort to a more physical form of basketball," he said. "You have to put a body on somebody and they don't like you to do that with the president."

[ianlou]

True. And since the days of the Brothers grimm, all old women are witches.
But did you read their stories when you might have been reading economics?
Posted by U-R-So-Wrong at 1:48 PM : Apr 11, 2009


You're right,
I get tired of everyone bashing all UAW workers as lazy overpaid leeches.

So we can count on you to defend bankers and UAW workers as not all bad?
Say the word and I'll join you.

[ianlou]

Bankers Aren't "Villains"???

Bankers have been seen as Villains since the days of Charles Dickens and they haven't done anything in my lifetime to change that image much.

Especially NOW!!!!!!!!

give me a break.....

[emperorlotku]

The banks spent over 5 billion dollars donating to politicians of both parties and lobbying to members of both parties over the last ten years. Over 5 billion dollars. The math is astounding . That means that they spent over 500 million a year, which means that since we have 500 or so members of the Senate and the House these banks cumulatively spent $1,000,000.00 dollars per member per year buying their protection so they could continue their rampant greed and looting. These banks CEOS and chairmen authorized and signed the checks that purchased our congressmen. They are responsible and accountable for the corruption of our financial health and the corruption of our government. The laughable sight of our congressmen giving the third degree to CEOs at the hearings was pathetic. "Gee BOB, sorry I've got to do this for the TV, thanks for the check last week, I'll make it up to you with whatever legislation you want me to pass". All these congressmen and bank CEOS should be occupying Guantanamo when the lesser terroristgs are evicted.

[smoknmirrors]

They are the ones getting the billions. It isn't their billions. They didn't earn it. Brings a different slant on "welfare Cadillacs." Here are my questions : Would Citi carry a loan to Citi at a reasonable rate of interest without substantial down based solely upon Citi's performance over the last two years? Would Citi accept Citi's excuse that it wasn't all their fault?

[Teknikid]

The banks are ABSOLUTLEY the villains in this mess. My bank gave me a free overdraft protection which I didn't even need, free until late last year when I suddenly saw a twenty-dollar charge appear on my statement, with NO notification. They have made their greed quite clear.

I am paying off my mortgage as fast as possible. These banks are not getting any more interest than I can help. They loan funny-money paper backed by real assets such as a home. People are losing their homes to these thieves like Citi. They could be pretty benevolent and tell folks they'll put things on hold, but no, business is business, right? Get rid of the central bank to start with - the non-federal reserve.

[hologram5]

They are villans, plain and simple, Like one poster stated, they pay themselves millions when they are clearly not worth it and pay their employees peanuts. These "Villans" do not know that it is the employees that make the company, not the idiots that sit in the upper echeleon offices.

[enriquecaliente]

Well this is not good, they put this guy in charge and he's now trying to say what.? They banking industry has the biggest group of lobbyist in government, next to the NRA. While they're busy outsourcing American jobs to India and other places to 'save the company money' they give themselves BIG BONUSES. All of these guys sit on each others boards. I wonder how long it took for him to look in the mirror and say this over and over until even he believed it. No oversight, damn I wonder why.? I guess the lobbyist they hired or the politicians they have in their back pockets had nothing to do with that. NOBODY forced them to do anything. It was GREED pure and simple. Look at all the fees they collected and whatnot. They sold it like the TOBACCO industries, sold us on cigarettes, knowing full well that they are TOXIC and caused cancer. The government did nothing to protect the public so they're to blame also. PLEASE.

[vhammon]

"Everybody did it" - sounds like the classic adolescent excuse. Bank board members and CEOs cannot have it both ways: either they deserved their exorbitant compensation because they had knowledge, foresight and a willingness to make mature decisions that would keep their companies on a sound footing, OR going along with the crowd and failing at oversight and prudent leadership is acceptable performance that should be remunerated accordingly. What in the world is a board member that thoroughly messed up doing at the helm, now?

[brianbwb-2009]

Posted by U-R-So-Wrong

The percentage of people who bought a house, versus the percentage of people that need one, are about the same as the percentage of honest bankers versus dishonest ones, about 1 in 200,000.

Also if the lenders hadn't tried to hide the high risk loans in CDS-es, and paid off the ratings agencies to rate their BS with AAA, and then bet twice the annual GDP of the entire planet on them, the market would not have collapsed. Again, not the fault of the middle and low income borrowers.

Maybe you should take a course in basic economics, you seem to need remedial education on this subject.

You want to blame a small number of people for a problem that they did not cause, go ahead, you have been wrong about mostly everything else, so it wouldn't be like a departure or anything.

[goosfraba2]

I didn't read this article and don't care to. If I had the time, I'd like to wait for bankers and pelt them with rotten eggs. Especially the fat-cats at AIG, JP Morgan, and the rest. YOU PEOPLE don't deserve the sweat off my .....