New Citi Chair: Bankers Aren't "Villains"

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."