Is Citi prepping for its next bailout already?
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Is Citigroup prepping for its next government bailout already? It’s a bit unfair to infer that from the latest news emanating from the recovering megabank: Citi is hiring President Barack Obama’s former budget chief Peter Orszag. But for a firm that’s been whacked by more financial crises than most over the past few decades, having a direct line to the White House is something of a must-have.
Of course, Orszag won’t be the only one on Citi’s staff to fit that bill — nor would he be the most senior: Chairman Richard Parsons is said to be chummy with Obama and others in the Democratic establishment. But unlike Parsons, Orszag would be coming fresh from the D.C. treadmill, so can boast a broader set of contacts.
Moreover, he isn’t another Bob Rubin. The Wall Street veteran joined Citi in 1999 just months after leaving his post as Treasury Secretary. He spent 12 years as chairman of Citi’s executive committee and forswore taking on any responsibility for the way the bank was run despite taking home more than $120 million in pay, stock and options.
Lavishing such largess on a Washington insider who’d spent most of his career at Goldman Sachs didn’t prevent Citi from almost going under. Orszag, at least, isn’t taking on quite as high profile a role — he’s joining the investment bank — where his remuneration would almost certainly need to be commensurate with his contribution. That, at least, is an improvement.