PE and the Citi

September 16, 2009

One would think that leaders of large financial insitutions whose very existence is dependent on the kindness of taxpayers would be more circumspect in their words and actions. It’s not a blunder on the same scale as the recent tough-guy talk from AIG’s new chief executive, Robert Benmosche, yet today’s news that Richard Parsons will join a private equity firm is a little worrisome.

The statement announcing that Parsons will become a senior adviser to Providence Equity Partners, a private equity firm known for its many media investments, stresses that Parson’s “primary business activity” will continue be as chairman of Citigroup. The new role, however, still suggests that Citi no longer requires Parsons’ full-time attention — a suggestion that Citi’s legions of skeptics will find astounding.

Parsons, to be sure, may no longer be needed as a “referee,” as the Wall Street Journal had it earlier this year, in the acrimonious relationship between the bank’s management and its regulators. And the management reshuffle and restructuring, not to mention the discussion toward paying back some of the government’s investment may be steps in the right direction.

But there are few if any signs of a turnaround. The core banking business is still weak, with several billions of dollars of additional loan losses expected. The chief executive, Vikram Pandit, has his supporters, but his survival is anything but guaranteed. And the bank is effectively a subsidiary of the U.S. government.

So is this the right time for the chairman of Citi to be focusing on media deals? Sure, having the former chief executive of Time Warner join Providence makes loads of sense. But it still looks bad. Taxpayers may well wonder why the chairman is broadening his portfolio when they have
a $45 billion invesetment and a guarantee on $300 billion in assets at stake.

The New York Times reports that Parsons’ move was originally planned to be earlier in the year until it was delayed so that he could focus on Citi’s problems. He should have waited another year.

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The literari and the remaining ‘great unwashed’ will never catch on it seems.

The move by Parsons is, and was, planned for some time. He is a gifted individual who understands his marching orders and how best to execute them. Are you surprised? You ought not be.

Would this move be: Announced? Never. Explained? Never. Why? Because the efforts of the people and their ‘groups’ working toward control of the economy, political structure and other major industries (which, at one time in our American history were held privately) are now held corporately and available to, essentially, control a whole people.

Parsons fits neatly into the role as corporate structure is molded to become the ‘leadership’ of the nation. Our political process is, for the most part, dead and buried. The governing bodies of the nation are, at best, nothing more than employees of corporate structure.

This is not new stuff. History is replete with stories of individuals who built groups that became powerful drivers of societies. The United States is in that wash tub now. Will it come out clean or will it come out with stains remaining and no shine to its sheets?

Well folks, a read of history (Will and Ariel Durant create a neat thumbnail sketch) will certainly put you at ease and you can watch it all come and go on television! Imagine that! A whole and complete live history, viewed from your ‘easy chair’ and you needn’t do a damn thing!

This truly is a…whoops…was, a great nation.

Posted by Pheadar O'Tyrrell | Report as abusive