Parsons: White House won't run Citi
In an exclusive interview with CNN, the Citigroup chairman and transition team member says the bank is on its own.
NEW YORK (CNN) -- The chairman of Citigroup says that despite the infusion of $45 billion in TARP funds, the Obama administration has largely left the running of the company to Citi with the exception of executive pay.
In an exclusive interview at Citi's midtown Manhattan offices, Dick Parsons, who was named non-executive chairman in February, said regulators told him, "We don't have the capacity, we don't have the bandwidth, we don't have the expertise and we don't have the interest in running Citigroup (C, Fortune 500)."
But Parsons, a member of the Obama transition team, said that the White House was sensitive to populist outrage over Wall Street pay. The former CEO of Time Warner, the parent company of CNNMoney.com, said that he was familiar with the debate over the worth of talent in sports, entertainment and finance. He said he hopes that any regulation about "bringing the fences in" would not "crater" the financial institutions involved.
"I can understand how people will feel better in the short term about, 'Well, we got those guys.' But in the long term it is going to disadvantage our system on a global basis against the rest of the world. Not a smart thing to do in my judgment."
Parsons said restrictions on pay would still leave plenty of options for Wall Street talent - even during a financial crisis. He said international financial companies with U.S. operations would not be bound by pay curbs. He said hedge funds and new start-up companies would also be beneficiaries of Wall Street defections. Parsons, who said he has spent a "fair amount of time" on the phone with bank regulators, said Washington intervention on compensation could bring new problems, something he called the "land of unintended consequences."
While the government could ultimately own about a third of the company in common shares, Parsons said he doesn't anticipate any similarities to the administration's influence at GM (GM, Fortune 500), which ousted CEO Rick Wagoner and is expected to name new directors picked by the government. Parsons said regulators told him, "We're policymakers, not bankers."
While rival banks such as Wells Fargo (WFC, Fortune 500) and Goldman Sachs (GS, Fortune 500) are doing stock offerings to repay TARP, Parsons says Citi can earn its way out of its $45 billion obligation to the government. He said Citi sank faster than the economy overall and that the company will recover more quickly than the economy. He said Citi is weighed down by troubled legacy assets, but that it is still a very profitable bank in more than 100 countries.
Parsons, a Republican, said he gave the Obama administration close to an "A" for its handling of the economy. He called the president secure enough to welcome dissenting views in order to shape his own debate. When asked what the president knew about the economy given a career based in academics and politics, Parsons called the 44th president a "smart guy" and "an extraordinary student. Parsons concluded, "I'm impressed." 
