There is a theme developing on Wall Street that allows the rats to escape the sinking ships while placing caretakers in charge who are willing to mutter along with the engines out and the rudders damaged. This is the case as we find that Citigroup Inc. (NYSE: C) has installed Richard Parsons as Chairman.Several things come to mind here. First, Citigroup has clearly been rudderless for some time and it is ironic that Parsons, who filled the same role at BloggingStocks.com's mother-ship, Time Warner (NYSE: TWX), would be tapped to do the same thing again. TWX stock has also been unimpressive the last five years and before that it only went down following the ill-timed merger with AOL.
Another issue with Parsons is that he is not known for radical or rapid decision making, and Citi is in need of change, and has been for a long time. Parsons has been on the board and could have acted long ago. Is this the guy that will lead a company and shareholders desperate for action to the promised land? It is a highly unlikely probability. Is he the guy that can mingle with the Washington and Wall Street elite to find the resources to keep the ship afloat? Perhaps.
In my mind only one thing should be considered. How fast can you get this ship to a safe port where you can dismantle it and sell the salvaged parts or integrate them with more focused enterprises. Parsons as caretaker works; Parsons as creative entrepreneur and man of action does not. He needs to find that person fast: a person from the outside that is not wedded to the past or to any particular part of the company. If he does not act, then Citi will continue to have to react to ever worsening conditions until they simply move their logo to the headquarters of the US Treasury, where they have spent plenty of time lately.
This is something that I have been ranting about for years, most recently in Mergers not heaven sent: Citi, GM, Chrysler, Sirius, AOL, Yahoo!, Microsoft, but others have sounded the same alarm. Is anyone listening at Citigroup? I think not!
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.
DISCLOSURE: I own shares of TWX and not C.
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Reader Comments (Page 1 of 1)
1-22-2009 @ 2:52PM
al said...
This action so perfectly illustrares that Citi deserves to go belly-up. What the hell are they thinking.
Oh, I get it. Parsons is tight with the new President so Citi will receive a never ending stream of funding from Uncle Sam.
Why should Mr. Parsons actual track record have anything to do with it? He's no banker, he screwed up Dime, went on to make Time Warner a mediocre business, wasn't the AOL acquisition brilliant, has been a Citi Board member for too long, and was the head of the search committee that recommended Mr. Pandit !!!!!
A perfect score of ZERO -- this is just the Chairman that Citi needs -- to get the common share to $0, and he doesn't have long to bgo.
IT'S TRUE, THE CITI ALWAYS SLEEPS
1-22-2009 @ 3:07PM
judy743 said...
He is a really skilled infighter. But he is horrible at leading a company. He has no vision no imagination no leadership and no ability.
He is great at feeding himself though. Look at the bundle he made demutualizing Dime. His compensation at Time Warner was entirely unjustified. He took a company in a position where it could have shone and dragged it down into the mud. He will destroy Citi, while enriching himself. Citi needs a leader who can both save the bank and help Citi profit from the challenging times we are in.
Our only hope is that he recognizes his limitations and picks a leader to run Citi while he concentrates on what he is best at--skilled infighting and feeding at the trough. If he does this he will have more to feed on.
Al above is correct in his assessment of Parsons.