The Super "Connected" 1% CEO: The Incredible Tale of Billions of Dollars of Failure
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Here, for example, is a 1994 article from the New York Times about what went on at Dime Savings under Parsons’ leadership. Notice the remarkable similarities in the mortgage scam described in the article to the mortgage scams pulled off in our time:
U.S. Fraud Inquiry Into Dime’s Mortgages
Federal officials are investigating the Dime Savings Bank for possible fraud in its home-mortgage business.
The inquiry, which is being directed by the United States Attorney’s office in Concord, N.H., is apparently seeking to determine whether Dime’s executives knew during the late 1980′s that documents were falsified to allow unqualified borrowers to get loans.
The investigators also apparently want to know whether those executives knowingly allowed such mortgages to be included in packages of loans that were sold to investors.
The loans in question are known as low-documentation loans. Unlike traditional mortgages, they were often approved on the spot, with little or no background check on an applicant’s qualifications, which were often questionable.
Sounds familiar, doesn’t it? What happened at Dime in the late 1980s—the predatory subprime loans hard-sold to the least sophisticated borrowers, loans with hidden adjustable rates which they called “low-verification” mortgage loans… the fraud in the documentation, preying on the least credit-worthy, least qualified borrowers in order to pump out as many bad subprime loans as fast as possible, dumping the losses on the government—what happened under Parsons’ watch in the late 1980s, only to be revealed in the early-mid 1990s, was repeated on a grand scale a decade later at banks like Citibank, resulting in massive payouts to a small group of executives, and devastation for everyone else.
Now that Parsons is finally stepping down as chairman, I want to briefly re-trace Dick Parsons’ career. His rise from a middle-class, frat-boy slacker, to suddenly find himself at the very pinnacle of American power and finance– offers us some insight into the culture and ideology of the ruling One Percent. To quote Starship Troopers: “To defeat The Bug, we must know The Bug.”
Why Dick Parsons? Why is failure so valuable? Why was Parsons so handsomely rewarded in perfect inverse proportion to the spectacular damage he caused to so many others? That is the big question.
Dick Parsons’ biography can be summed up in two phases of his life: before meeting Nelson Rockefeller, and after meeting Nelson Rockefeller.
Before meeting Nelson Rockefeller, Dick Parsons was a self confessed clown from a middle-class African-American family in Brooklyn. “Left to my own devices, I don’t feel any compulsion to strive,” he told to the New York Times. Race was never an issue with Parsons either: ”I don’t have any experience in my life where someone rejected me for race or any other reason.’
So Parsons dropped out of high school with a “C” average, earning a GED certificate. He enrolled in the University of Hawaii for reasons he could never really explain, joined a frat, and became their social chairman. As one of Parsons’ frat brohs recalled to journalist Nina Munk, “Here’s this guy who’s at the bar sixty-seven days in a row and, as you can imagine, he did very poorly in school.”
Parsons did worse than poorly: He flunked out of U. Hawaii. Without earning a degree.
And then slacker Dick Parsons met oligarch Nelson Rockefeller, and from here on out, Parsons lived out a Cinderella fairytale for the One Percenters. As luck would have it, Dick Parsons’ grandfather was once a favorite groundskeeper at the famous Rockefeller Compound in Pocantico Hills and lived in a hut on in the shadow of the oligarchs’ mansion. Soon, Dick Parsons and his wife would move into one of those same groundskeepers huts under Nelson Rockefeller’s patronage.