Economy  
comments_image Comments

The Super "Connected" 1% CEO: The Incredible Tale of Billions of Dollars of Failure

Citgroup's outgoing chairman Dick Parsons' career is the perfect example of how 1 percenters reward utter failure at the expense of the rest of us.

Continued from previous page

 
 
Share
 
 
 

As Parsons  later admitted, “The old-boy network lives…I didn’t grow up with any of the old boys. I didn’t go to school with any of the old boys. But by becoming a part of that Rockefeller entourage, that created for me a group of people who’ve looked out for me ever since.”

And so, magically, despite failing out of Hawaii without a degree, Dick Parsons was accepted into the Albany University Law School program. Nelson Rockefeller happened to be in Albany too at the time, serving as governor of the state of New York. Dick Parsons was chosen to be an intern for Rockefeller.

Whereas before, when Parsons didn’t study he failed out, now, after meeting Nelson Rockefeller, by some magical twist of fate, he was the law school’s valedictorian. Sandy Stevenson, a fellow law school classmate of Parsons’ who became a professor at Albany Law, recalled: “He didn’t study hard. He played a lot of bridge. He was so smart he didn’t have to study, and he was in the cafeteria playing bridge a lot.”

Parsons took the New York state bar exam, and scored the highest in the state, beating out all the high-achieving Ivy Leaguers that year. It may have been a complete coincidence, but Nelson Rockefeller’s right-hand man, Harry Albright, was in charge of both the law school internship program with the governor, and in charge of scoring the New York state bar exams.

By another coincidence in the 1980s, the same Harry Albright headed the Dime Savings thrift, and this same Harry Albright appointed Dick Parsons to replace him.

Parsons did something right at Dime Savings. Something wrong for everyone else, but something right for those who mattered. A handful of executives pulled off what looks remarkably like the sort of “control fraud” scheme described by Bill Black: Quickly saddle the thrift with enormous amounts of bad mortgage loans, inflate the assets, loot, cash out, and dump the problem on the public.

Parsons proved himself useful in that scam. He played wingman for Harry Albright as they loaded Dime up with bad mortgage loans in warp-speed time, practically doubling the asset base from less than $7 billion in early 1987 to over $12 billion in late 1988. At the same time, as reported in the New York Times, “Checks from thousands of homeowners stopped coming.”

With the asset base pumped up and ready to collapse, Albright cashed out and moved his lawyer, Dick Parsons into the CEO’s seat to cover his tracks.

Often times I hear non-One-Percenter Americans ask, “How do these people sleep at night?” Harry Albright  answered that question to the New York Times: “I am entirely unapologetic.”

Promotions and appointments followed in rapid succession for Parsons for a job well done, his career advancement largely to helping hand of Nelson Rockefeller’s brother, Laurance Rockefeller: board positions at Fannie Mae, Citibank, and most importantly, Time Warner. Thanks to Laurance Rockefeller’s introduction, Steve Ross brought Parsons onto Time Warner’s board, paving the way for Parsons to replicate his “success” at Dime over at the new AOL Time Warner, and later again, to replicate his AOL Time Warner “success” at Citigroup.

After Parsons took over AOL Time Warner, the  New York Times summed up his career trajectory:

In 1988, Mr. Parsons was recruited to serve as president of the Dime Bank by Harry W. Albright Jr., another former Rockefeller aide. A few years later, the Rockefeller hand intervened again: on the recommendation of Laurance Rockefeller to Steven Ross, Mr. Parsons was invited to join Time Warner’s board in 1991. He became president of the company in 1995.

 
See more stories tagged with: