Citigroup’s Chuck Prince confirms that risky behavior drives out prudent
Gresham's Law in action.
Former Citigroup CEO Chuck Prince made what could be considered the most infamous statement of this credit crisis when he said: “as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”
From today's WSJ:
Bill Thomas, a Republican former congressman from California who is vice chairman of the panel, which must produce a report on its findings by Dec. 15, compared the former CEO to “a lemming” because of his reluctance to rein in risk-taking as late as mid-2007.
Mr. Prince was referring to the dangers of leveraged lending for private-equity buyouts, but Mr. Thomas responded: “You weren’t going to be the lemming that stopped and said: ‘I don’t want to keep walking.”’
Mr. Prince said Citigroup could have lost market share or key employees if it veered away from the sorts of bets that so many banks and securities firms were making at the time. “It would have been impossible,” he said, “to say to bankers, we’re not going to participate … and expect to have any people left.” Instead, Mr. Prince said he asked regulators to intervene to curb such risk taking industry wide.
Sources: Naked Capitalism article & WSJ article.