Crains New York - October 22, 2012 - (Page 13)

Citi CEO ouster just window dressing hen the Citigroup board pushed out CEO Vikram Pandit last week, the directors wanted to end the financial-crisis chapter of the too-big-to-fail bank’s history. It is not that simple. Questions remain about whether Citi should even exist. Maybe it should have been put out of its misery in 2008 or 2009. The Pandit decision came just as former Federal Deposit Insurance Corp. Chairwoman Sheila Bair published her blistering account of the decisions to bail out the big banks at the height of the crisis in her book, Bull by the Horns. Her key targets are Citi, Mr. Pandit and the bank’s most fervent supporter, then-New York Fed President Tim Geithner. As Ms. Bair tells the story, Citi was clearly a disaster before the crisis broke. It lost $9.8 billion in the last quarter of 2007, a total of $10 billion in the next three, and was so poorly managed that it couldn’t tell anyone in Washington which of its businesses were regulated and which were not. It was paying out $11 billion in dividends despite the hemorrhage of red ink and was dependent on uninsured foreign deposits. Mr. Pandit had no clue about banking, Ms. Bair contends, but was protected by Mr. Geithner, who she W GREG DAVID says was trying to preserve the reputation of his mentor, Robert Rubin, then a key Citi board member. Ms. Bair, in her role as FDIC chief, wanted to dismantle Citi into the parts worth saving and get rid of everyone responsible for the mess. Mr. Geithner eventually won the day, persuading the powers in Washington to save Citi because its demise would have risked the global financial system. Mr. Pandit’s defenders say he succeeded in getting Citi through hard times. The government made a big profit on the taxpayers’ $45 billion in direct capital injections into Citi. That’s something, I guess. Citi remains deeply troubled—the weakest or second-weakest of the big banks, depending on how one assesses Bank of America.Citi’s inept investment bank is way too big (as large as Goldman Sachs), its domestic consumer operations have missed out on the mortgage refinancing boom that have lifted both JPMorgan Chase and Wells Fargo, and its management continues to be suspect. The appointment of longtime Citi insider Michael Corbat as chief executive was mostly met with the comment, “Who’s he?’’ Maybe Mr. Corbat will be the next Jamie Dimon, but the odds are that he’ll just be the next Vikram Pandit. Citi has resisted fix-up efforts for more than a decade now. The available history suggests Ms. Bair may have been right. Dismantling Citi would have sent a signal that incompetence had consequences. Since it wasn’t, it remains unclear—almost four years later— how the United States will deal with another financial crisis, whether the big financial companies are still too big to fail and whether anyone will be held accountable. That’s not good for anyone. JACK FRIEDMAN O Queens’ racino bet pays off big-time n the eve of Resorts World Casino New York City’s first anniversary this month, it is abundantly clear that Queens’ bet on this important business has more than paid off. Public finances are stretched to their limits, and private financing opportunities for large development projects in New York are sparse at best. But here in Queens, we have built one of the most prosperous and lucrative developments New York has seen in years. Resorts World has created more than 1,750 permanent jobs and 1,400 construction jobs and generated more than $410 million in total tax revenue. Of those permanent jobs, more than 60% belong to Queens residents, and 50% of the top management jobs belong to people who live in the borough. This success is attributed not only to the fact that Aqueduct is a fantastic location, but also because Resorts World has taken the steps necessary to fully integrate itself into the Queens business community.Local businesses also are seeing their bottom lines benefit through partnerships with the casino—for example, by cultivating vending agreements and developing innova- More than a million visitors to Aqueduct in July alone tive marketing programs together. The continued influx of millions of visitors to the casino from New York City, the tristate region and beyond has had the spillover effect of creating additional jobs in the community. Almost every dollar earned by the Resorts World work- force makes its way back into our local economy, from workers to businesses and back again, creating a cycle of much-needed economic growth in the borough. Procurement opportunities are available, with preferences given to Queens businesses. New York City’s only casino continues to pour hundreds of millions of dollars into New York state for education funding. The success of Resorts World should remove any doubt about the economic potential of New York’s most diverse borough. The pessimists may have said that Aqueduct was too far from Manhattan to succeed, but the record speaks for itself: more than a million visitors in July alone and the top-grossing slots casino in the entire country in May. Now just imagine what table gaming would add to the equation. After years of false starts and missteps by previous developers, Resorts World has fulfilled its promises.The Queens Chamber of Commerce has prioritized branding the borough as a destination location. Millions of visitors have descended upon the great borough of Queens, and, in doing so, local residents and businesses have emerged as the winners. Jack Friedman is executive director of the Queens Chamber of Commerce, of which Resorts World Casino is a dues-paying member. October 22, 2012 | Crain’s New York Business | 13 http://www.crainsnewyork.com/events-bestplaces2012 http://www.crainsnewyork.com/events-bestplaces2012 http://www.crainsnewyork.com/podcasts http://www.crainsnewyork.com/podcasts

Table of Contents for the Digital Edition of Crains New York - October 22, 2012

Crains New York - October 22, 2012
In the Boroughs
In the Markets
The Insider
Business People
Opinion
Greg David
Report: Real Estate
Real Estate Deals
The List
Digital New York
Classifieds
For the Record
New York, New York
Source Breakfast
Out and About
Snaps

Crains New York - October 22, 2012