Citigroup 'Too Interwoven' to Fail, Chairman Says
Citigroup remains too "interwoven" to fail even after the government has plowed billions into rescuing the banking titan and Congress has passed laws taking aim at financial behemoths, Citi Chairman Richard Parsons told CNBC.
"It's not a question of too big to fail," Parsons said in a live interview. "It's a question of too interwoven in the fabric of the global financial life to fail."
Speaking as Citi prepares to shed its government stake, which was as high as $45 billion when the bank teetered on the brink of disaster during the financial crisis, Parsons said maintaining huge financial conglomerates is in the interest of the US economy.
The Treasury Department has priced 2.4 billion shares of Citi at $4.35 a share, which will end its stake in the bank.
Parsons said allowing Citi to fail previously or in the future would be akin to having "the heart, the pump of the economic system fail because then everybody else dies."
"It's probably the most important private financial institution for maintaining our economic strength and presence around the world. You can't let an institution like that go down," he said.
Some 95 percent of the Fortune 500 companies are clients of Citi, he added.
"We can meet the needs, satisfy their needs and provide services to them in any country in the world in which they are operating. You have to have scale to be able to do that," Parsons said. "You don't have to be an enormous colossus to be deemed too big to fail. It's the interrelatedness of your business to the global economy that matters."
Citi is one of dozens of banks in the system such as Bank of America , Wells Fargo and Morgan Stanley to receive funds through the $700 billion TARP bailout.