Why Citigroup?

By James Kwak

I think Ezra Klein is probably right about Peter Orszag:

“Citigroup is a really big, really powerful institution. Orszag’s position in it is the sort of position that could one day lead to being president of Citigroup. If you’re him, and you’re trying to figure out an interesting and high-impact way to spend the next 40 years, I can see why it’s appealing. But it’s the power and the job and the opportunity, more than the money, that make it appealing.”

Klein says the problem is that this kind of job transition makes people lose faith in government, and I agree with that. But I think there’s a deeper problem as well.

This is the mindset of the ambitious educational elite: You go to Harvard (or Stanford), maybe to Oxford (or Cambridge) for a Rhodes (or Marshall), then to Goldman (or McKinsey, or TFA), then to Harvard Business School (or Yale Law School), then back to Goldman (or Google), and on and on. You keep doing the thing that is more prestigious, opens more doors, has more (supposed) impact on the world, and eventually will make you more and more famous and powerful. Money is something that happens along the way, but it’s not your primary motivation. Then you get to Peter Orszag’s position, where you can do anything, and you want to go work for Citigroup? Why do our society and culture shape high-achieving people so they want to be executives at big, big companies that are decades past their prime? Why is that the thing people aspire to? Orszag wanting to work at a megabank — instead of starting a new company, or joining a foundation, or joining an NGO, or becoming an executive at a struggling manufacturing company that makes things, or even being a consultant to countries with sovereign debt problems — is the same as an engineer from a top school going to Goldman instead of a real company. It’s not his fault, but it’s a symptom of something that’s bad for our country.

76 thoughts on “Why Citigroup?

  1. The only reason Citi would pay Orzag that much money is to buy influence. This proves again that the business model of the big banks is to rely on the government to allow them ways to skim from the real economy.

  2. Yes, our ‘fancy’ banks function by skimming from everyone else. As some clever blogger said in the last week, I don’t remember now whom, it takes a sparklingly devious mind to poke a hole in the side of your milkshake and drain some out while you are sitting right there. This dude must have the sparkle…Hold on to your milkshakes people!

  3. If you allow yourself to consider the possibility that America is a class society, Orszag’s decision doesn’t look too mysterious.

  4. It’s the Wall Street Journal and NYT real estate sections. Breathless descriptions of SoHo lofts, “classic sixes”, you know the drill. You’re nobody if you don’t have a $10 million home.

  5. Why Citigroup? You might as well ask why get a first class cabin on the Titanic. The answer, of course, is that first class gets a lifeboat when the iceberg hits while steerage gets a refreshing bit of exercise for five minutes before they disappear beneath the waves.

  6. How come the “blame” is always placed on everyone and everything but Peter Orzag? It seems to me that Peter Orzag doesn’t end up at Citi unless Peter Orzag makes that decision. Shouldn’t the individuals going through the revolving door bear as much or more responsibility for their actions as the door itself.

  7. My my my, how the tweeker’s ADD makes it impossible to get beyond “perception is reality”…


    is and was and will be

    the only durable, solid-evolutionary, thousands of years in the making


    The INSANE self-proclaimed “gods”…?

    well, health “reform” should include walling up D.C. and declaring it a mental institution “cheapest” solution to the health care issue of kleptocrats…

    Constitutional Convention and BURN the patriot Act.

    It’s “survival of the fittest” time…

  8. If people will keep pulling their money out of these TBTF big banks and moving them to their local credit unions or regionals, the power problem will be kept in check, no matter how much lobbying power the TBTF has. Hopefully Julian Assange’s call for people to stop banking with B of A will catch on.

  9. Consider it an example of gentrification, the All-American version of the “gentlemanly capitalism” described by PJ Cain and AG Hopkins in their study of British Imperialism. Despite all the hearty yammering about red-blooded risk-taking entrepreneurs our society still maintains a strong cultural bias in favor of “clean hands” rent-seeking methods of amassing wealth. Orszag is simply following an “honorable” tradition.

  10. people like this have been on auto-pilot for so long and are totally insulated from effectively perceiving reality. they should never be in the news.

  11. This is exactly correct… amongst all the gnashing of teeth I haven’t come across a reasonable discussion of what sort of employment Orszag should be pursuing otherwise.

  12. “It’s not his fault, but it’s a symptom of something that’s bad for our country. ”

    I think you are wrong and right. It is EXACTLY his fault. Nobody held a gun to his head and forced the choice. In fact, your whole post is about people like him working to create choices for themselves…options for what to do in the future.

    But you are also right in that it is also a very troubling symptom.

  13. I think those people get caught in a feedback loop with their own kind and never can escape. In that world you don’t just go to work (or school) — you (with your mate) also hang out together socially with them, and you drive their kind of car and have their kind of decor and wardrobe, and if you don’t, you will not advance. And of course you have the same kind of conversations. By the time you have lived this way into your middle age, and raised your kids the same way, they have become your tribe. It is hard to break step with your tribe –it’s organic. Orsag’s choice reflects the values of that tribe.

  14. This is symptom when society has decided to produced ‘money’ (that too a fiat currency) instead of real wealth. Has anyone tried to do anything practical with that money? I mean now they can go a buy a Monet or Picasso for few millions/billions or can have their food in gold cutlery (does not changes the taste or calorie of food) it does not mean anything except for that persons ego. This is just a rat race in which every one has to run fast but don’t know where to!

  15. James, why do you think that Citibank is in any sense past its prime? There are European banks that have lasted for centuries. Why not Citi? Why not go for a job that makes him more powerful than every politician in the world?

  16. Money, not “impact on the world,” is the “primary motivation” for most people when seeking jobs. This generally directs talented people to the most productive occupations and companies since those are able to pay the most. What’s “bad for our country” is that Wall Street’s “productivity” is largely the result of unethical and illegal acts. This should be apparent to anyone who reads the newspaper–never mind this excellent blog–but if you’d like specifics, see http://ustreasurymarket.com for how dealers make money front-running customers in the world’s most liquid and transparent debt market.

    Prosecute the illegal acts–putting individuals in jail instead of just fining the companies–and the companies will make much less, pay much less, and attract many fewer talented people (and won’t be able to create the fraudulent assets that lead to periodic bubbles and bailouts). If Citibank couldn’t have offered Peter Orszag a virtual guarantee of making far more money than at Ford Motor or any other legitimate company (McKinsey and Google should be offended at being lumped in with Goldman and Citibank), he wouldn’t have taken the job.

  17. It’s a small incompetent tribe that lives by one math formula:

    More misery for others = More money for ME ME ME

    Spaceship Earth is TRASHED.

    They have no plan besides continuing to steal and consume.

    What part don’t you understand?

    What MORAL OBLIGATION do you have to bend your knee as a slave to war lords and drug lords?

    Who are you to presume to replace thousands of years of REAL LIFE SUSTAINING values with “political correctness” based on “perception is reality”?

    Nihilism for everyone else – SACRED CONTRACTS for themselves?

    “Sacred contracts” upheld with schemes like the health insurance companies claiming you shorted them 21 cents and then used a BIBLE quote to prove YOUR guilt?!

    Seems to me that added to the INCOMPETENCE of the “elite KLEPTOCRATS”

    once can certainly add really BAD “instincts” about just how STUPID “americans” are…

    Here’s the SCIENCE of the situation – the STUPID have no representative government, no free press, no habeus corpus and no fiat $$$

    So exactly HOW are the “elite” going to “govern” a

    MAJORITY OF STUPID PEOPLE who have NOTHING to loose by locking and loading but everything to GAIN?

  18. Last year when we talked about replacing Orzag, I commented that they needed someone with his amorphous morality and was challenged. So, here’s to you!

  19. Good question. There is so much more to life. Will this position fulfill his “pursuit of happiness?”

  20. Compared to Goldman, JPMorgan, and Morgan Stanley, Citi is a second-rate investment bank. Compared to Bank of America and Wells Fargo, it’s a second-rate retail bank. I guess it could come back, but it doesn’t have a lot going for it.

  21. I see. Maybe Orszag figures he can bring it back. That’s a challenge for a creative financier! He’d have a hell of time rising to the top at one of the first rank banks–those ladders are already full of climbers, not so? Maybe he figures it’s better to go to one of the second rank, take it over, and lift it up. Banks, unlike people aren’t subject to old age, and Orszag is in his forties: lots of time to work on Citi.

  22. Mr. Orzag is likely to have as much fun being a banker path forward as it was being a banker in 1933. Past is not prologue as he should soon learn. Irony is another dish that is best served cold.

  23. I think it may because our schooling and our society encourage students to take classes in order to get a certain job in a certain field; to “be” someone. For example a banker. But what does that mean, being a banker? Status, power, but community involvement, personal fulfillment?

    Instead schools–indeed the community–should be helping students of all ages explore and develop their own way of thinking so they can feel fulfilled contributing in their own way vs conforming to social status quo.

    This concept is developed in Peter Senge’s work, among others.

  24. But Annie there but for a matter of degree goes thee and me — it seems to me that you are reacting (and shouting) more than you are thinking . . you should read FIRST AND LAST MEN by Stapleton.

  25. It’s LAST AND FIRST MEN, dood.
    And we’re not even to the “Sino-American War” yet.

  26. You’re right — duh ! . . cut my teeth on it as a teenager and that was a looooong time ago.

  27. Ezra and you make some very good points. There seem to be a couple of other issues to consider.

    Is the position at Citibank something that Peter Orszag could reasonably have obtained without having worked at the public sector? Perhaps one issue here is whether a government should only employ someone with Orszag’s capabilities on condition that he/she must forever (or for a specified period) decline certain private sector positions after leaving the government. These conditions should be negotiated upfront before someone like Orszag joins the government.

    Another issue is whether public sector career (including remuneration and long-term career path) is sufficiently appealing to attract and permanently retain the best and brightest individuals of society to the public sector.

  28. They’re paying him a lot of money precisely because they have the expectation that he won’t stay there forever; i.e., that he’ll go back to government and be beholden to them. This is exactly what’s wrong with big government today: it is owned by big, lackluster or crooked companies like Citi and Goldman.

    Don’t be perplexed as to why he wouldn’t start his own company. It’s not in his genes. He’s a big company, big government kind of guy.

  29. Exactly. This is a man who left his pregnant girlfriend for a hottie. The guy isn’t exactly a boy scout. The only surprise is that GS didn’t hire him.

  30. My immediate thoughts were that its a little like what Robert Reich once said about working overtime. When you take the time off you spend part of your free time agonizing that you should have taken the overtime and the money.Orszag probably went through a similar decision making process.

  31. Maybe off the subject.
    Pardon my naivete, but, why do the Treasury employ primary dealers to handle auctions? They should be able to expand the functionality in their treasurydirect site (a la ebay) so that we (taxpayers) don’t have to be victimized by TBTF.

  32. I should have been clearer.Reich was talking about taking on speaking engagements and other extra projects. He tells the story of giving up a nice speaking engagement to watch his son run cross county and when the meet was over his kid didn’t want to be with him instead of his friends.Orszag might have considered other options but in the final analysis took the money, not unusual in our culture.

  33. outside the US, citi has some strong banking franchises; in many Asian countries it is a ‘high net worth’ bank. It also has a cash management product used by hundreds of MNC’s. But it has almost gone under (at least) three times since the early ’80’s; has mediocre technology (in spite of John Reed in the ’80’s), unintegrated systems (from its ill advised acquisitions since the mid-90’s) and is a chronic lawbreaker across dozens of countries in the last ten years. All this before even touching on its ‘diseconomies of scale and scope’, and the systemic risks these introduce. For the good of the USA and its long suffering taxpayers who have bailed it out multiple times, it should be broken up.

  34. Entre to important and influential Government figures will keep him for a year or two also useful as a spokesman to Congress. That has an immense value to Citi with its’ checkered past.

  35. James, you ask some very pertinent questions: “Why do our society and culture shape high-achieving people so they want to be executives at big, big companies that are decades past their prime? Why is that the thing people aspire to?” This certainly isn’t about Peter Orzag, now is it? It’s about not just our country, our culture or the American success mindset. It’s about undertanding what is important in our lives. First, there’s the old camel through the eye of a needle thing. Then there’s the one with the most toys wins thing. Then there’s the can’t take it with you thing (although, with that one, perhaps the fame will follow you, but what good is that if you’re pushing up daisies as it were. I would say that somewhere along the way, a substantial section of human culture, maybe as much as 15% has now focused on the power/money paradigm to the exclusion of all else. Why is that? As the old saying goes, “because they can.” They certainly don’t have to worry about where to eat or sleep, or what to drive, or where to go. There choices of such things are unlimited. So, with those elite the choices are simple. Keep up with the other “Joneses” who are in your paradigm league. Orzag (or Your Name Here Mr. Elitist) is just following the route taken by the privileged.

    All this makes me and maybe others wonder why it is that so many of Bill Gates competitors have subscribed to the idea of giving it all away. Of course, so just get it, that is what is the most wonderful thing in life. At Christmas time, many are prompted to give. Sadly, this is a seasonal trend.

    I wish Peter all the best of everything, but mostly that, before he gets too old and wizened, he will realize that it’s not what you go, where you work, how much you have, but about what real contribution you make to the wellbeing of your fellow humanity that really is the measure of success. Name like Martin Luther King, Mahatma Ghandi, Mother Theresa, Abraham Lincoln, Helen Keller, and a rather long list of unforgettable humans who will go down in history as the best of humanity. No one, in 50 years will speak of Loyd Blanfein or Jamie Dimon in respectful tones, if they mention these men’s names at all, except as footnotes to American history, and even smaller print will apply to these sorts of people in the annals of human history.

    Which reminds me, when will this country produce another truly brave, selfless and noble leader? Or will it ever happen again.

  36. I’m the one not thinking?


    Promising 7 billion people an SUV in the driveway of a McMansion – and pretending to be doing it by throwing USA FIAT $$$ in the pockets of the “strong men” who will do ANYTHING for the money, in every “3rd world” country on the planet

    was THINKING?

    And then when THAT was not going as planned, planted another “belief” among the “strong men” that if you STEAL the manufacturing and jobs and resources from WOMEN in USA

    that’ll work

    because the MATH is:

    More misery for others = More money for ME ME ME?

    Save the “resources” and stop writing BOOKS

    because the TRUTH is short and EASY TO SEE…

    Survival of the fittest was SELECTING the “strong men” in countries who are the WORST in their own culture and race?

    it AMAZES me that you people are still trying to RATIONALIZE the creation of the “end times”

    as a scholastic, science-based PLAN

    for “wealth”…

    With every book and every blog

    you PROVE your unworthiness as “leaders” of the free world….

    If the 2.5 million stolen from us 5 ladies is in “sino” – well, guess we’ll be having that f-ckin’ war of the “fittest” won’t we…? Go surround yourself with 5 year old girls sold into prostitution by the strong men with USA FIAT $$$ in their pockets if you think you’ve got our PSYCHOlogical profile correct and we won’t slam through the kids to get to you….

    Constitutional Convention and BURN the Patriot Act

  37. Waterbury wrote, “Which reminds me, when will this country produce another truly brave, selfless and noble leader? Or will it ever happen again.”

    This is rich – you KNOW that there has been a PRE-EMPTIVE plan in place in schools to make sure that the real “leaders” are “assassinated” early – all the gunned down assassinations in the 1960s were too obvious and memorable and people keep writing books about “who killed _____”

    Surrender, Waterbury, if YOU are “sincere” in your question.

  38. Just because “they” are not thinking, it does not logically follow that you ARE.

    You are violating one of the basic laws of logic at the outset. Which is an example of what I mean when I say you are not thinking — even though I agree with most of your values.

  39. John Kenneth Galbraith noticed a long time ago that after a high earner has enough money, it is other factors that motivate him (mostly males in those days). But of course in the past 30 years, the income gap has become so distorted that what satisfied the post-war high level earners, and thereby led them to look for other kudos to satisfy them, do not appear attractive any longer. We may have reached a stage where virtually no amount of money will be considered sufficient. This should be alarming, as the income distribution and the corruption accompanying it resembles certain features of the 18th century more and more.

  40. Not really worth hyperventilating about. And an even bigger fuss will come when Tiny Tim G. leaves to go to a 7/8 figure salary in Wall Street. We elected this administration — we desreve them.

  41. Did I say logic was infallible? No — I said (by inference) that ILLOGIC is Fallible. Not the same at all You see? This is what I mean when I say you are not thinking well. Logic is a valuable discipline.

  42. Not a mystery – political power and the big greed.

    It’s been our governing philosophy since Reagan.

    The real question is if this governing philosophy drives our society in the correct direction.

    My answer:

    If good governance can send a man to the moon, or win a world war against some real evil people like Hitler vs. getting a bunch of people and families extremely rich then I’m hoping we get more good governance and dump the whole “greed is good” schtick.

  43. Nobody noticed, “Did I say logic was infallible? No — I said (by inference) that ILLOGIC is Fallible. Not the same at all You see? This is what I mean when I say you are not thinking well. Logic is a valuable discipline.”

    Actually, you said absolutely nothing -typical semite schtick – and you wonder why you lost your cultural superiority in “science” centuries ago…? That’s VERY illogical…

    Want to slap our “degrees” and life experiences out here on this blog to see whether you are qualified and competent to “judge” whether ANYONE is “thinking”?

    And why is this just about “ANNIE”….?

    Stepping on my face to lift Sarah above the THOUSANDS of real female leaders in the USA…? Yes, THOUSANDS better than her – and SHE knows it….

    Brooksley Born – they said she wasn’t “thinking” either….

  44. Thanks — makes sense. Been there with my own kids. And in my case the extra project/overtime opportunities would not have paid much anyway.

    I was independently poor.

  45. WTF is an Orzag and why are you wasting any of your energy on it?

    You people really need to all get a life.

  46. Two words: Moral bankruptcy. The insolvency of America is strictly a by-product of this and I really don’t think things will change until the stench of death becomes uncomfortably familiar in the “Homeland” as a result of civil unrest but also as a result of pandemic and rampant illness as the financial system falls apart as public health spending implodes and health care becomes a scarce resource only available to the upper quintile. And even then I wouldn’t put it past the Elites to somehow drag it out til the bitter end. There is everything to gain by me being completely wrong but when you look at the facts on the ground and compare them to history..well…good luck everyone.

  47. I did my Engineering DPhil (PhD) at Oxford and am now working for Goldman. Given they pay twice the starting base pay of alternative engineering firms, it’s no supprise the best get tempted by finance. And to be honest, I really like my job here – far faster pace than the academic/industry life.

  48. High achiever? Why not “starting a new company, or joining a foundation, or joining an NGO, or becoming an executive at a struggling manufacturing company that makes things, or even being a consultant to countries with sovereign debt problems”? Because those would require work. He’s ready to coast, and he gets to hang out with big shots. He’s done.

  49. Our society values money more than philanthropy and public service. Money is human power: It has no hold on the animals or the plants, but it will make men and women perform utterly degrading, humiliating, unconscionable, and dangerous acts in its pursuit.

    This learned behavior cannot be rapidly unlearned barring an epiphany of sufficient gravitas (pardon my redundancy), despite the obvious social benefits of doing so. I thought the 2008 meltdown would do it, but I had discounted legislative capture and spin control.

    Recognition of the dichotomy between productive and parasitic economic activity is sorely lacking in mainstream modern economic thought. Society fails to recognize the difference between extractive, rent-seeking activities and productive or new-wealth-generating activities. This indoctrination largely starts in ECON101 with the introduction of the wonders of globalization in the context of comparative advantage. This allowed us to ship our manufacturing jobs abroad while focusing our best and brightest on augmentation of financial extraction methodologies. Nice. Now we make nothing, but we can help other nations hide the dire nature of their true balance sheet.

    Happy holidays!

  50. I think you overestimate his talents. From what I’ve seen, and I presume he is smart and knowledgeable, he wouldn’t make a good entrepreneur. So starting up a business would just lead to being a K Street operative, like William Cohen (fmr Sec Def and Senator) that provides “consulting” but really access.

    You also undervalue the importance of money. The money is required to be taken seriously by other important (read, Rubin types). They would not respect, and therefore socialize, listen to, etc, anyone that didn’t command a sizeable salary.

    I recently heard one of these types say (I work with folks like this) that he wanted to interact with “a better class of people” and another “you can’t get anyone good for that kind of money [less than $200k]”

    So, they are royalty. And what do our royalty do, the things you list. As Delong posts on his blog about the Orwell, which relates: http://delong.typepad.com/sdj/2010/12/george-orwell-on-belonging-to-englands-lower-upper-middle-class-in-the-1920s.html?cid=6a00e551f0800388340147e0dbf04f970b#comment-6a00e551f0800388340147e0dbf04f970b

  51. When reading her comments over the last few weeks, I thought she was unwell. This time I decided to respond and see what happened. Sure enough — her comment above about me being a “semite” is straight out of a Mel Gibson rant. And I am a WASP and have never indicated I am otherwise.

    Annie, imho your values are in the right place but you are in a frenzy of some kind. Is there anyone in your life you can trust? Please — and I mean this sincerely — get help. Find your peace, and then be a warrior for the Good. You cannot make the world better if you are not grounded in peace.

  52. Why do we still act so surprised evertime the revolving door spins and spits out another one of these people? This is the way the system is structured and I wouldn’t agree that it is a “symptom” of something that is “bad for the country”. Ask these questions: 1) Is he adding value to Citi? 2) Is the value he will add beneficial to shareholders? 3) who are the shareholders? I can answer the third question: shareholders= pension funds and mutual funds in which we stash away our retirement money.

  53. Right on, Sam.

    As John Kenneth Galbraith put it: “The art of genteel and elaborately concealed idleness may well reach its highest development in the upper executive reaches of the modern corporation.”

  54. Who the fu** is Peter Orzag? Is there some reason ever to trust a single one of these creeps? If you must watch television turn off the sound.

  55. I remember years ago in the media of the ’50s and ’60s there was much ado about heart attacks suffered by executives, brought on by the stress of their positions. Pure myth — as later proven by statistical research. Self-serving media manipulation. It is the underlings who suffer from stress diseases.

  56. “what real contribution you make to the wellbeing of your fellow humanity that really is the measure of success”
    This realization may be permanently beyond Orzag’s pay grade.

    “when will this country produce another truly brave, selfless and noble leader?”
    Waiting on and relying on leaders to look out for our interests has gotten us where we are today; that would be wage slaves, working on the chain gang building pharaoh’s pyramid.

  57. Compared to Bank of America, Bank of Americas is a second-rate retail bank. I should know, I bank there.

  58. Taking a look at his life up to this point, one realizes that he is a very smart policy guy with little ‘real world’ experience in the world outside of think tanks and government.

    What he has to offer is only valuable to organizations that need to understand with great nuance and detail the dynamics of Federal government economic policy.

    I suspect that he won’t feel that comfortable at Citi and will leave within three years. If he has a nose for business, he’ll use his Citi experience to jump to a smaller firm. Given the orientation of his family (parents and siblings), though, he’ll look for a more policy oriented role, but he’ll have to figure out the whole cash flow thing with two families to support.

  59. Orszag went to Citi because he is a complete a**hole and because he has an expensive girlfriend who wants stuff.

    This isn’t complicated. It is everyone for themselves in America, and the group in the White House are going through the motions. They aren’t fooling anyone. The oligarchs are in charge and the looting that began under Bush continues.

    Nothing will change until the unrest begins. The French nobility never saw it coming until the mob was literally at the gates. The American upper class isn’t any smarter.

  60. He doesn’t have the skills or experience to start a company. Most elite students don’t fit the profile of a successful founder of a company either. But grinding 80 hours a week on somewhat dull and somewhat intellectually challenging work (Big Law,I-Banking)while leveraging your connections. Right up the alley of the type of person who goes to an elite college.

  61. The answer may be Reality. He isn’t what you thought he was. Really, Why would you think this man was anything but a hustler. A clintonite who became Head of the CBO from 2007 – 2008 where he highlighted the need for healthcare reform Democrat style. 2009 – 2010 head of the OMB where he cooked the books to make Obamacare a trillion dollar savings.

    And as any good Clintonite will become a multi-millionare working to keep Citi-group, a TBTF Bank that get bailed out by tax payers.

  62. He probably wants to do private sector after being disillusioned with how things get done in Washington (which is, they don’t). In the private sector, at least, there’s somebody in charge to make decisions.

    As far as the private sector, Citigroup is a good fit. The pay is certainly right, and nobody has more experience trying to fix a balance sheet that’s an absolute mess than Orszag!

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