Op-Ed
Weill of Ignorance
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Sadly, Citigroup Chairman Sanford I. Weill '55 faced few tough questions at Cornell this week during his gleeful address to an auditorium packed with students who idolize the 162nd richest person in America. The Johnson Graduate School of Management's Rick Sweeney told the Sun that Weill is "a model for anyone at Cornell." But Weill was behind some of the worst corporate scandals in history during his five years as CEO of Citigroup, which paid $400 million in fines -- more than any other Wall Street firm.
Throughout his Wednesday lecture, Weill compared himself with George Bush, who went on TV Tuesday night to explain that his lengthy summer vacation caused him to miss the August 2001 CIA briefings called "Bin Laden Determined to Strike in U.S." and "Islamic Extremist Learns to Fly."
Like Bush, not quite contrite, Weill made vague allusions including "Over the last five years we've learned a lot about corporate governance and how things can look after the fact" and "Things went on." Alluding to the electronic paper trails that implicated so many financial industry crooks, Weill got the biggest laugh of the afternoon: "I don't do e-mail and I think that turned out to be a good idea."
One reflection on the recent past rang unsettlingly false: "I don't know what I did wrong," Weill told the crowd. He should ask duped AT&T shareholders and Jack Grubman -- the telecommunications industry analyst at Citigroup investment banking unit Solomon Smith Barney, who long rated AT&T stock a mediocre "hold." Weill wanted more AT&T business and pressured Grubman for a "buy" rating. In return, Weill put in a good word -- and a $1 million Citigroup donation -- for Grubman's twin daughters at an elite Manhattan preschool. Grubman paid a $20 million fine for his part of the bargain -- awfully expensive tuition. The Grubman tots incident was so egregious that even Maxim ran a story. Vanderbilt University Law Professor Larry Soderquist told the magazine: "The Citigroup scandal was a sordid tale of greed, with ethics ignored. It was one of many that, taken together, helped destroy market confidence and trash the economy."
Sandy Weill -- a boy from Brooklyn now worth $1.4 billion -- should know what he did wrong. Institutional investors agree. CalPERS, the California Public Employees' Retirement System, is the nation's largest. It owns 26.7 million Citigroup shares and will vote with the New York State Common Retirement Fund at next week's annual shareholders meeting to replace Weill and current CEO Charles Prince with independent auditors on the Board of Directors.
Weill ought to be ashamed. He repeatedly told us on Wednesday that "the emergence of middle classes" all around the world is a top priority for global business yet helped blow the largest financial bubble in history. When it popped, the pensions and life savings of millions of middle class Americans disappeared as well.
The huddled masses of business students yearning to breathe in the big bucks after graduation still welcome Weill warmly, but even for a man who says "The more money I make the more I can give away" and whom Business Week calls "One of the 50 Most Generous Philanthropists," the time for atonement is now. Here's an idea. During Monday's outdoor forum on Ho Plaza, Cornell President Jeffrey Lehman eloquently defended the University's affirmative action policy in response to a negative comment that followed the my-parents-made-it-here-so-anyone-can trajectory. But as University of Illinois Professor Walter Benn Michaels argued in Sunday's New York Times Magazine: "When student and faculty activists struggle for cultural diversity, they are in large part battling over what skin color the rich kids should have." Class-based affirmative action would much more radically alter student bodies -- and help the "collective fantasy" of unfettered class mobility become reality.
Professor Michaels elaborates that solving the problem of racism "requires us to give up our prejudices, whereas solving the problem of economic inequality might require something more -- it might require us to give up our money." Class-based affirmative action also conflicts with fundraising efforts that rely on generations of well-heeled folks to pay full tuition to subsidize financial aid and endow professorships, buildings, even whole colleges. Enter embattled tycoon Sandy Weill.
The children of public employees in New York and California, whose retirement funds want Weill out of office, are far less likely to get into Cornell than Jack Grubman's daughters or Weill's grandchildren because, grade for grade, kids who grow up working class struggle so much more than kids whose fathers upgrade stocks from "hold" to "buy" in exchange for favors.
Sandy Weill '55 and other wealthy alums should make up the difference at the educational institution where any person can find instruction. Weill said he was "helped by Bush's tax change, especially the tax on dividends." As the federal government cuts its contributions to higher education and gives people like Weill ever larger slices of the pie, beneficiaries should send larger voluntary portions Cornell's way. No one needs remotely near $1.4 billion. Class-based affirmative action would be a just contribution to Weill's favorite cycle.
The more opportunities for advancement Weill creates, the more people save and invest and enrich Weill, enabling him to donate more. As he said, it is "fun to give away money and see the results of it while you're still alive."
Danny Pearlstein is a junior in the College of Agriculture and Life Sciences. He can be reached at dp89@cornell.edu. Thinking in Public appears Fridays.
Archived article by Danny Pearlstein