* Citi couldn't be only bank to stop leveraged lending
* 2007 quote had "nothing to do" with mortgage crisis
NEW YORK, April 8 Charles "Chuck" Prince's
infamous comment that his bank was "still dancing" even as the
the subprime crisis worsened came back to haunt him on
The former Citigroup Inc (C.N) chief executive's
explanation seemed to boil down to: it was a race to keep up
with competitors who kept loosening lending standards and Citi
couldn't afford to drop out.
In July 2007, Prince told the Financial Times that global
liquidity was enormous and only a significant disruptive event
could create difficulty in the leveraged buyout market. "As
long as the music is playing, you've got to get up and dance,"
he said. "We're still dancing.
The U.S. congressional panel investigating the origins of
the worst U.S. financial crisis since the Great Depression
pressed Prince about his comment, which has become emblematic
of banks' failure to come to grips with the gravity of the
Prince told the Financial Crisis Inquiry Commission on
Thursday during questions after his testimony, "The quote
itself related to the leveraged lending business, and I
specifically asked the regulators if they would take action in
regard to that."
Prince said that at that time "private equity firms were
driving very hard bargains with the banks, and at that point in
time the banks individually had no credibility to stop
participating in this lending business."
"It was not credible for one institution to back away from
this leveraged lending business," he said. "The regulators had
an interest in tightening up lending standards."
Prince looked tense and uncomfortable as the commission
"This was about leveraged lending. It had nothing to do
with the mortgage business," Prince said, referring to the
quote. "It had nothing to do with the CDO business. It had
nothing to do with the issues that we've been talking about
here," he said.
A few months after the Financial Times interview, in
November, Prince resigned.
(Reporting by Maria Aspan)