CEO Speaks: Making Peace

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You've always relied on your wife Joan for consultation--a personal vice president.

I would say personal president. She was my adviser, my confidant, but never a person who interfered in business. She made sure that people knew that she didn't understand the business, that I was the one who was running the business. But she has very good judgment about people and feelings and me: my strengths and my weaknesses. She was invaluable that way.

Is that why you've always been inclusive of spouses and partners of your employees?

Any company that doesn't do that is making a major mistake. If you are inclusive, most of the time you will end up having two supporters in that household, rather than just one, have somebody at home who understands what the issues are and can speak intelligently to their partner about those issues, so you're not just saying, "Yes, dear." The person knows something else, they've met other people--maybe they've met at an event [and] they can say, "I know this person. He or she is not the way you describe them."

As much of a risk taker as you are when it comes to deals, you're at the same time very conservative with the balance sheet. How can those two coexist?

The only exception to that was when we [Travelers] reached to buy Primerica from Gerry Tsai, which was leveraged as it was. We leveraged it more because it was bigger than our company. We had to really pay attention to everything until we got our balance sheet back in line, which took about a year and a half. But most everything else we did in a very financially conservative way so that we really weren't risking things.

That's a much different philosophy than what we're seeing today with private equity.

Private-equity groups have had incredible access to the market. They've raised a lot of new equity to invest--the financing terms are incredibly liberal, so they can leverage it without a lot of handcuffs. People being able to express themselves freely and evaluate and come to conclusions--that's what markets are all about. Eventually it will get to a point where its grip becomes too much and it stretches too far, and there will be another reaction.

That's called a bubble.

Bubbles are great until they break. I've personally never been an investor, really. It's never been what I've done, except for investing in whole companies. With very few exceptions, the only stock that I've owned has been our Citigroup stock for the past 20 years.

But it's not your problem these days, right?

I'm chairman of three major nonprofits. Since 1991, I've been the chairman of Carnegie Hall, and of the Cornell Medical College since 1996. I'm also the chairman of the National Academy Foundation, which started 25 years ago to show people in inner-city schools that there is an opportunity education is the key to unlocking that future. If we don't do that, the divide between the wealthy and those who don't have anything is going to get even wider. If that happens, this country is not going to be a leader in this world 20 years from now.