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Photograph by Jeff Mermelstein for Bloomberg Businessweek; Parsons's A-List: Bloomberg (11); Getty Images (8)Story Tools
Albright was considered something of a visionary in the savings and loan field: He helped popularize "no-doc loans," which were strikingly similar to the subprime variety. Dime Savings doled out loans without regard to a borrower's ability to repay. Instead, the bank just looked at the value of the home. Not surprisingly, Dime was nearly wiped out when the real estate market crashed in the early Nineties. By the time Parsons became CEO in 1990, 10 percent of the bank's $12 billion loan portfolio had gone bad. Expecting the Federal Deposit Insurance Corp. to arrive at his office demanding the keys, Parsons says he urged the agency to give him some time to sell off the bad loans. "You can trust us," he says he told the regulators. "We'll manage this book at least as well as any liquidator. We won't do any more stupid stuff."
Even though Dime's reckless lending got them into the mess, the FDIC went along with Parsons's plan. Regulators "appreciated that he wasn't one of those people who work on Wall Street and think they can get anything they want just because they've made a few contributions," says Richard F. Hohlt, a Republican banking lobbyist who worked with Parsons at the time.
The real estate market recovered, and Parsons was able to merge Dime Savings with Anchor Savings Bank in 1994. He also found time while he was still running Dime to serve as chairman of his former law partner Rudy Giuliani's successful campaign to become mayor of New York City.
In 1995, Levin asked him to become president of Time Warner (TWX), and Parsons took the job even though he knew very little about the media business. "I'd never thought about it before," he admits. "It was a surprise. But I had never thought about banking either."
"People wondered what I was doing," says Levin. "But I was confident, given his style and his approach and his people skills. And I was proven right."
Parsons says his primary duties were to deal with Washington agencies such as the Federal Communications Commission, stabilize the company's debt-laden balance sheet, and bring the company's headstrong chiefs in the company's film, music, magazine, and cable divisions under control. "You had a king, but you had all these dukes and barons who ran their own things and who were sort of obstreperous," Parsons recalls.
A late-1990s boom-time atmosphere permeated the company; it hosted grand parties and unveiled plans to build a lavish headquarters, complete with a jazz club on the fifth floor, thanks to Parsons. The good times ended in early 2000 when Levin announced a deal to sell Time Warner to AOL (AOL) for $184 billion in stock and assumed debt. Time Warner's revenue was nearly six times that of AOL, a dial-up Internet-access company based in Dulles, Va. Indeed, the only reason AOL could make a credible offer was that its share price was swollen by the dot.com bubble. "It's easy to look back and say, 'Oh, worst deal in history,'" Parsons says. "In terms of evaporation of value, it probably was. But if you looked at all the press back then, everybody thought it was the greatest thing since sliced bread."
Not everybody. One of the skeptics was one of his own employees: Carol Loomis, a veteran writer at Time Inc.'s Fortune. She wrote that the merger would only succeed if Levin and AOL CEO Stephen Case were able to meet their wildly optimistic financial goals, which would be akin to "pushing a boulder up an Alp."
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