By Wong Wei Kong

IN A bullish world, his was among the few voices urging caution. William Rhodes warned of a sub-prime crisis two years ago, but few then heeded the banker who made his name fighting economic fires around the world over three long decades. And it's something the senior vice-chairman of Citigroup recalls with some irony.

'The first time I talked publicly about the difficult economic situation we're in was here in Singapore two years ago at the IMF-World Bank meetings,' says Mr Rhodes, who is also chairman, CEO and president of Citibank, in an interview with BT here. 'At a press conference by the Institute of International Finance where I am first vice-chairman, I mentioned that I was very concerned that we were in the midst of a liquidity bubble and a major housing problem, in particular, sub-prime.

'Now you will remember that this meeting of the IMF and the World Bank was full of euphoric feelings over where the world economy was going and I didn't have much company in my concerns. The only two people I could remember who had similar concerns were Paul Volcker, former chairman of the Federal Reserve, and Larry Summers, former US treasury secretary.

'One newspaper wrote that there were only three pessimists at the conference and mentioned the three of us. It's interesting that the other two are now economic advisers to Senator (now President Elect) Obama.'

The crisis fighter has seen it all happen before, having joined Citigroup in 1957. In the 1970s, he had helped Jamaica restructure its debts. He went on to build his reputation for the leading role he played in the 1980s in helping to manage the external-debt crisis that involved developing nations and their creditors worldwide. Through the 1990s, he headed the advisory committees of international banks that negotiated debt restructuring agreements for Argentina, Brazil, Jamaica, Mexico, Peru and Uruguay.

In 1998, when South Korea experienced liquidity problems, he chaired the international bank group that negotiated the extension of the short-term debt of the Korean banking system. In early 1999, at the request of the government of Brazil, he acted as worldwide coordinator to help implement the maintenance of trade and interbank lines by foreign commercial banks to Brazil.

'I have been through so many crises, and you get a feel for these warning signs that are there.

'My concern was that it was going to lead directly to a recession and that, unfortunately, is where we are today. There was a tremendous over-leveraging of the system based on cheap credit and a drop by some in standards in lending and investing,' he says of his early warning of a bubble in late 2006.

Frustrated, Mr Rhodes penned an editorial for the Financial Times in March 2007 - the first of several as the sub-prime crisis developed. The article carried a 'Market Warning' tag in bold red. In it, he wrote: 'What is clear to me is that in the next year a material correction in the markets will occur.'

The problem, he says, was that most people were lulled into a false sense of comfort. 'People saw the bubble building up but they felt that there was more time before it burst. One of the things Paul Volcker taught me was that when you are approaching a problem or a crisis, the clock is always running against you and so you have to try to get out in front of the problem. What happened here was that people thought they had more time and they felt that this was something that was not going to hit for another year or two. So in a sense, they saw the warning signs, understood that we were in a bubble, but thought that there was time to handle it. I think that view was shared not just among those in the private sector but also by many in the public sector.'

It was something all too familiar to Mr Rhodes. Back in the 1990s, he had also sounded warnings of a financial crisis in Asia, only to be told his experience was in Latin America, and that the high savings rate in Asia and Asian values would prevent a crisis in the region.