The Coming Liberal Suicide by John Avlon
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Paul J. Richards, AFP / Getty Images What keeps the former Clinton economic star up at night? Friends blame him for the Citigroup fiasco. And Rubin can't figure out how he didn't see it coming.
People who know Robert Rubin say he never thought that it would end this way. In a span of about 10 years, the former Treasury secretary under President Bill Clinton pulled off an amazing feat—going from the man who saved the economy to one of those responsible for its demise as a senior executive and board member of the hopelessly troubled banking giant Citigroup.
It is an amazing about-face for someone who has wielded so much influence and achieved so much success in the power centers of New York and Washington over the past four decades. Before becoming Treasury secretary during the economic boom of the Clinton presidency, Rubin served as CEO of Goldman Sachs. Since leaving Washington, he spent the last 10 years as a board member and senior executive at Citigroup, which for a time was the prototype of the modern Wall Street firm, with its financial “supermarket” business model that offered every banking and brokerage service imaginable. In time, however, Citi became the poster child for the financial crisis that has plunged the country into one of history’s steepest recessions after its massive and costly bet on toxic real-estate debt.
“Bob feels pretty strongly that what happened at Citi wasn’t his fault,” says one associate. “He also knows that he faces an uphill battle changing people’s opinion about the matter.”
It is his role at Citigroup during this time that has damaged Rubin’s legacy, possibly beyond repair. He has been ridiculed in the press. He found his picture prominently displayed with other board members on the front page of the New York Post under the headline “Bounce These Bozo Bankers,” which pointed out that Rubin made close to $110 million during his time at Citigroup, while shares fell from above $50 to below $5, wiping out billions of dollars of shareholder wealth in the process, as he became richer.
Even among his peers on Wall Street, who revered him for so long, there is a general belief that Rubin is fairly culpable for the Citigroup implosion that led to a massive government bailout. This general belief, even among people who consider themselves friends, is what keeps Rubin up at night, according to people who know him. “Bob feels pretty strongly that what happened at Citi wasn’t his fault,” says one associate. “He also knows that he faces an uphill battle changing people’s opinion about the matter.”
One reason Rubin is so concerned about his reputation is that even now, eight months “retired” from Citigroup, he commands respect and influence. He keeps an office on Park Avenue at the Council on Foreign Relations and has a regular business schedule. He often travels to Washington to speak with his good friend and protégé, former Treasury Secretary Larry Summers, now the president’s chief economic adviser, to discuss what he likes to talk about most: economic policy. Recently, Rubin even had a sit-down with President Obama on the subject.
People who know Rubin say what keeps him going at age 70 is that he is still very much part of the public-policy debate, albeit in a behind-the-scenes way, and he would like to keep it that way. (It is one reason he won’t talk publicly with me about these issues.) Unfortunately, Rubin is also still very much part of the debate surrounding the disaster known as Citigroup, including the questions over whether the troubled company should be broken up, whether its CEO, Vikram Pandit (a man Rubin helped hire), has the chops to remain in that position, and most importantly, who’s to blame for the bank’s tragic downfall—one of the key events in the great financial crisis of 2008.
It’s that blame that Rubin can’t seem to shake; in fact it’s becoming more intense as the one year anniversary of the financial crisis’s most turbulent period approaches. And as the debate about Rubin’s culpability grows among the chattering classes, people who know Rubin say this debate is also growing inside his head. Rubin has been privately wrestling with his role as senior adviser to former Citi CEOs Sandy Weill and Chuck Prince when the risk taking began (and reached immense proportions), and falling back on the fact that he didn’t have “operating responsibilities,” meaning he had authority but no direct responsibility to manage those risk takers.
He concedes that he advocated more risk taking, but he says he wanted Citi to do it smartly, “like we did it at Goldman,” he has said. (What makes him feel bad is that he knows that even his old friends on Wall Street say he needs to own up to the damage caused by that wild risk taking.)
View as Single Page 12 Back to Top August 19, 2009 | 11:02pm Facebook | Twitter | | | Emails | print Robert Rubin Larry Summers, Vikram Pandit Robert Rubin, Sandy Weill Bob Rubin, Robert Rubin Charlie Gasparino, Robert Rubin Citi, John Reed, Robert Rubin Citigroup, Bob Rubin, Sandy Weill, Robert Rubin, Treasury Secretary, Larry Summers, Economic Meltdown, Economy, Business, Goldman Sachs, Wall Street, Bill Clinton (–) Show Replies Collapse Replies Sort Up Sort Down sort by date: GPatton
Not a nice guy. Arrogant a-hole, like Tim G., L Summers. They should all be in jail with B. Madoff. George Patton
Flag It | Permalink | Reply | (–) Show Replies Collapse Replies 5:17 am, Aug 20, 2009 mblipsYes, but to jail them you need a law. Which law puts Rubin in jail?
Flag It | Permalink | Reply | (–) Show Replies Collapse Replies 8:49 am, Aug 20, 2009 artoisThere are a litany of laws to cover their crimes. We can start with Bank Fraud all the way through Money laindering...Oh and BTW if you think you "need a law" to jail them you're wrong...
Flag It | Permalink 11:30 am, Aug 20, 2009 mcmchugh99I bet he ripped off plenty of money in his time. They always do.
Flag It | Permalink 11:43 am, Aug 20, 2009 eeasyriderIt's the same story, decade after decade. Goldman Sacs alum migrating into powerful government positions and leading the charge for deregulation benefitial to Goldman Sacs. And then Goldman Sacs starts the turd sandwhich assembly line and markets the turd sandwhich to the rest of the world as chocolate cake. And why not? No one ever goes to jail. Never, never, never. Instead, it's, massive bonus, massive bonus, massive bonus.
Flag It | Permalink 2:46 pm, Aug 20, 2009 mcmchugh99This is just more proof that the Clinton administration was really Republican, following the same free market/free trade philosophy. Clinton and Reagan were both part of the Second Gilded Age, and had a hand in leading us into another Great Depression.
Flag It | Permalink | Reply 11:36 am, Aug 20, 2009 DobodobGeorge- Jesus Christ it's good to hear from you. I thought you bought it back in 45 when that truck squashed your car. Remember those German bastards at Kasserine - those were the days. I can't believe Ike stuck you in Palermo after that, but wanted to say you did a helluva job in Europe. Too bad Ike let that little prick Montgomery screw things up with Market Garden. Damn glad to hear you're still in the game. Give my regards to Bea.
Flag It | Permalink | Reply | (–) Show Replies Collapse Replies 1:22 pm, Aug 20, 2009 GPattonMengle's boys got hold some of my DNA before they beat it to Argentina and cloned me. Got some of Bea's too; she's right here with me now. Thank God they didn't get any of Monty's, insufferable bastard! George Patton
Flag It | Permalink 1:43 pm, Aug 20, 2009 norbitThis whole debacle comes down to a simple matter of INVESTMENT vs. SPECULATION! Our capitalist system is based on investments funding entrepreneurial growth in order to provide optimal financial opportunity for society at large. The role of the financial industry (Wall Street) in this system is to steward those funds to a free market. It is not to usurp those funds in the form of speculative trading and lavish compensation, in order to engorge the net worth of a select cabal of Wall Street traitors - I meant traders! This transformation from investment to speculation was codified through systemic changes in the law enacted during the Clinton administration (Rubin, Summers, Raines, etc) and ran amok during the Bush years. GREED, not capitalism, drove both this process and our economy off a cliff!. I and my associates are in the process of presenting a tenable and reasoned thesis on the OBLIGATION of government to oversee not only process, but also compensation regarding the financial industry. (It will be posted on 'thewallstreetpirates.com' - now under construction - and will be widely disseminated to public officials and the media.) ------------------------------------------------------------------------ --------------- Charlie, you can tell the Feudal Lords of the Street that the days of $40 crab legs are coming to an end! btw, (personal preference) as far as business/finance channels go CNBC is still #1; Bloomberg #2; FBN #3...but as an aside, I was surprised to find you on The daily beast!?? - what are you doing here?
Flag It | Permalink | Reply 7:06 am, Aug 20, 2009 rigel1Robert Rubin could make an enormous contribution to his Country. First, he needs to bore deep into the inner workings of his mind. One of the many things he needs to own and fess up to is ignoring the conflict of interest between the dismantling of the Glass-Steagall Act and his landing his unique and very lucrative job at Citigroup. He needs to rethink the paradigm of the financial world's relationship to the rest of the world. Why should firms too-big-to-fail exist? Why should they be extraordinarily profitable during boom periods and the executives still be given absurdly large compensation even while playing a major role in wreaking the world economy and being bailed out by Washington? After very serious soul searching, these are but a few questions that Robert Rubin could address. If he did that, he could be a giant among men, but the executives on Wall Street probably would scorn him. Also, he may find himself not being very popular in Washington. Which is more important to you Mr. Rubin being in with the in-crowd on Wall Street or the welfare of your Country? Rise to the occasion, Mr. Rubin.
Flag It | Permalink | Reply 7:30 am, Aug 20, 2009 rigel1Robert Rubin: If you would like to explore the suggestions I posted earlier, contact me at http://rallbritton.com, ~richard allbritton, Miami
Flag It | Permalink | Reply | (–) Show Replies Collapse Replies 7:46 am, Aug 20, 2009 ElvinMelvinDo you really think that Robert Rubin reads the comments section of The Daily Beast?
Flag It | Permalink | Reply 10:08 am, Aug 20, 2009 mdreaderI think you're right on the money. He may not have "seen it coming" but by now, he should be very well aware of his conscious efforts to make it possible for this collapse to happen.
Flag It | Permalink | Reply 11:32 am, Aug 20, 2009 jmchrislipRubin is a disgrace as are Greenspan, Summers and Geithner. They all thought the market would regulate itself. Goldman Sachs and all the rest are STILL doing the SAME risky deals that put this country is the shape it's in now.
Flag It | Permalink | Reply 7:46 am, Aug 20, 2009 neverlateWhen the top tier of our society cannot even take responsibility for their actions we are up-the-creek. In Japan the shame would have led these guys to give their money away to poor people, and, either commit Hari-Kari, or become a monk. These guys just continue in their self-delusional state.
Flag It | Permalink | Reply 7:58 am, Aug 20, 2009 MixpixlixIt's must be difficult for former Masters of the Universe to realise their galaxy has imploded AND they did it. Anyone who hasn't worked in corporate America at the manager or above level, really has no idea how of what passes for business methods is pure ego. In some cases meglomania. Rubin should have known better and maybe he did. The issue is he did nothing. The self serving "I didn't have operational responsiblity" is a cop out. If the Board room were on fire would he not grab a fire extingusher because he's not a fireman? As a highly paid member of the Board of Directors he had a fidicuary responsiblity to the SHAREHOLDERS. Instead, he took the money and kept his mouth shut. Sadly he's one among many.
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