Is Robert Rubin "Competent" Enough To Guide Team Obama?
There is an article in the New York Times on the fall of Citibank that has some startling admissions, but none more shocking than this:
Citigroup's risk models never accounted for the possibility of a national housing downturn, this person said, and the prospect that millions of homeowners could default on their mortgages. Such a downturn did come, of course, with disastrous consequences for Citigroup and its rivals on Wall Street.
They never factored that housing prices would drop? Really?
[W]hile Mr. Rubin certainly did not have direct responsibility for a Citigroup unit, he was an architect of the bank's strategy.
In 2005, as Citigroup began its effort to expand from within, Mr. Rubin peppered his colleagues with questions as they formulated the plan. According to current and former colleagues, he believed that Citigroup was falling behind rivals like Morgan Stanley and Goldman, and he pushed to bulk up the bank's high-growth fixed-income trading, including the C.D.O. business.
Former colleagues said Mr. Rubin also encouraged Mr. Prince to broaden the bank's appetite for risk, provided that it also upgraded oversight -- though the Federal Reserve later would conclude that the bank's oversight remained inadequate.
Once the strategy was outlined, Mr. Rubin helped Mr. Prince gain the board's confidence that it would work.
After that, the bank moved even more aggressively into C.D.O.'s. It added to its trading operations and snagged crucial people from competitors.
No wonder Wall Street media is standing there with pitchforks and torches calling for Rubin's head this morning. A WSJ op-ed wonders "Why are Robert Rubin and other directors still employed?" New York Post says "Citi of Fools: Negligent bank board must quit."
Yes, it's incredible that nobody required Rubin and the board to resign as a condition of the Citibank bailout. But I tend to look at these final days as the BushCo crooks holding their final heist, taking advantage of the fact that something must be done immediately to keep the economy from hurling into a ditch. They have the ability to impede anything from happening, and they're holding us all hostage and demanding the right to steal as the price of their acquiescence. What's Obama supposed to do? If he calls bullshit, the fragile markets could tumble. He's in a position where he really has to just do what he can.
What I'm more concerned about is the key place Rubin still occupies in Team Obama:
Geithner, Summers and Orszag have all been followers of the economic formula that came to be called Rubinomics: balanced budgets, free trade and financial deregulation.
There are many who are arguing that ideology is not important, and that Obama is prizing competence over philosophical perspective. Glenn Greenwald does a nice job of arguing that competence is largely a function of ideology -- and from a pragmatic perspective, progressives (who are almost entirely left out of Obama's key administration appointments) got a lot of things right.
When I argued the other day that Obama was delivering exactly what he'd promised, it wasn't because I thought the people he was appointing were more "competent" than progressives would have been. There is no way you can make the argument that Nobel laureate Paul Krugman, or Nouriel Roubini, who have been consistently right about the economy and where we were headed, would not be more "competent" than Bob Rubin, one of the high priests of deregulation who got us into this mess.
Rubin is there because he makes the People Who Matter comfortable, who would panic if Krugman were in a position to call high-level bullshit. It has nothing to do with superior competence.
Jane Hamsher blogs at firedoglake.com
Follow Jane Hamsher on Twitter: www.twitter.com/janehamsher
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Good piece, but I think it's going too far to say that Robert Rubin occupies a key place in the Obama team. Whether you think he's great or awful, he's not on the team.
Yes, he was a mentor to some of the appointees, and his son is part of the transition team. But to position Rubin as "guiding" Team Obama gives the impression that he's calling the shots. I'm hopeful that this team can separate what worked or didn't work in the past and apply those lessons learned. And let's not forget, ultimately, Team Obama will be guided by President Obama.
Do none of these people remember the 90's and budget surpluses under Robert Rubin and Clinton? These comments sound like a big echo chamber of people who can't/don/t remember the 1990s.
forsterj, in the 90s there wasn't a big subprime mortgage business and the hedge funders were fewer for sure. The big difference is that those financial mistakes didn't threaten the economy then. Now, for sure, they do.
And I keep wondering . . . . .
I have heard Dr. Ravi Batra several times on the Thom Hartmann show. He got it right years ago when he predicted all this would happen. The book is "Greenspan's Fraud". He is brilliant. He said what would happen and when it would happen. He says that all these guys are only looking at half of the economic equation. They don't know economics. And all the talk you hear, and these 'solutions' you hear them trot out, still represent a very narrow and obsessive understanding of economics. Dr. Batra says there are some very good solutions.
I have sent his name to TV shows and Obama's team, etc. and I have never heard anyone mention him. But once you hear someone talk about how economy works as a whole, it is very hard listening to these self-important power-baron 'economic celebrities' talking their ideological nonsense. I wouldn't mind them talking like children except this is a HUGE amount of money and a very critical junction to put the kids in charge.
Money alone can’t help our economy. Money is blood of economy. If economy is sick, money system is also sick. No one financial genius can help in this situation.
GE great manager Jack Welch is great, because he know Six Sigma. He knows how treat smart people, who work for Company. He always made Inventors happy.
In one of his Company I saw work of his weak followers. They implement the same Six Sigma but didn’t understand spirits of inventions, but they still want to receive the same honor as Jack Welch. This is became problems not only for GE but for many others Companies in USA. Managers who create bubbles became disaster for our Economy. In housing market they try use profit from poor people. It creates foreclosure problems. It is always good to help poor people, but can we afford it when unemployment is too high?
Inventions, new jobs can save our economy. Helping poor people escape foreclosure will help housing market to go in the same direction. Helping banks, cars industries will do the same. Deadly sick Companies need to be dying. It cruel, but it is good for economy.
I do not see Inventors in Obama team. His energy policy and Al Gore vision of reason for global warming are scaring me.
The NYT article that she is referring to is "Citigroup Pays for a Rush to Risk" (Nov 22) and is only one of a series of well written articles that show how the economic meltdown occurred. As soon as I read that article, my hair caught fire I was so P.O.. I immediately sent an e-mail to my two US Senators and also one to the Obama Tansition team's e-mail address. My question was, "Should Obama be taking advice from Robert Rubin? Apparently a lot of people did the same thing because today (Wed), Obama announced his council of economic advisers and I didn't see or hear Rubin's name. Now if we can get rid of Hillary as Secretary of State.
Giving big money and the Wall St. potentates what they want, that is what makes them happy. We "ordinaries" don't count for much. Who the hell cares if mortgages are way more than many folks can afford? Foreclosure takes care of that. The idea that there might be something like a domino effect from mortgages to the failure of banks apparently never occurred to the confident and greedy holders of this nation's wealth. Rubin has gotten so much good publicity and Obama has been unable or unwilling to look at the down sides of de-regulation. Jane Hamsher, the competence is there; what is lacking is any sort of compassion.
I wish I could remember who said it first: If Bob Rubin is reincarnated, he'll come back as a bucket. All he knows is bailing out.
That's a great quote, Sharly. All I know is what I see, a man pretty well consumed with himself.
Making The People Who Matter comfortable is the Clintonian tactic.
There has been a Republican onslaught in this country until this year, and the Democrats since Clinton have been forced to appease the financial class in order to be able to move any agenda forward.
We should blame our leaders less and blame the American voters more. Despite whatever "change" may be on the way, it's still neck and neck between Saxby Chambliss/Norm Coleman, Ted Stevens came awfully close, and Michelle Bachman won, to cite a few examples.
People are still voting based on Republican bumper stickers, right-wing radio and TV propaganda, even if there are hopes that the tide has changed.
Our political system has become so neck-and-neck between the Democrats and the Republicans that, no matter how excited we are over Obama's 53% win, the system requires that a Democratic administration strive to make The People who Matter comfortable above competency even in a fiscal emergency.
We can blame leaders for the current financial swindle designed to leave Obama incapable of solving problems via government, but we should blame American voters for requiring a President to appease the financial sector over concentrating on the problems of individual Americans.
Voters must stop believing Republican propaganda and be willing the vet the facts instead of harping over "values." What we all need to do is to combat the scourge of the Low Information Voter, or the People who Matter will continue dominate over individual Americans.
Was Clinton "forced" to appease big money? I think he simply chose to.
Don't forget, the Republicans had an overwhelming win after Clinton was elected. How could Clinton get anything through Congress if he didn't appease big business and Wall Street? I believe that the idea was to comfort the People that Matter, as Jane Hamsher puts it in her post, and lay the ground work for more progressive policies in the future. Monica Lewinsky took care of that plan by flashing her thong underwear in the Oval Office, then Bush won, and we are decimated as a nation.
Final HEIST !!!! Perfect description of the Bush Reg(r)ime!!!!!
Well, not only did Mr. Obama vote for the bailout, he is calling on Mr. Rubin for advice.
I don't know how y'all reconcile this.
I oppose both actions.
It seems just as reasonable to call the the *first* heist of a new set of Washington insiders.
This whole rescue/bailout scheme looks like a crime drama: The crooks (bankers) take a hostage (the economy) and demand ransom (the bailouts) -- otherwise the life of the hostage (the economy) is at grave risk. Pay me off or I'll kill the hostage -- and sure enough the payoffs are taking place.
Robert Rubin was the Treasury Secretary under President Bill Clinton. He helped usher in 8 years of peace and prosperity and when President Clinton left office, there was a 1.5 trillion dollar surplus! Let me say again, Mr. Rubin helped usher in 8 years of peace and prosperity and when President Clinton left office, there was a 1.5 trillion dollar surplus! He is more than capable of helping President-elect Obama solve some of the problems he will inherit from the Dubya. Mr. Rubin helped Clinton with Bush, Sr's and Reagan's debt, he can certainly advise those handling the current crisis, CitiGroup notwithstanding.
You are naive Rockerbabe. Do not confuse policies that create short-term gain with policies than create long-term sustainbility. Rubin got himself and his cronies rich at the price of our current problems and our children and children's children economic future.
Sure Rubin is smart but what is as or even more imnportant these days is how does he use his smarts and whom for? If I wanted to make a lot of money (and I had a lot of money) I might hire him but his track record on doing things for the benefit of the masses is dismal.
RUBIN SHOULD NOT BE ALLOWED IN THE NEW ADMINISTRATION
Confusing policies that create short-term gain with policies than create long-term sustainability has been the folly of the American voter since at least the time when they voted for Reagan.
"Hurling" into a ditch?! Sounds disgusting. Although I've done it once or twice myself.
But I tend to look at these final days as the BushCo crooks holding their final heist....
Words of wisdom!
This country was 39% union before Reagan and is now less than 9%. As the unions go, so goes the middle class. The South has turned their states into "Right to Work" states, Orwellian-speak for no-union, low-wage work. The Republicans/Conservatives destroyed the unions and successfully utilized propaganda to make the majority of Americans believe that unions are to blame for every economic problem, rather than the swelling coffers of the upper 1% who give themselves 500 million bonuses and stock options on which they pay little tax when they either lay off 1000s of workers or break up and union or force the union to accept lower wages and benefits. Then Until we organize, unionize and fight the investor/financial class on equal footing through political power, i.e., unions, we are destined to get ever small crumbs falling off an ever larger pie that's being eaten only by those on top. We must unionize all workers, information workers, clerical workers, hospital workers; THE TIME IS NOW!!!. Obama may be an ally of unions, let's hope he is and we move back to the days like the 1950s and 1960s when unions ensured that one household earner could earn enough to feed a family of four, buy a house, buy two cars and lots of appliances, take vacations, save money for retirement and NEVER, NEVER get into debt. We can do it! YES WE CAN!!!
Thank you - Amen
Well done, X
I agree with you there. My dad worked a union job.
By the time I was an adult to join the work force, after I served my country as a Navy air traffic controller, it was not worth joining the Civilian ATC force as there was no PATCO, the pay was dismal the hourly wage worked out to about the same as working for McDs. The union was askin for shorter hours and a little more time off work. 7 or 10 12 hour days then three days off was too much for the stress of the job. I remember people pitching a fit over wanting time off. That is a severely stressful job, you can be responsible for up to 20 planes at a time..alll loaded with live people, this was before FedEx etc had so many planes carrying cargo, but still you drop a plane loaded with people or cargo on a city.....
Unfortunately, no one likes the reality that the only real power to push back against Finance are Unions, political power vs. polictical power. Yes, Unions may be corrupt, but in spite of their corruption they fight for high wages and good benefits and pensions for their employees. That's why the Big Three automakers are not getting an easy bailout. It's not because they don't make good cars (which is debatable, just a year ago they sure were selling a lot of Americans a lot of giant SUV's and making a handsome profit doing it); and it is not because their executives fly jets into Washington. The faux outrage on Capitol Hill was to hide the real agenda of the Congress, yes the DEMOCRATIC CONGRESS, to finally break up the last great union, UAW, which is the last bastion of providing middle class jobs to working people. If Wall Street was unionized, there would have been no bailouts until the unions were broken. (Cont'd)
For those of us so young as to believe that Obama represents real change, talk to your elders about when, once upon a time, a politician had the courage to march with the Farm Workers Union and talk turkey to the money men about the responsibility they had to participate in helping the underclass, i.e. the Bedford Stuyvesant Restoration Corporation.
Robert Kennedy had the courage to talk turkey to the rich and the knowledge of where true power lays. Is Obama a Robert Kennedy. Time will tell but I hope that Obama understands what is really necessary to accomplish real change.
You are so incredibly right.
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