Back in November, I asked the question: is Robert Rubin a liar or a coward or both? Today, in what should be a welcome sight to every working American, Rubin is effectively being run out of Citigroup, his reputation sullied. And, yet, he continues to obfuscate his role in the financial crisis we face.
This from the New York Times:
For Mr. Rubin, his resignation is a sobering turn in a sterling career in Washington and on Wall Street. Since joining Citigroup in 1999 as an adviser to the bank's senior executives, Mr. Rubin, 70, who is an economic adviser on the transition team of President-elect Barack Obama, has sat atop a bank that has made one misstep after another.
When he was Treasury secretary during the Clinton administration, Mr. Rubin helped loosen Depression-era banking regulations that made the creation of Citigroup possible. During the same period, he helped beat back tighter oversight of exotic financial products, a development he had previously said he was helpless to prevent.
In his capacity as a senior adviser to Citigroup's top executives and board, he pushed hard for the bank to step up its trading of risky mortgage-related securities and other complex investments as long as it improved oversight -- a strategy critics say sowed the seeds of the bank's current troubles. Mr. Rubin, whose contract specifically absolved him from daily operational responsibilities, has maintained that he could not have foreseen the current mess.
"This is not a decision that I have come to lightly," Mr. Rubin said in a statement released by the bank. "But as I enter my 70s and with all that is now in place at Citi, I believe the time has come for me to make these changes."
"My great regret," he added, "is that I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today." [emphasis added]
Rubin, though, is engaging in the strategy being employed by numerous leaders of the so-called "free market," not to mention the current president and his vice-president. They are adopting the Sgt. Schultz defense: I know nothing, I see nothing, I hear nothing.
Except it's a lie.
As I pointed out, Rubin knew very well the risks of leverage and spoke publicly about them as Treasury Secretary. But, he chose, deliberately, to ignore those dangers for one reason: profit and greed. Rubin pocketed more than $126 million in the past decade in pay and stock during his role with Citigroup. You don't get paid that kind of dough if you don't help fatten up the bottom line, no matter the cost.
Rubin's resignation is a way of avoiding taking the heat for the mess he created:
Although Mr. Rubin had been contemplating leaving Citigroup for several months, he may have hastened his departure to try to get ahead of the criticism facing the bank's board, said two people at Citigroup with knowledge of the situation. Mr. Rubin is fiercely protective of his reputation, and though he most likely would have been re-elected, he faced the potential embarrassment of a public struggle with investors who have been critical of his tenure and lucrative pay.
The downside to letting him slip quietly from his role at Citi is that he leaves with enough of his reputation intact that he still holds some sway in Washington, in particular, as part of the president-elect's transition team. Though I'm not optimistic, because you even have some liberals wanting to kiss-and-make up with Rubin, one can only hope that he will quietly be sidelined and his star diminished over time. But, that will only likely happen if a broad set of people make it their business to remind the public that Rubin failed Citigroup and failed the country.
Indeed, there is one silver lining in Rubin's reputation taking the rightful tarring it deserves: while he once served as a beacon for the political class, his slow fall from grace may give more momentum to the notion that it is time to fire the "free market" leaders who failed miserably.