One thing I always liked about Robert Rubin was his ability to make a perfectly knotted half-Windsor on his elegant ties. Alas, that’s not much compared to the damage in which this “wise man” of Wall Street entangled the country. Along with Alan Greenspan, he of Ayn Rand and conservative market religion purity, Democrat Rubin is most responsible for the Great Recession.
Today he’s testifying before the Financial Crisis Inquiry Commission, lacking even the decency of former Citigroup CEO Charles Prince, who offered what appeared to be a heartfelt and knowing apology. Nicknamed “One Buck Chuck” for the track of Citi stock under his high-paid leadership, Prince told the panel, “I’m sorry the financial crisis has had such a devastating impact for our country. I’m sorry about the millions of people, average Americans, who lost their homes.”
Rubin was barely contrite and went back to his meme of “why knew?” adding the unintended comedic line about how leaders shouldn’t be responsibility for the “granularity” of little things — such as $40 billion in essentially fraudulent collateralized debt obligations. Rubin was being paid more than $100 million as a senior adviser to Citi while it headed toward collapse and a $45 billion taxpayer rescue. So “granularity” is in the eye of the beholder.
Commission vice-chairman Bill Thomas said, “Apparently you get to the top without having had to experience anything the people underneath you do. You don’t have a comprehension. You’re not informed, but you get to make all this money on the upside, but there’s no downside.”
Indeed. Rubin and Citigroup epitomize the public policies and the corporate practices that brought the economy to the brink of a new depression.
As Bill Clinton’s Treasury Secretary, Rubin championed financial deregulation and the financialization of the economy as manufacturing was hollowed out. Among other things he helped keep derivatives from being regulated and encouraged the creation of “too big to fail” institutions such as Citi. Rubin led the battle to dismantle Glass-Steagall, so Citi and its giant siblings could gamble in investment banking, while also doing commercial banking and insurance. An alum of Goldman Sachs, Rubin was fine with big compensation for executives, even if their leadership wrecked the bank (Prince walked away with $120 million). Funny how Rubin was offered the lucrative Citi position after he left such “government service.”
Lessons? Institutions such as Citi are too big to exist, and certainly shouldn’t be operating in so many risky areas, gambling with the assurance that taxpayers will bail them out. Wall Street and its vaunted leaders are incompetent. The ideas undergirding American finance are bankrupt, and bankrupting the country. Corporate governance is broken. And, alas, the skill to tie a good half-Windsor is not a sign of character.
Keep watching and reading about this commission. It’s one of the most important events happening now and citizens should be paying attention (and put in those bite blocks, so you don’t accidentally grind away your teeth in anger).
Today’s Econ Haiku:
Greenspan said he erred
Thirty percent of the time
That’s some big thirty