I have regularly trashed Robert Rubin in this blog for quite some time.
And while I further tarnish the name of Rubin in Bailout Nation — he is between Hank Paulson and Larry Summers in our blame list — I probably could have slapped him around even more had time and space pemitte.d
No Matter. Felix Salmon jumps into the void with this list of Rubin crimes:
• He epitomized the way in which traders ousted investment bankers and turned investment banks into systemically-dangerous institutions by making them much larger than they had ever been in the past.
• For all his vocal bellyaching about tail risk, he ultimately made his money as an arbitrageur, making leveraged bets that something with a 95% chance of happening was, indeed, going to happen. That’s a strategy which works until it doesn’t — but by the time it failed, Rubin had moved on to greater things.
• He was one of those senior men at investment banks who encouraged risk-taking without understanding the risks which were being taken.
• He was perfectly happy to see Larry Summers cheer on the single most disastrous deregulation of derivatives ever, the CFMA.
• He allowed the illegal creation of Citigroup with a nod and a wink, knowing that Gramm-Leach-Bliley was just around the corner and would make Citigroup legal in retrospect.
• He then collected his just rewards in the form of $126 million in pay from Citi, for a job which even Weisberg admits involved no managerial responsibility.
• He turned the job of Treasury secretary into a job where the first priority was to make Wall Street happy, asking for nothing but cheap debt in return.
• He institutionalized and epitomized the revolving door from Wall Street to Washington and back again.
• He set himself up as a wise expert on risk, even as he had no idea what risks his own company was running.
• He took on a job with significant power, but ducked any responsibility which might normally go with such power.
• He specifically refused to take any responsibility for his recommendations to Weill and Prince on the subject of risk-taking.
• He failed to push Prince to put in place any kind of succession plan, thereby creating a horrible vacuum at the top of Citigroup just as strong leadership was desperately needed.
• He’s slippery and unapologetic in hindsight.
Great list — thanks , Felix . . .
Reuters, May 1, 2010 15:24 EDT