The great mystery of Robert Rubin’s fall from grace is his own role in managing the public perception of his work at Citigroup. Yesterday’s announcement that Rubin would be retiring–combined with news reports of negotiations to sell some crown jewels–will be remembered as the turning point in Citi’s fortunes years from now. Sink or swim, Rubin’s role in the company will now appear more important and decisive than it probably was. And the responsibility for that lies entirely with Rubin himself.
Let’s look at what’s being reported. The WSJ passes along this piece of ham-handed spin:
Mr. Rubin, 70, decided last month that he was ready to leave the company, according to a person familiar with the matter. That conclusion was driven by the overwhelming amount of time that his role at Citigroup was requiring, the person said. Mr. Rubin declined to comment.
Yeah, that’s right. Too much of his valuable time. That’s the ticket. Do Rubin and his advisers really think–after all of this time, scrutiny and disaster–that he can maintain the fiction that his role at Citi was a part-time advisory job?
His paycheck alone belies that, setting up a no-win situation where he was either massively overpaid to lend his reputation to Citi’s reckless actions (for those who remember the infamous Enron call, this lends even darker overtones to what Rubin might have been doing for Citi all these years) or he was a reckless dilletante ignoring his responsibilities.
Neither of these interpretations seems likely to be the truth. Rubin’s massive reputation is well deserved. And his previous ability to make himself both powerful and the center of attention without grasping at power or thrusting himself into the spotlight has been a marvel of corporate, national and international leadership. And yet that self-same style seems to be what has backfired here.
There’s another dimension to the Citi story that CNBC’s Charlie Gasparino mentioned on air yesterday: Rubin is seen as Vikram Pandit’s biggest supporter. With Rubin resigning, Pandit’s position is now weaker.
And this isn’t the first time that Rubin has shown poor judgment leaving the heavy hand of his support too long on an embattled protege’s shoulder. At Harvard, Rubin supported Summers too long, pushing the university into an embarrassing conflict between President and faculty. It’s hard to imagine that Chuck Prince could have survived the pressures of dealing with Sandy Weill’s mess without Rubin’s protection.
John Kenneth Galbraith’s dictum about the end of financial euphorias states that a previously omnipotent figure from the boom must be dethroned in the bust. Robert Rubin seems to fit that bill.
Citi Takes First Step Towards Break Up
Wall Street Journal; January 10,2008