|
This is a picture of the super-maxed out donation to Joe Lieberman's campaign in July, 2006, from Robert Rubin.
How did Robert Rubin escape blame for the massive subprime meltdown? He's on the executive committee of Citigroup, he joined the company in 1999, and he has a history of negligence when it comes to conflicts of interest in the financial sector, including the Enron scandal and the dot com bubble (both of which Joe Lieberman enabled).
His problem was a call about Enron he made in November 2001 to undersecretary of the Treasury Peter Fisher. In the call Rubin asked whether Fisher might not want to ask the credit-rating agencies to hold off on any downgrading of Enron's debt--Rubin's point being that delay might allow the company's bank creditors to scramble a rescue.
Rubin, who was phoning at the instigation of Citi's banking head, later told a bipartisan congressional staff investigatory team that he prefaced his conversation with Fisher with a qualifier about this being "probably a bad idea." He'd chosen to put it forth nonetheless, and he wasn't just any caller; he was the former Secretary of the Treasury, weighing in from a company that had huge exposures to Enron. Even so, Fisher thought Rubin's idea was bad, and the matter ended. Later the staff investigation concluded that nothing illegal had happened, leaving the question of impropriety hanging in the air. Rubin says today he can see why the call might be questioned, but that given the circumstances of the time and what he knew, he would make the call again. You have to wonder, though, whether he really would.
In another strike against him, Rubin did not urge Citi to put in something like a "zero defects" program when he arrived there in 1999. In fact, Rubin himself asks today the very large question of why he--along with many others, including the media--did not recognize earlier the investment-banking and research conflicts that have led to so many scandals. His answer, not too satisfying, is that perhaps the great bull market masked many sins or created "powerful incentives" not to dwell on problems when all seemed to be going so well. He calls that a "natural human inclination."
This subprime meltdown, lovingly known as the 'big shitpile' by Atrios, feels eerily like the East Asian crisis in 1998. I was in Japan at the time, and I read in the newspapers about one country after another go into a tailspin, with the financial press offering neoliberal prescriptions from the IMF. Malaysia, which rejected those prescriptions, seemed to do pretty well. Thailand and Korea, not so much.
Rubin was Treasury Secretary at the time. Why is this guy near every major financial disaster of the last ten years, always in an influential yet seemingly peripheral position? And why doesn't he catch blame for it?
UPDATE: I should add that Rubin is widely lauded as the architect of 1990s prosperity for his low deficit and strong dollar policy. Regardless of the merits of his stewardship in the 1990s, it seems odd that he should receive no blame for any of the problems. It's oddly like this Citigroup situation, where he's directly in the path of responsibility and yet somehow seems to be considered above it all. |
Design by Politics by Design, Powered by: SoapBlox