Mr. Rubin is… or let’s make that was, as he’s resigning … chairman of Citigroup’s executive committee. Citigroup is breaking up it’s “supermarket” bank investment business model, despite receiving bailout funds.
Citigroup signaled a breakup of its unwieldy financial supermarket model with a possible deal to sell a share of its prized retail brokerage business to Morgan Stanley, said several people with knowledge of the discussions, underscoring the enormous problems the bank continues to confront even after receiving taxpayer bailout funds.
The new chapter of wrenching change came as former Treasury Secretary Robert E. Rubin, who came under fire for his strong support of that model in an advisory role that helped fuel the bank’s troubles, said he would resign.
~~~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.
~~~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.
Remember this guy? Let’s jog your memory…
Back in 1995, Clinton had Mr. Rubin – as his Treasury Secy – rewrite the rules for the Community Reinvestment Act, This was, as I mentioned in my Sept 22, 2008 post, the first domino falling in a perfect storm of housing and lending events.
Now if you’re standing, you’d better sit… Now that the election is over, and the media’s beloved candidate has taken the White House, the NYTs decides to cop to the truth about the economic housing origins.
Yup… the below is from the ol Grey Lady herself – the lead linked article in this post.
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.
Woof… it’s a brand new day, eh? LOL
But wait, we’re not done with Mr. Rubin’s “sterling career” yet. In 2002, he was uncomfortably close to the Enron scandal. Yet, as even the uber-left rag, Common Dreams states, Rubin danced out of that shadow with a “get out of jail free” card.
As Enron’s accounting irregularities were being discovered and its fortunes rapidly sinking, Bob Rubin placed a call on November 8 to Peter R. Fisher, current undersecretary of the Treasury for domestic finance. According to Treasury, Rubin wanted to know if the Bush administration was going to intervene with the big credit rating agencies, who were about to lower their rating of Enron’s debt. Since Rubin’s Citigroup was holding hundreds of millions of dollars worth of Enron’s debt, it had quite a large stake in the outcome of any such decision.
Treasury told the press that Fisher said no, and Rubin agreed with the decision — as if this were just an informational call to discuss the pros and cons of political intervention to protect the credit rating on Enron’s bonds. But this should not be allowed to drop.
The public needs to know more about this phone call, and any others that Rubin may have made on Citigroup’s behalf. Whether or not they are technically illegal, such actions are a blatant and corrupt abuse of one of the highest offices of our government.
So why do we care about Rubin now? Rubin’s replacement as Clinton’s Treasury Secy replacement was Larry Summers… the same Larry Summers who is now the *current* appointed Treasury Secy [see my update: NEC Director] with the Obama administration… and in sole charge of all that bailout cash.
UPDATE CORRECTION: As Chuck snidely pointed out in his comment below, I erroneously swapped the positions of Tim Geithner and Larry Summers in their admin appointed positions. Geithner has his hands on the taxpayers bucket of cash, and Summers has Obama’s ear as his NEC Director and top advisor.
Geithner was Under Secretary of the Treasury for International Affairs, working under both Rubin and Summers. Some say Summers was Gaithner’s mentor, but other sources described him as a Rubin protégé.
Well ain’t that an improvement? LOL
This, of course, make the potential of a Rubin position in the Obama admin even worse… reuniting the damaging cabal of Clintonian economic team once more.
Rubin is also a member of Obama’s Transition Economic Advisory Board.
After his latest “sterling” career moment of helping drive Citigroup into the ground , Rubin’s unemployed.
So the burning question is, how long before this loser shows up in Obama’s Treasury Department or economic team to help spend the taxpayers money?
Aye,
Roubini himself advocates gov’t action, just the right kind. Paulson initially took the wrong tack, buying up bad assets. The correct action is injection cash, but that is gov’t intervention nonetheless. Are you against that as well?
Roubini:
I have also argued that, in order to resolve this financial crisis it is not enough to take the bad/toxic assets off the balance sheet of the financial institutions (a new RTC); it is also necessary and fundamental to reduce the debt overhang of millions of insolvent households via a significant debt reduction on their mortgages (an HOLC program like the one that was implement during the Great Depression); and also recapitalize undercapitalized banks with public capital in the form of preferred shares (as the RFC did with 4000 banks during the Great Depression). An RTC scheme without an HOLC and RFC component would not resolve two fundamental problems: millions of households are insolvent and unable to service their mortgages; the financial system is vastly undercapitalized and needs capital to avoid an ugly credit crunch and to foster new credit creation that is needed for future growth.
That is why I proposed the creation of a HOME (Home Owners’ Mortgage Enterprise) that would be a combination of an RTC, a HOLC and a RFC. Let me flesh out this proposal and its key elements and compare it to the Treasury TARP proposal that in its current form has many flaws.
The RTC (Hoover’s creation) did the same thing Paulson originally did with the TARP money. It took Hoover over a year to correct this approach. It took Paulson a few weeks, which I think is a good sign. Also, the second $350 billion will be used by the Obama administration similarly to how Roubini proposes it be used: the creation of a HOME. Either way, he advocates gov’t intervention to address a serious problem. Citing the limits the Constitution places on gov’t, you are against ANY gov’t action, regardless of what is happening in the country. That is dogma. You don’t see it as such because you feel the Constitution supports your view, but in the face of enormous problems that only the gov’t has the power to help solve, I see your view as an ideology.
Regarding the New Deal, it obviously wasn’t perfect. Some things worked, some things didn’t. For instance, I think there is a consensus that the FDIC was and continues to be a huge success in restoring confidence in the banking system. No? Some things that were tried were in fact unconstitutional, like the NRA, which was eventually scrapped. But to quote economic historian Eric Rauchway,
“The most important thing to know about Roosevelt’s economics is that, despite claims to the contrary, the economy recovered during the New Deal. During Roosevelt’s first two terms, the U.S. economy grew at average annual growth rates of 9 percent to 10 percent, with the exception of the recession year of 1937-1938. As economist Christina Romer (now director-designate of the Council of Economic Advisers) writes, these rates were “spectacular, even for an economy pulling out of a severe recession.”
Thus, at the very least, the New Deal did not prevent a “spectacular” rate of recovery. More, we have reason to believe some of Roosevelt’s policies enabled it.”
http://www.prospect.org/cs/articles?article=learning_from_the_new_deals_mistakes
Ben Bernanke:
“Only with the New Deal’s rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression.”
“Our [with Martin Parkinson] own view is that the New Deal is better characterized as having ‘cleared the way’ for a natural recovery (for example, by ending deflation and rehabilitating the financial system), rather than as being the engine of recovery itself.”
Milton Friedman: admitted that the New Deal’s Federal Deposit Insurance Corp. was “the structural change most conducive to monetary stability since … the Civil War.”
In any case, to claim that gov’t activism in the face of economic crises is barred by the Constitution if a fundamentally ideological one, not an argument for or against what is best for the welfare of American citizens. The debate on what to do and how to do it is wholly separate from whether the gov’t has any role to play whatsoever. The latter argument is irrelevant to the issue of the day. That’s why conservatives–from candidates for RNC chair to private citizens–who were and are opposed to any and all “bailouts” have lost the ear of the electorate, and as long as you cling to this rigid doctrine, you will remain out of power.
Again, Chuck, I hate to be repetitive or redundant, but what you, and others, are proposing is simply not constitutional.
The fed gov’t has NO role outside of reducing spending, cutting taxation, reducing regulation, and getting out of the way.
Outside of that, there is no role for the gov’t.
The free market is just that; free. The private sector functions just fine when the gov’t stays out of it.
A great portion of what is going on right now can, in fact, be traced back to gov’t involvement and tinkering where they had no business.
You can call that “dogma” or “ideology” or any other term you wish to apply to it, however the facts support my position.
It is not the job or the responsibility of gov’t to buy up toxic assets, overdue mortgages, or to invest in or prop up any sort of free enterprise.
No matter how much you may believe that it’s the right thing to do, and no matter how many examples or opinions you attempt to cite as to why it was done before or why it appears to be a good idea now, it remains unconstitutional.
Finally this, or any other, problem is not so enormous that free market forces are unable to resolve it. The “invisible hand” that Adam Smith wrote about is still there. It just needs to be left alone and allowed to work without the shenanigans of politicians from any party.
You and I have a basic difference of opinion on this matter.
You see gov’t intervention as the answer.
You see the growth of the nanny state as a good thing.
I see gov’t intervention as the problem.
I see the American people having the freedom to succeed and the freedom to fail.
One of us has the Founding Fathers, original intent, the US Constitution, and historical proof on our side.
The other, not so much.
I see that I am late to the party! Just a quick quibble about something that Chuck wrote earlier about the $300 billion “tax cut”. It’s not a tax cut, it’s a one-time tax credit, same as the stimulus in early 2008 that didn’t work.
And a quick word about where we will be in 2010 – with the largest deficit as a % of GDP ever. China will own us and the only way to pay them off is to raise taxes. I have no problem doing my fair share to get us back to manageable deficits, you can raise my taxes a few % points. BUT ONLY if: 1) the fed (and local govts) slash their budgets, quit spending. and 2) EVERYONE has to participate, not just 1/2 the population paying taxes and the other half getting tax credits. If you make only $30K a yr, perhaps you only pay 1%, but at least you contribute. If not, we are divided and we fall.
Hard Right,
Hey, Hey! Eagles won! Anxious to see Cardinals against Eagles next week. Go Cardinals, GO!
If the Cardinals of the last two games show up, they have a real chance to win. I am cautiously optimistic. This is the first time they have ever gone to an NFC Championship game.
Do you two want a special private email exchange for football chat??? Happy to arrange that, ya know…
Mata, thanks, but it won’t be necessary. We will stick to the subject of the thread; just allow us to give a quick sentence on Footbal in a Post-Scriptum in our posts and we will be happy.
Personally, Craig… I’m not interested in the latest football stats, which can create a thread all on it’s own. As I said, I’m quite happy to provide you and HR each others’ private email so you can chat about football off FA. Other than that, I am not in favor of “PS” football comments on a politically oriented blog, diverting the thread comments not only off political topic, but into the sports world..
Mata… lol. You do not understand sports for sure, it is all about politics. People always mix sports with politics. I only root for Red States for instance. I think that since the republicans lost the elections, it would be nice for a red States to win the Super Bowl so a Blue State could get its downfall… lol. After all, isn’t Football THE national sport that Americans prefers after politics? And in my mind, they are tightly related. Too bad there are no FA authors that are Football maniacs, it would have been fun to have a thread on that so we could ALL exchange on this. The title could have been: Who will win the Super Bowl? A red State or a blue State?
Anyways, thanks for the offer, but there is no need for private e-mails. All my friends are Football maniacs; I have to answer to all of them… a full time job. But a thread would have been nice… too bad!
president elect buckweat is a commie traitor just like you foolish nit wits.this clown will ruin america whil the commie press will praise him to the heavens right up untill they go bankrupt.as for me i will cling to my bible and guns.