Also, he got some exercise by playing basketball at his daughters’ school. Sorry, what did you accomplish this weekend again?
Over the weekend, federal regulators met with Citigroup executives to save the banking giant from collapse, and ultimately decided to provide the bank with $306 billion in loans and securities and a direct investment of about $20 billion. While they were hammering out that plan, the Times hammered former Treasury secretary, current Citigroup director, and Obama economic adviser Robert E. Rubin, who, according to the Times account, played a “pivotal role” in the bank’s undoing by pushing its executives to move into the packaging and trading of the now-infamous collateralized debt obligations.
“Chuck Prince going down to the corporate investment bank in late 2002 was the start of that process,” a former Citigroup executive said of the bank’s big C.D.O. push. “Chuck was totally new to the job. He didn’t know a C.D.O. from a grocery list, so he looked for someone for advice and support. That person was Rubin. And Rubin had always been an advocate of being more aggressive in the capital markets arena. He would say, ‘You have to take more risk if you want to earn more.’ “
According to current and former colleagues, he believed that Citigroup was falling behind rivals like Morgan Stanley and Goldman, and he pushed to bulk up the bank’s high-growth fixed-income trading, including the C.D.O. business.
And:
Former colleagues said Mr. Rubin also encouraged Mr. Prince to broaden the bank’s appetite for risk, provided that it also upgraded oversight — though the Federal Reserve later would conclude that the bank’s oversight remained inadequate.
And:
[S]ince joining Citigroup in 1999 as a trusted adviser to the bank’s senior executives, Mr. Rubin, who is an economic adviser on the transition team of President-elect Barack Obama, has sat atop a bank that has been roiled by one financial miscue after another.
Ouch. That last one was just mean. But still. Considering that, as a Sunday Times piece pointed out, Obama’s economic department is made up almost entirely of “Rubinistas” — protégés of Rubin — this seems a little awkward. We’re giving the guys that broke the system the contract for the reconstruction project?
U.S. Approves Plan to Help Citigroup Cope With Losses [NYT]
Rubinomics Recalculated [NYT]
