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<nettime> Robert Rubin: I had some/all/no responsibility at Citigroup
David Mandl on Sun, 30 Nov 2008 15:26:45 +0100 (CET)

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<nettime> Robert Rubin: I had some/all/no responsibility at Citigroup

Today's Wall Street Journal features an interview with former Treasury  
secretary Robert Rubin that probably caused him to squirm for all of  
thirty seconds, but it's better than nothing.

Rubin was in the unique position of being at the very highest (i.e.  
highest paid) echelon of Wall St., but having a mysterious non- 
management job that gave him plausible deniability for, well, pretty  
much anything that went on at the company he worked for.  He had an  
undefined senior role at Citigroup that some people might see as a  
sinecure--payment for helping the company with their successful  
campaign to have Glass-Steagall repealed a few years ago.

So now he's got to defend the astronomical sums he was paid while  
claiming that he wasn't really involved in running the company (into  
the ground).  Seeing him spin this is surreal.  But he does  
acknowledge that "there's an enormous amount that needs to be learned."




Rubin, Under Fire, Defends His Role at Citi

Under fire for his role in the near-collapse of Citigroup Inc., Robert  
Rubin said its problems were due to the buckling financial system, not  
its own mistakes, and that his role was peripheral to the bank's main  
operations even though he was one of its highest-paid officials.  
"Nobody was prepared for this," Mr. Rubin said in an interview. He  
cited former Federal Reserve Chairman Alan Greenspan as another  
example of someone whose reputation has been unfairly damaged by the

Mr. Rubin, senior counselor and a director at Citigroup, acknowledged  
that he was involved in a board decision to ramp up risk-taking in  
2004 and 2005, even though he was warning publicly that investors were  
taking too much risk. He said if executives had executed the plan  
properly, the bank's losses would have been less. Its troubles have  
put the former Treasury secretary in the awkward position of having to  
justify $115 million in pay since 1999, excluding stock options, while  
explaining Citigroup's $20 billion in losses over the past year and a  
government bailout of at least $45 billion.

Mr. Rubin's salary made him one of Wall Street's highest-paid  
officials -- and a controversial figure among Citigroup shareholders  
and some executives, who questioned whether his limited duties  
justified the big paydays. "Even though he has no 'operating'  
responsibilities, he still has a fiduciary responsibility as a board  
member," said William Smith, a New York money manager and frequent  
critic of Citigroup's current management and board. "He has overseen  
the entire meltdown, yet been compensated as an operating employee  
while bragging about having no operating responsibility." Mr. Rubin  
can't "have it both ways," Mr. Smith added.

Mr. Rubin said his pay was justified and that there were higher-paying  
opportunities available to him. "I bet there's not a single year where  
I couldn't have gone somewhere else and made more," he said. He turned  
down his bonus last year, telling the board the money could be better  
spent elsewhere. Asked if he had any regrets, Mr. Rubin said: "I guess  
that I don't think of it quite that way," adding that "if you look  
back from now, there's an enormous amount that needs to be learned."

Mr. Rubin's effort to salvage his reputation comes just after Chief  
Executive Vikram Pandit appeared on PBS's Charlie Rose show. Mr.  
Pandit, too, blamed the overall financial crisis, not Citigroup, for  
the problems that led the government to decide to inject money into  
the bank for a second time this fall. "This was something that was  
bigger than Citi," Mr. Pandit said. "It was about confidence in the  
financial system. It was about stability of the financial system."  
 From the time Mr. Rubin joined Citigroup in October 1999, shortly  
after leaving the Treasury, the former Goldman Sachs Group Inc. co- 
chairman said he didn't want to run any of Citigroup's businesses. At  
the time, he told colleagues he wanted more time for activities such  
as fly fishing. In the recent interview, he said his task was to meet  
with clients and have an advisory role as an "experienced senior  
person who has no ax to grind."

Since 1999, the bank has lurched from crisis to crisis, first with  
regulatory authorities, then with investors who grumbled that the bank  
lacked a strong strategy and was bloated. Since the housing market  
turned down, Citigroup has grappled with its worst crisis ever.  
Besides an initial $25 billion injection as part of a broad rescue of  
financial firms, the government recently agreed to put in $20 billion  
more and vowed to protect Citigroup


Dave Mandl
dmandl {AT} panix.com
davem {AT} wfmu.org

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