Meet Robert Rubin: The Man In Charge

Tyler Durden's picture

Meet the man, who many say (most of whom correctly) has been running pretty much everything from deep behind the scenes.

Rethinking Robert Rubin, by William Cohan

Bill Clinton has a favorite Robert Rubin story. It’s 1999, and the Cabinet has gathered to discuss the business of the American people. Except no one can focus because the impeachment crisis is raging, and even the most veteran Washington power players are, for lack of a better term, freaking out. “It was amazing what he did,” says Clinton of Rubin, his then-Treasury Secretary. “He often didn’t say much, and I was stunned when he wanted to speak. He just sat there and in about three minutes summed up the whole thing in a very calm way, and had an incredibly positive impact on the attitude of the Cabinet. He said, ‘What we’ve got to do is get up tomorrow and go back to work, just like we did today, make good things happen, and trust the system and trust the American people. It’s going to be fine.’ And oh my God, you would’ve thought that somebody had gone around and lifted a rock off everybody’s shoulders.”

Rubin’s knack for spreading wisdom and tranquility has been the defining trait of his professional life. Whether economies across Asia are contaminating each other like kids on a school bus or the Mexican government rises one morning and decides to devalue the peso, Rubin’s hooded eyes and perpetually mussed gray hair give him the air of an ancient Galapagos tortoise. Whatever nastiness politics or the global economy may throw at him, he abides.

Rubin in the 1960 Harvard yearbookPhotograph by Ed Quinn/CorbisRubin in the 1960 Harvard yearbook

This legendary stillness, combined with decades of economic and market expertise, keeps Rubin in constant demand. Since 2007 he’s been the co-chairman of the Council on Foreign Relations, where he maintains a disheveled office and employs his longtime assistant. He’s considered the intellectual father of the Hamilton Project at the Brookings Institution, which examines the relationship between government spending and unemployment. He’s a regular participant at the annual Bilderberg Meetings (so secretive they make Davos look like an American Idol taping) and a member of the Harvard Corporation, the discreet board that runs his alma mater. He also meets regularly with congressmen and foreign leaders and has access to the Obama administration through Timothy Geithner and other protégés. In 2010 he joined Centerview Partners, an advisory investment banking boutique, as a counselor to founders Blair Effron and Robert Pruzan.

It’s enough to keep a 74-year-old plenty busy. But not enough to shake questions about just how wise and thoughtful Robert Rubin really is, especially on the fourth anniversary of a financial crisis in which he played a pivotal, under-examined role. Rubinomics—his signature economic philosophy, in which the government balances the budget with a mix of tax increases and spending cuts, driving borrowing rates down—was the blueprint for an economy that scraped the sky. When it collapsed, due in part to bank-friendly policies that Rubin advocated, he made more than $100 million while others lost everything. “You have to view people in a fair light,” says Phil Angelides, co-chair of the Financial Crisis Inquiry Commission, who credits Rubin for much of the Clinton-era prosperity. “But on the other side of the ledger are key acts, such as the deregulation of derivatives, or stopping the Commodities Futures Trading Commission from regulating derivatives, that in the end weakened our financial system and exposed us to the risk of financial disaster.”

After he stepped away from Treasury in 1999, Rubin moved to Citigroup (C), and until 2009 he served as chairman of the executive committee and, briefly, chairman of the board of directors. On his watch, the federal government was forced to inject $45 billion of taxpayer money into the company and guarantee some $300 billion of illiquid assets. Taxpayers ended up with a 27 percent stake in Citigroup, which was sold in 2010 at a cumulative profit of $12 billion. Rubin gave up a portion of his contracted compensation—and was still paid around $126 million in cash and stock during a tenure in which his serenity has come to look a lot more like paralysis. “Nobody on this planet represents more vividly the scam of the banking industry,” says Nassim Nicholas Taleb, author of The Black Swan. “He made $120 million from Citibank, which was technically insolvent. And now we, the taxpayers, are paying for it.”

Evaluating Rubin’s role in the financial crisis is a tough task made tougher by the fact that the tortoise has retreated into his shell. Once famously adept at working the press—the author of a 2007 American Prospect profile noted that he “literally could not find a single feature piece that was, on balance, unflattering”—Rubin has turned down countless interview requests over the past four years, including several for this piece.

Which is not to say he dismissed the idea lightly. After an April event at the Council on Foreign Relations, Rubin appeared in the building’s Park Avenue lobby. His white Brooks Brothers shirt was fraying, and his gray suit looked rumpled enough that he might well have slept in it the night before. He was carrying an old-fashioned Redweld legal folder, filled with papers, when he pulled me aside. “I have been working hard to try to balance my work-life issues,” he said, explaining why he’d deliberated for months about whether to talk on the record. “I have been really busy, and I am not sure I have the right balance.” A few weeks later a representative conveyed that it was a close call, but Rubin would be heeding advisers who urged him not to speak. Instead, he dispatched his friends to speak for him.

During his 26 years at Goldman Sachs (GS), Rubin rose from trader to the corner office, and along with his partner, Stephen Friedman, helped transform Goldman from an investment bank into shorthand for financial dominance. Goldman has made thousands of people, including Rubin, very rich. But the firm’s reputation for avarice has also created a cloud that follows its all-star alumni into civic life. The case against Rubin’s performance as a public servant is mainly about that cloud. As Treasury Secretary, was he motivated by a desire to serve the people, or an opportunity to serve himself and his friends?

Rubin and Clinton worked closely together managing the nation’s economy 

“Most people see him as your sort of archetypical buttoned-down Wall Street guy,” says President Clinton, acknowledging the perception that Rubin favored the financial sector. Clinton, for one, doesn’t buy it, and cites numerous examples of Rubin advocating for policies that ran counter to his own economic interest. “When we had to give up the broad-based middle-class tax cut to reach our deficit reduction targets, he was one of the strongest supporters I had in not giving up the proposal to double the Earned Income Tax Credit. He said, ‘We can’t do that. It’ll move millions of poor people who are working out of poverty.’ You wouldn’t expect somebody who had spent a career on Wall Street, making and helping other people make millions and millions of dollars, to be in there arguing. But he was just as strong as [Secretary of Labor Robert] Reich was. He said, ‘We’ve got to keep that.’ And we took a lot of heat for it.”

Rubin’s selflessness, whether in economic policy or the day-to-day management of the Treasury, is a frequent theme of his admirers. Sheryl Sandberg, the chief operating officer of Facebook (FB), worked at Treasury after she graduated from Harvard Business School in 1995. In her first meeting with Rubin and a dozen senior staffers, she hid in the back of the room, hoping to turn invisible. “I’m young and brand new at Treasury, and I did not know much,” says Sandberg, now 43. Rubin called on her anyway. “He said, ‘You’re new. You may see things we’re missing.’ And it was a really powerful lesson, because he was showing everyone that you take opinions and you get feedback from everyone. He wasn’t going to be curtailed by hierarchy or titles.”

She says Rubin was spectacularly self-aware, and taught her that people will “overreact to things you do when you are senior,” especially in places like Goldman Sachs and the U.S. Department of Treasury. “He’d start, ‘I’m going to say this really carefully. Here’s what I mean. Here’s what I don’t mean,’ ” recalls Sandberg. “More importantly, he encouraged everyone to ask questions. He said, ‘If you have questions, come to me.’ ”

Peter Orszag, another Rubin protégé who later became President Obama’s director of the Office of Management and Budget (and is now a managing director at Citigroup and a contributor to Bloomberg View), had a similar experience as a junior White House staffer. In a meeting with Rubin, the Secretary bungled a calculation, transposing a billion dollars for a trillion. Orszag scribbled a correction on a note in an attempt to help Rubin save face. A week later, Orszag’s phone rang. “[Rubin] was abroad, like in Italy or somewhere,” Orszag says. “He called to tell me he was going through his briefcase and he came upon my note, and I was right. He just wanted to tell me that I was right. Most Treasury Secretaries would not do that.”

It’s not his personality that riles critics of Rubin’s four-and-a-half-year tenure at Treasury. It’s his failure to tame the 1999 repeal of Glass-Steagall and the wild expansion of over-the-counter derivatives, which were traded between banks, out of the public eye. “The changes that Robert Rubin drove through in the 1990s certainly helped plant the seed for [the] collapse,” says Angelides.

Rubin’s legion of defenders stir at any mention of Glass-Steagall, the 1933 law that separated the activities of commercial and investment banks. “There is an assumption that Bob was pushing hard for the repeal,” says Michael Schlein, a former chief of staff at the Securities and Exchange Commission and a former Citigroup executive. “I was there. That’s not the way it happened.”

In testimony before the Financial Crisis Inquiry Commission in March 2010, Rubin conceded that he “was an advocate of rescinding Glass-Steagall.” But: “By the time we rescinded it, there were no restrictions left in it at all except for the insurance underwriting, which had no relevance to anything that has happened since then.” What Rubin meant was that commercial banks had long been able to underwrite debt and equity and advise on mergers and acquisitions, and they had been buying investment banks through much of the 1990s. Rubin told the FCIC that ditching Glass-Steagall removed the “cumbersomeness” experienced by banks already in those businesses. In other words, he argued, he pushed for the removal of a law that was a phantom.

“Of course, it would have been better if we’d had the foresight and political strength to put in place the protections that were put in place in 2010 after the financial crisis occurred,” says Larry Summers, Rubin’s friend and successor as Treasury Secretary. “But this does not relate to the repeal of Glass-Steagall. There were virtually no restrictions on the investment banking activities of the major banks after the Federal Reserve’s undertakings during the decade before Glass-Steagall was repealed.” Speaking at a CNBC forum on July 18, Rubin said simply, “It is a myth that the repeal of Glass-Steagall contributed to the financial crisis.”

This is no longer the consensus. Aside from Paul Volcker, several of Rubin’s ex-Citigroup colleagues have recently revised their opinions. In an October 2009 letter to the New York Times, John Reed, the co-chief executive officer of Citigroup from 1998 to 2000, wrote: “As another older banker and one who has experienced both the pre- and post-Glass-Steagall world, I would agree with Paul A. Volcker (and also Mervyn King, governor of the Bank of England) that some kind of separation between institutions that deal primarily in the capital markets and those involved in more traditional deposit-taking and working-capital finance makes sense.” Richard Parsons, the former Citigroup board chairman, told a Washington audience this past spring that “to some extent, what we saw in the 2007-2008 crash was the result of the throwing off of Glass-Steagall.” Most famously, Sandy Weill told CNBC in July 2012 that the law’s reinstatement in some form is necessary to restore confidence in the financial system. “Have banks be deposit takers, have banks make commercial and real estate loans,” Weill said. “And have banks do something that will not risk taxpayer dollars.”

With Greenspan and Summers on the cover of ‘Time’ in February 1999Summers dismisses this as revisionism, warped by hindsight and political convenience. Instead, he offers a syllogism: If permitting the combination of commercial and investment banks caused the financial crisis, why was fixing it so dependent on commercial banks buying investment banks? True enough, many companies that took advantage of Glass-Steagall’s repeal (Citigroup, JPMorgan Chase (JPM), Bank of America (BAC)) still exist. Souvenirs from the standalone investment banks (Bear Stearns, Lehman Brothers, Merrill Lynch) are available on EBay (EBAY).

In part because of its complexity, less attention has been paid to Rubin’s role in the unleashing of the over-the-counter derivatives market. In March 1998, Brooksley Born, chairman of the CFTC, wanted to release a “concept paper” that would raise a series of questions about the possible regulation of derivatives. “I was very concerned about the dark nature of these markets,” Born told the Washington Post in 2009. “I didn’t think we knew enough about them.”

With Greenspan and Summers on the cover of ‘Time’ in February 1999

Born’s plan was to have the CFTC oversee these new, often inexplicable financial products. Rubin, Summers, Federal Reserve Chairman Alan Greenspan, and Securities and Exchange Commission Chairman Arthur Levitt countered that Born was out of her depth. (Levitt is a board member of Bloomberg LP, which owns Bloomberg Businessweek.) They argued that the CFTC, created in the 1970s to regulate futures contracts bought by farmers, didn’t have the authority or expertise to regulate complex derivatives in a fast-expanding market. Born was no match for their firepower. They persuaded Congress to ignore her.


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Colombian Gringo's picture

Too bad its a tie, and not a noose, draped around his neck.

Pladizow's picture

What would Cecil Rhodes and Professor Quigley say about Rubin?"

....give him the air of an ancient Galapagos tortoise." - Didnt Lonsome George die recently?

idea_hamster's picture

            trust the system and trust the American people

LMAO -- that's rich.

Pinto Currency's picture


Where is the section about Rubin and Larry Summers coordinating bullion bank gold leasing from central banks to suppress the gold price thus depressing interest rates. 

This led to the wildely speculative .com bubble and a completely false economy.

Rubin's briliance has been in coordinating a worldwide bubble and economic collapse.

Also nothing in the article about the role of the B.I.S. in the whole affair.

strannick's picture

Rubin's briliance has been in coordinating a worldwide bubble and economic collapse.

Except no one can focus because the impeachment crisis is raging. He said, ‘What we’ve got to do is get up tomorrow and go back to work, just like we did today, make good things happen, and trust the system and trust the American people. It’s going to be fine.’

Rubin said the American people are so ignorant, the system is so corrupt, that we can ride out this scandal, and we can go on manipulating things for our benefit.

BaBaBouy's picture

Ya Gata Love These Isrealis, They Really Know Everything Thats Good For US ...

WTFx10's picture

"Ya Gata Love These Dual citizenship Isrealis USA TRAITORS"

Fixed it.

phyuckyiu's picture

That Time magazine cover from 1999 gives me the chills, eerily similar to The Bernank cover on the Atlantic from a few months ago. Just add Orszag and you have the Obama 'we will continue the anal fucking till morale improves' dual citizenship recovery team. Must the Hebe overlords always use their 'don't worry we know better than you do' smile while they fuck us in the ass? The Atlantic took it one step furthur and used a soft glow lens and airbrushed his ugly ass. The only thing missing from those magazine covers is some moving spirals in the eyeballs that flash obey once every 30 frames.

Oh regional Indian's picture

Unbelievable tenor to the post, given what this man has done to the world (and the US of course)/

Goldman, Citi, Tres. Sec.

Enough said. He runs with the foxes.


SeattleBruce's picture

Whatever else could be said about this - it's not "their" fault that 'we the people' - generally speaking - scratch our bellies, drink beer and watch American Idol.  Now "they" do have responsibility for acting morally, as do all of us.

Panafrican Funktron Robot's picture

"it's not "their" fault that 'we the people' - generally speaking - scratch our bellies, drink beer and watch American Idol."

Depends on your concept of personal choice.  If you're not able to see the forest for the trees, to what degree are you culpable?  Keeping in mind that the education complex is designed to make the citizenry docile and ignorant; ditto for the media complex.  The internet does open up more easily accessible opportunities for re-education, but we're talking an island in a sea of intentional stupidity.  The standard fatass middle aged NFL fan who's angry at a particular side of the political isle (when he's not busy getting absurdly angry with Mark Sanchez) is by design my friend.  

ParkAveFlasher's picture

Here's my brilliance:

gold, bitchez!

Where's my position at Citibank?

Bastiat's picture

Rubin, Summers, Clinton and the repeal of Glass-Steagel.  Save the world?  Doom the world.

Bay of Pigs's picture

The Gold Carry Trade came before that. Rubin was the leading force to dump CB gold into the market, depress prices and distort interest rates and thus low ball inflation

He is directly responsible for much of this mess. He's an evil rotten son of a bitch.



DaveyJones's picture

Hey, the Antichrist's gotta make a living too

john39's picture

should be 'man who sold the world'....

Turin Turambar's picture


You need to rethink your criticism of Glass-Steagel.  Glass-Steagel wasn't repealed, it was only modified, regardless of what the pundits say.  The main problem that resulted in increased moral hazard was FDIC insurance which remained.

Peter Schiff has a great little section on this in his recent book Crash.

Bastiat's picture

I will check out Crash, thanks.  Do you not agree that the essential effective elements of Glass-Steagal were gutted? 

Nothing To See Here's picture

Bastiat, really, that Glass-Steagall repeal story is the progressive baseline to make people believe that regulation (and the government) is necessary to save the markets from themselves.

Before some of its elements were repealed, GS did not apply to Bear Stern, Lehman, AIG nor to Fannie or Freddie. This is the greatest red herring ever told.

Bastiat's picture

I don't think it's a red herring at all.  I recall ranting down the hall the day it happened because I knew then what the banksters were and it removed a real protection.  If they don't want "regulation" they shouldn't be protected by the FDIC.  Of course they want the appearance of regulation, captured regulation and they wanted it without those inconvenient hard lines, isolating investment banking risks from depositors and depositors insurance.

What about the shifting of derivatives and other risk assets into bank holding companies post 2008?  What about the stampede to become banks but GS etc, post 2008 so they could get their shit-encrusted shouts into Timmy & Ben's trough?  This is no small thing and the changes which permitted it, no red herring but a big stinking dead fish served up to us all.

trichotil's picture

Did you mean: Glass-Steagall?
Learn to spell first.

Bay of Pigs's picture

Say what? It allowed the banks to run fucking wild with leverage. Sorry, but thats just not accurate at all.

That was a huge mistake by Congress.

Canuckistan Al's picture

He was flapping his lips on Canuck TV here last night. In passing he referenced solutions to the current challenges in the economy etc. When he referenced "perhaps we need to reinstitute Glass - Steagal, I threw up in my mouth...........

Burticus's picture

Yeah, and what about Rubin's alleged leadership role in swapping out the real gold from the Untied States gold reserves at Ft. Knox for gold-plated tungsten?!

Urban Redneck's picture

It's no more superficial fluff than the rest of the article-

idea_hamster's picture

Likely true -- but I couldn't keep reading after "trust the system and trust the American people."

Honestly, what little I know of both those entities does nothing to instill confidence.  In fact, quite the opposite.

buckethead's picture

The photo from his Harvard years lends credence to some of David Icke's theories.

LMAOLORI's picture



They would have said thank you for helping our plan come to fruition. Quigley was scumbag bill's mentor

Clinton, Quigley, and the New World Order

DeadFred's picture

Is it my imagination or can you see bats and dark shapes floating around him in the photos?

Haha, got you to look. Don't you know it takes more discernment than a photograph has to really see them?

Sean7k's picture

I was going to say he looks rather reptilian in that old harvard photo...

pods's picture

I would like to see a picture of him next to a mirror.


paradism_'s picture

Don't worry, a tie is an upside down noose.

mayavision2012's picture

The undercurrent of utter frustration with all the pol/mil/corp/bankster corruption is about to hit the beach as a tsunami, me thinks.  I'm actually beginning to wonder who will emerge from the mists to become the next General George Washington.

Comay Mierda's picture


what is seen cannot be unseen

Shizzmoney's picture

Hey look, it's the corporate welfare version of "Lemon Party"

luckylogger's picture

Good one WB! you never seize to amaze me with your creativity......

iDealMeat's picture

Finally seeing some Tits around here again..  Thanks lucky...

Winston Churchill's picture

Rubin Hood,

Robs from the poor,

to give to the rich,

Rubin Hood.

LongSoupLine's picture

And once again, Madoff sits in his cell...alone.