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Trashing Rubin

Posted By Barry Ritholtz On May 3, 2010 @ 10:30 am In Bailout Nation,Derivatives,Really, really bad calls | Comments Disabled

I have regularly trashed Robert Rubin in this blog for quite some time.

And while I further tarnish the name of Rubin in Bailout Nation [1] — he is between Hank Paulson and Larry Summers in our blame list — I probably could have slapped him around even more had time and space pemitte.d

No Matter. Felix Salmon [2] jumps into the void with this list of Rubin crimes:

• He epitomized the way in which traders ousted investment bankers and turned investment banks into systemically-dangerous institutions by making them much larger than they had ever been in the past.

• For all his vocal bellyaching about tail risk, he ultimately made his money as an arbitrageur, making leveraged bets that something with a 95% chance of happening was, indeed, going to happen. That’s a strategy which works until it doesn’t — but by the time it failed, Rubin had moved on to greater things.

• He was one of those senior men at investment banks who encouraged risk-taking without understanding the risks which were being taken.

• He was perfectly happy to see Larry Summers cheer on the single most disastrous deregulation of derivatives ever, the CFMA.

• He allowed the illegal creation of Citigroup with a nod and a wink, knowing that Gramm-Leach-Bliley was just around the corner and would make Citigroup legal in retrospect.

• He then collected his just rewards in the form of $126 million in pay from Citi, for a job which even Weisberg admits involved no managerial responsibility.

• He turned the job of Treasury secretary into a job where the first priority was to make Wall Street happy, asking for nothing but cheap debt in return.

• He institutionalized and epitomized the revolving door from Wall Street to Washington and back again.

• He set himself up as a wise expert on risk, even as he had no idea what risks his own company was running.

• He took on a job with significant power, but ducked any responsibility which might normally go with such power.

• He specifically refused to take any responsibility for his recommendations to Weill and Prince on the subject of risk-taking.

• He failed to push Prince to put in place any kind of succession plan, thereby creating a horrible vacuum at the top of Citigroup just as strong leadership was desperately needed.

• He’s slippery and unapologetic in hindsight.

Great list — thanks , Felix . . .

>

Source:
Blaming Rubin [3]
Felix Salmon
Reuters, May 1, 2010 15:24 EDT

http://blogs.reuters.com/felix-salmon/2010/05/01/blaming-rubin/


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2010/05/trashing-rubin/

URLs in this post:

[1] Bailout Nation: http://www.amazon.com/exec/obidos/ASIN/0470520388/thebigpictu09-20

[2] Felix Salmon: http://blogs.reuters.com/felix-salmon/2010/05/01/blaming-rubin/

[3] Blaming Rubin: http://www.ritholtz.com/blog http://blogs.reuters.com/felix-salmon/2010/05/01/blaming-rubin/

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