Robert Rubin

Robert Rubin
Robert Rubin in April 1999
5th Chairman of the Council on Foreign Relations Serving alongside: Carla Anderson Hills
Incumbent
Assumed office  2007
President	Richard N. Haass
Preceded by	Peter George Peterson
70th United States Secretary of the Treasury
In office January 11, 1995 – July 2, 1999
Preceded by	Lloyd Bentsen
Succeeded by	Lawrence Summers
1st Director of the National Economic Council
In office 1993–1995
President	Bill Clinton
Succeeded by	Laura Tyson
12th Chairman of Citigroup
In office November 4 – December 11, 2007
Preceded by	Charles Prince
Succeeded by	Win Bischoff
Born	August 29, 1938 (1938-08-29) (age 72) New York City
Spouse(s)	Judith Oxenberg Rubin
Children	James Rubin Philip Rubin
Alma mater	Harvard College (B.A.) Yale Law School (LL.B.) London School of Economics
Religion	Judaism
Signature

Robert Edward Rubin (born August 29, 1938) served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations. Before his government service, he spent 26 years at Goldman Sachs eventually serving as a member of the Board, and Co-Chairman from 1990-1992. His most prominent post-government role was as Director and Senior Counselor of Citigroup, where he performed ongoing advisory and representational roles for the firm.^[1] From November to December 2007, he served temporarily as Chairman of Citigroup.^[2][3] On January 9, 2009, Citigroup announced he was resigning after being criticized for his performance.^[4] He received more than $126 million in cash and stock during his eight years at Citigroup.^[4]

[edit] Education and background

Born in New York City to a Jewish family, Rubin moved to Miami Beach, Florida, at an early age and graduated from Miami Beach High School. He was a member of Boy Scout Troop 35, sponsored by the American Legion, and received the rank of Eagle Scout. In 1960, Rubin graduated summa cum laude with a B.A. in economics from Harvard College.^[3] He then attended Harvard Law School for three days before leaving to see the world.^[5] He later attended the London School of Economics after graduation and received an LL.B. from Yale Law School in 1964.^[3]

Rubin began his career as an attorney at the firm of Cleary, Gottlieb, Steen & Hamilton in New York City. He joined Goldman Sachs in 1966 as an associate in the risk arbitrage department.^[5] Rubin proved his skills at the intricate art of investing his firm's capital in high-reward arbitrage opportunities and became a general partner in 1971. He joined the management committee in 1980 along with fellow Democrat Jon Corzine, later a U.S. senator and governor of New Jersey. Rubin was Vice Chairman and Co-Chief Operating Officer from 1987 to 1990. From the end of 1990 to 1992, Rubin served as Co-Chairman and Co-Senior Partner along with Stephen Friedman.

Rubin was awarded the degree Doctor of Laws, honoris causa by the University of Miami on May 9, 2008. Rubin has also been awarded honorary degrees from several other prestigious universities, including Harvard University on June 7, 2001, Yale University on May 21, 2001, Columbia University on May 17, 2000, University of Pennsylvania on May 17, 1999, and New York University on May 13, 1999.

[edit] Clinton administration

From January 20, 1993, to January 10, 1995, Robert Rubin served in the White House as Assistant to the President for Economic Policy. In that capacity, he directed the National Economic Council, which Bill Clinton created after winning the presidency.

The National Economic Council, or NEC, enabled the White House to coordinate closely the workings of the Cabinet departments and agencies on policies ranging from budget and tax to international trade and alleviating poverty. The NEC coordinated policy recommendations going into the President’s office, and monitored implementation of the decisions that came out.^[3]

Robert Strauss, former U.S. Ambassador to the Soviet Union, credited Rubin with making the system work. "He's surely the only man or woman in America that I know who could make the NEC succeed," Strauss said in 1994. "Anyone else would have been a disruptive force, and the council wouldn't have worked."^[6]

[edit] 1990s global financial crisis

In January 1995, one year after the signing of the North American Free Trade Agreement (NAFTA) and immediately after Rubin was sworn in as Secretary of Treasury, Mexico was suffering through a financial crisis that threatened to result in it defaulting on its foreign obligations. President Bill Clinton, with the advice of Secretary Rubin and Federal Reserve Board Chairman Alan Greenspan, provided $20 Billion in US loan guarantees to the Mexican government through the Exchange Stabilization Fund (ESF).

In 1997 and 1998, Treasury Secretary Rubin, Deputy Secretary Lawrence Summers, and Federal Reserve Board Chairman Alan Greenspan worked with the International Monetary Fund and others to effectively combat and contain financial crises in Russian, Asian, and Latin American financial markets. In its February 15, 1999, edition, Time Magazine dubbed the three policymakers "The Committee to Save the World."^[7]

Mr. Rubin was succeeded on July 1, 1999, as Treasury Secretary by his deputy, Lawrence H. Summers..

[edit] Economic record and the 2008 global financial crisis

Upon Rubin's retirement, Clinton called him the "greatest secretary of the Treasury since Alexander Hamilton." On April 18, 2010, in an interview on ABC’s “This Week” program, Clinton said Rubin was wrong in the advice he gave him not to regulate derivatives.^[8]

"During his tenure as Treasury Secretary," Senator Chuck Hagel (R-NE) said, "Bob was an ideal public servant who put policy before politics."^{[9][dead link]}

In 1997, together with then-Federal Reserve chairman Alan Greenspan, Rubin strongly opposed the giving the Commodity Futures Trading Commission oversight of over-the-counter credit derivatives when this was proposed by then-head of the CFTC Brooksley Born. Rubin's role was highlighted in a Public Broadcasting Service Frontline report, "The Warning."^[10] Over-the-counter credit derivatives were eventually excluded from regulation by the CFTC by the Commodity Futures Modernization Act of 2000.

Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission, has said in explaining Rubin's strong opposition to the regulations proposed by Born that Greenspan and Rubin were "joined at the hip on this." "They were certainly very fiercely opposed to this and persuaded me that this would cause chaos."^[11] However, in Mr. Rubin’s autobiography, he notes that he believed derivatives could pose significant problems and that many people who used derivatives did not fully understand the risks they were taking.^[12]

In a December 2009 Newsweek piece, Robert Rubin described the extraordinary combination of circumstances that led to the global financial crisis, including market and credit excess, low interest rates, massive increase in the use of complex derivatives, misguided AAA ratings, stagnant media real wages, abusive mortgage practices, and the overleveraging of financial institutions, among many other factors. In the article, Rubin advocates for the reform of the financial system in order to better protect against systemic risk and devastating crises in the future. Rubin says that “the market-based model must be combined with strong and effective government, nationally and transnationally, to deal with critical challenges that markets won’t adequately address.”^[13]

On 9 January 2009, Citigroup said that Robert Rubin had resigned as a senior adviser and would not seek re-election as a board director.^[14] Press reports noted that Rubin had drawn criticism for his role in the bank's recent problems that drove it to seek federal assistance.^[15]

[edit] Post-political career

Upon leaving the Clinton administration, Rubin joined the Board of The Local Initiatives Support Corporation (LISC), the nation’s leading community development support organization as Chairman.

Reflecting on his decision to join an institution devoted to bringing economic activity to neglected areas of the country, the Chicago Tribune said the following in an editorial: "Even before he became Bill Clinton's treasury secretary, during his days as a high-powered Wall Street executive, Rubin was passionate about fostering business investment as the way to fight poverty in depressed city and rural areas. That made him somewhat unusual among Democrats, who generally emphasized government anti-poverty programs."^[16]

In 1999, affirming his career-long interest in markets, Rubin joined Citigroup as a board member and as a participant "in strategic managerial and operational matters of the Company, but [...] no line responsibilities."^[17] The Wall Street Journal called this mix of oversight and management responsibilities "murky."^[17] In an interview with the Journal, Rubin said: "I think I've been a very constructive part of the Citigoup environment."^[17] Separately, the Journal noted that Citigroup shareholders have suffered losses of more than 70 percent since Rubin joined the firm and that he encouraged changes that led the firm to the brink of collapse.^[17] In December 2008, investors filed a lawsuit contending that Citigroup executives, including Rubin, sold shares at inflated prices while concealing the firm’s risks. A Citigroup spokesman said the lawsuit was without merit.^[18]

On January 8, 2001, he was presented with the Presidential Citizens Medal by President Clinton.

On July 1, 2002, Rubin became a member of Harvard Corporation, the executive governing board of Harvard University. This happened one year after he had received an honorary doctoral degree from the same university.^[19]

Rubin has written a memoir, In an Uncertain World: Tough Choices from Wall Street to Washington (ISBN 978-0-375-50585-0), co-written by Jacob Weisberg. It was a New York Times bestseller as well as one of Business Week's ten best business books of 2003.^[3]

He is currently engaged actively as a founder of The Hamilton Project, an economic policy think tank which is intended to produce research and proposals on how to create a growing economy that benefits more Americans.^[3] In October 2003, he was named Vice Chairman of the Council on Foreign Relations and in June 2007, he was named Co-Chairman. He serves on the Board of Trustees of Mount Sinai-NYU Health.

Rubin is a member of the Africa Progress Panel (APP), an independent authority on Africa launched in April 2007 to focus world leaders' attention on delivering their commitments to the continent. The Panel launched a major report in London on Monday 16 June 2008 entitled Africa's Development: Promises and Prospects.^[20]

Rubin has been touted as a possible appointee to a cabinet post for President Barack Obama. Rubin, alongside Austan Goolsbee and Paul Volcker, is one of Obama's economic advisers.^[21]

[edit] Family

Rubin is married to Judith Oxenberg Rubin, who served as the New York City Commissioner of Protocol for four years under Mayor David Dinkins. The Rubins have two grown sons, James and Philip.^[22]

[edit] Positions held

During his time in the private sector, Rubin has served on the board of directors of the New York Stock Exchange, the Ford Motor Company, Citigroup, the Harvard Corporation, the New York Futures Exchange, the New York City Partnership and the Center for National Policy. He has also served on the board of trustees of the Carnegie Corporation of New York, Mt. Sinai Hospital and Medical School, the President's Advisory Committee for Trade Negotiations, the U.S. Securities and Exchange Commission Market Oversight and Financial Services Advisory Committee, the Mayor of New York's Council of Economic Advisors and the Governor's Council on Fiscal and Economic Priorities for the State of New York. On November 4, 2007, he became the Chairman of Citigroup and is currently co-chairman of the board of directors of the Council on Foreign Relations. On January 9, 2009, Rubin resigned from the position of Senior Counselor at Citigroup and announced he would not stand for re-election to the board.

[edit] Compensation

Robert Rubin received over $17,000,000 in compensation from Citigroup and a further $33,000,000 in stock options as of 2008.^[23]

[edit] Criticism

Rubin sparked controversy in 2001 when he contacted an acquaintance at the Treasury Department and asked if the department could convince bond-rating agencies not to downgrade the corporate debt of Enron, a debtor of Citigroup.^[24] Rubin wanted Enron creditors to lend money to the troubled company for a restructuring of its debt.^{[citation needed]} The Treasury official refused. A subsequent congressional staff investigation cleared Rubin of any wrongdoing, but he was still harshly criticized.^{[citation needed]}

Some critics claim the repeal of the Glass-Steagall Act was a key factor in the 2008 financial crisis. Enacted just after the 1930s great depression, the Glass-Steagall Act separated commercial and investment banking. That law was eventually abolished in 1999 under President Bill Clinton, while Rubin was financial secretary. President Obama's current banking system proposals, appear to be a return to these former principles although there is no talk of reinstating Glass-Steagall.Obama pushes new bank regulation

[edit] Sources

• The White House - Office of the Press Secretary

[edit] References

• Clinton, Bill (2005). My Life. Vintage. ISBN 1-4000-3003-X.
• Rubin, Robert (2003). In An Uncertain World. Random House. ISBN 978-0-375-50585-0
• Crony-Capitalists Fiddle While Main Street Burns: Crashing Citigroup - accessed 12-03-07

[edit] External links

• PBS Frontline: The Warning, 2009

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v • d • e Cabinet of President Bill Clinton (1993–2001)   Cabinet Secretary of State Warren Christopher (1993 – 1997) • Madeleine Albright (1997 – 2001) Secretary of the Treasury Lloyd Bentsen (1993 – 1994) • Robert Rubin (1995 – 1999) • Lawrence Summers (1999 – 2001) Secretary of Defense Les Aspin (1993 – 1994) • William Perry (1994 – 1997) • William Cohen (1997 – 2001) Attorney General Janet Reno (1993 – 2001) Secretary of the Interior Bruce Babbitt (1993 – 2001) Secretary of Agriculture Mike Espy (1993 – 1994) • Dan Glickman (1995 – 2001) Secretary of Commerce Ron Brown (1993 – 1996) • Mickey Kantor (1996 – 1997) • William Daley (1997 – 2000) • Norman Mineta (2000 – 2001) Secretary of Labor Robert Reich (1993 – 1997) • Alexis Herman (1997 – 2001) Secretary of Health and Human Services Donna Shalala (1993 – 2001) Secretary of Education Richard Riley (1993 – 2001) Secretary of Housing and Urban Development Henry Cisneros (1993 – 1997) • Andrew Cuomo (1997 – 2001) Secretary of Transportation Federico Peña (1993 – 1997) • Rodney Slater (1997 – 2001) Secretary of Energy Hazel O'Leary (1993 – 1997) • Federico Peña (1997 – 1998) • Bill Richardson (1998 – 2001) Secretary of Veterans Affairs Jesse Brown (1993 – 1997) • Togo West (1998 – 2000) • Hershel Gober* (2000 – 2001) * acting secretary.   Cabinet-level Vice President Al Gore (1993 – 2001) White House Chief of Staff Mack McLarty (1993 – 1994) • Leon Panetta (1994 – 1997) • Erskine Bowles (1997 – 1998) • John Podesta (1998 – 2001) Administrator of the Environmental Protection Agency Carol Browner (1993 – 2001) Ambassador to the United Nations Madeleine Korbel Albright (1993 – 1997) • Bill Richardson (1997 – 1998) • Richard Holbrooke (1999 – 2001) Director of the Office of Management and Budget Leon Panetta (1993 – 1994) • Alice Rivlin (1994 – 1996) • Franklin Raines (1996 – 1998) • Jacob Lew (1998 – 2001) Director of National Drug Control Policy Lee Brown (1993 – 1995) • Barry McCaffrey (1996 – 2001) Trade Representative Mickey Kantor (1993 – 1997) • Charlene Barshefsky (1997 – 2001) Director of the Federal Emergency Management Agency James Lee Witt (1993 – 2001)* Director of Central Intelligence John Deutch (1995 – 1996) • George Tenet (1997–2001) Administrator of the Small Business Administration Philip Lader (1994 – 1997) • Aída Álvarez (1997–2001) * took office in 1993, raised to cabinet-rank in 1996