Posted on 11/30/2008 9:12:02 AM PST by Yo-Yo
In one of the most ill-advised pieces of PR I can remember, Bob Rubin has given an on-the-record interview to the WSJ, in which he takes no blame or responsibility for anything which has gone wrong at Citigroup (C). The reaction in the blogosphere has been, predictably, swift and brutal, helped along by the fact that Rubin's famous charm clearly hasn't worked on his interviewers, Ken Brown and David Enrich. Here's their lede:
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.
It just gets worse from there: by refusing to admit to any mistakes at all, Rubin has garnered himself zero sympathy. Rubin has been surprisingly bulletproof until now: while he's had many critics, his reputation has largely remained intact. But with this interview, it's disappeared at a stroke: no one can read it and think of him as anything other than a pompous and out-of-touch plutocrat, puffed up with much more self-regard than common sense.
For instance, he's quick to the not-my-bailiwick defense:
Mr. Rubin said it is a company's risk-management executives who are responsible for avoiding problems like the ones Citigroup faces. "The board can't run the risk book of a company," he said. "The board as a whole is not going to have a granular knowledge" of operations.
But board members don't get paid $115 million. If he wasn't playing a central role when it came to Citi's risk book, what was he doing for the money? It's not clear, but his comments don't help much:
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.
Justified? What does that possibly mean? And as for making more money elsewhere, I suspect that many Citigroup shareholders wish that he'd done precisely that. But not only was Rubin incredibly well-paid, he also had to all intents and purposes tenure at Citigroup: as a member of the board, he was an employer of the CEO rather than an employee, so there was really no one who could fire him.
The most astonishing instance of Rubin failing to justify his salary, however, comes later:
Mr. Rubin was deeply involved in a decision in late 2004 and early 2005 to take on more risk to boost flagging profit growth, according to people familiar with the discussions. They say he would comment that Citigroup's competitors were taking more risks, leading to higher profits. Colleagues deferred to him, as the only board member with experience as a trader or risk manager... At the time, Mr. Rubin was saying in speeches that most assets were overvalued. He would quote a noted investor he knew as saying that "the only undervalued asset class in the world is risk."
But it wouldn't have been right for the board to act on his concerns, Mr. Rubin said in the interview: "I wouldn't run a financial institution based on someone's view about what markets would do."
The cognitive disconnect here is simply staggering. Rubin's going around saying that institutions are taking on too much risk, but he's also telling the Citi board that it should take on even more risk. He had no problem with the board following his lead when he said he wanted Citi to take extra risks, but he says that he would have had a problem with the board listening to his concerns about doing so. For this he thinks his $115 million is justifiable?
The board of any bank can and should always err on the side of conservatism. Given Rubin's warnings about markets, it would have been easy to hold off on taking on more risk at the height of the credit bubble, especially since few board members had any real experience in risk management. It's therefore entirely reasonable to blame Rubin personally for the board's decisions in 2004-5. But all Rubin can say is that he doesn't "know what would have happened" if the decision had been different. Which is so far from any kind of apology for tens of billions of dollars in losses that it's laughable.
Wonderfully, the WSJ article ends with this:
Asked about what he feels he's accomplished, he responded: "It's a funny way to think about it. I think I've been a very constructive part of the Citigroup environment. That has become particularly manifest since August '07. I have been very involved."
Yeah, after paying someone $115 million, it's a bit funny to ask what that person has achieved. Shouldn't simply being very involved -- in a company which has lost nearly all of its value -- be enough?
In reality, Rubin failed even at the one job he was actually given, which was to be chairman of the executive committee of the board. As such, Rubin was instrumental in choosing two new CEOs for Citigroup. But in both cases, he found himself rushed into the choice, since he'd utterly failed to put in place any kind of well-thought-through succession plan. And right now, with Vikram Pandit's job security looking rocky, it looks like he might end up making the same mistake a third time. The wreckage that is Rubin's legacy at Citigroup hasn't come to an end yet.
Any six year old kid could come up with a less lame-brained excuse for his behavior than Rubin.
I am so sick of the "heads I win, tails you lose" mentality of the gangster class that I could scream. Somehow a "buckling of the financial system" is beyond Bobby R's control and he is not responsible. But the literally 100's of millions of dollars that he and his fellow gangsters reaped riding the secular bull market from 1982 to 2000 was "pay for performance." This is galling! Shame on the WSJ for letting these thieves get away with this flim-flam.
How about this for a simple reform. Any company that compensates its executives with equity whether through options or restricted stock is forbidden to purchase its own stock. Then at least the shareholder's cash (which should be returned as dividends anyway) will not used to put the executives even further in the money.
Anyway, most of Citigroup's current problems can be laid at the feet of Sanford Weill, not Robert Rubin or Vikram Pandit (not that they helped much).
Letting them get away with it? The WSJ was cheerleader-in-chief.
Touche!
Sadly, you are correct. (But I confess to reading the darned thing anyway).
I don’t view it quite so much as attributable to Clinton being in power, although I will admit, there will always be a deep fondness among Street types for the blatant marketing of pure BS that went on during the dot-com era. I’m saying, we associate those heady days with Clinton because he was prez, whether he had anything to do with it or not. In general, I just think Clinton had the most incredible string of uncanny good luck in the known universe; being president when the internet really exploded was only one example.
As to Rubin, really, who gives a crap what he says? There isn’t the slightest degree of accountability for anything at the levels he inhabits. There are no issues with the rapacious frauds like Barney Frank, Chris Dodd, Franklin Raines, Jamie Gorelick committed. None. All he and all these other leeches have to do is to keep spouting the party line over and over, look left, fake right, just keep stuttering some diversionary nonsense blaming somone, anyone but yourself until the interview’s over. Or for pity’s sake, they could take the blame for the entire debacle upon themselves and shed tears while writhing on the floor in a fetal position. It wouldn’t matter one iota. There’s simply no accountability whatsoever nor any possible consequence for these folks no matter how this all turns out, so they might as well just keep lying and looking good so their next $10+ million gig can be lined up.
All these genius banksters use the same justification as a pre-pubescent teenager on a vandalism spree “hey it seemed like a good idea at the time, everybody else was doing it”; only the teenager smashed some windows while the banksters of the world peddled fradulent paper all over the world and brought the financial system to the brink of implosion. For that, the rewards are in the multi-tens of millions. It’s a beautiful thing. For them.
Actually, there were quite a few banks who were NOT doing it.
Wells Fargo, USB, and JPMorgan to name three. Now they are buying up the assets of those who took foolish risks at bargain prices. It Citi wasn’t so big, they’d be buying them too.
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