car·riage re·turn

n. the lever or mechanism on a typewriter that would cause the cylinder on which the paper was held (the carriage) to return to the left margin of the page


Rubin’s Treasury Chances Liquidated

Robert Rubin,the former Treasury Secretary under President Clinton,has been mentioned as potentially reprising his role in the Obama administration. I profiled Mr. Rubin (along with others) last week,noting at the time:

Just days before Rubin resigned as Treasury Secretary and joined Citigroup as a top advisor,Congress passed (and President Clinton signed) the Gramm-Leach-Bliley Act,which allowed commercial and investment banks to merge and thus assisted the Travelers Group-Citicorp supermerger. Robert Scheer wrote of Rubin:

But Gramm and the Republicans couldn’t have done it [creating,in Scheer's words,"the biggest economic mess since the Great Depression"] without the support of leading Democrats. The most egregious of Gramm’s legislative favors to the financiers took the form of legislation named in part after him –the Gramm-Leach-Bliley Act,which only became law when Treasury Secretary Robert Rubin prevailed upon President Clinton to sign the bill. The bill’s immediate major effect was to legitimatize the long-sought merger between Citibank and insurance giant Travelers. Rubin’s critical support for the bill was rewarded with an appointment,within days of its passage,to a top job at Citibank (later Citigroup) paying more than $15 million a year.

Even more damning from a basic standpoint of foresight is Rubin’s statement in late January as director of Citigroup claiming that the turmoil already evident in the economy was “all part of a cycle of periodic excess leading to periodic disruption.”According to CNN Money,under Rubin Citigroup holds “$55 billion of collateralized debt obligations (CDOs) and other subprime-related securities.”

Today Citigroup announced that it would be eliminating an additional 53,000 jobs,following the termination of 23,000 employees’positions between January and September of this year. According to National Public Radio,the company has canned 20% of its employees since 31 Dec 2007.

More notable still in light of Mr. Rubin’s name circulating as a potential secretary is this tidbit in the same NPR story:

Citigroup reported a loss of $2.8 billion during the third quarter and has seen its share price plummet. Last week,Citigroup stock fell into the single digits for the first time since Sanford “Sandy”Weill created the bank in 1998 from the merger of Travelers Group Inc. and Citicorp.

Again,just to reiterate the point,here’s the Wikipedia summary of Mr. Rubin’s involvment with Citigroup:

In 1999,affirming his career-long interest in markets,Mr. Rubin joined Citigroup. Of note,the supermerger between Travelers Group and Citicorp was facilitated by the repeal of the Glass-Steagall Act (Gramm-Leach-Bliley Act). This legislation was passed under the Clinton administration,days before Rubin’s resignation. Consolidation of investment,commercial banking,and insurance services as practiced by Citigroup under the direction of Rubin has been implicated in the subprime mortage [sic] crisis.

Citigroup’s present Jenga-like viability should be another red flag in any vetting of Mr. Rubin (and,to an only slightly lesser extent,his right hand man,Larry Summers). Hopefully the Obama team won’t give Rubin or Summers a second chance to maim the American economy.

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