Robert Rubin


Robert Edward Rubin is an American retired banking executive, lawyer, and former cabinet member. He served as the 70th United States Secretary of the Treasury during the Clinton administration. Before his government service, he spent 26 years at Goldman Sachs, eventually serving as a member of the board and co-chairman from 1990 to 1992.
During the Clinton administration, Rubin oversaw the loosening of financial industry underwriting guidelines which had been in place since the 1930s. His most prominent post-government role was as director and senior counselor of Citigroup, where he performed advisory and representational roles for the firm. From November to December 2007, he served temporarily as chairman of Citigroup and resigned from the company on January 9, 2009. He received more than $126 million in cash and stock during his tenure at Citigroup, up through and including Citigroup's bailout by the U.S. Treasury.
He is currently engaged actively as a founder of The Hamilton Project, an economic policy think tank that produces research and proposals on how to create a growing economy that benefits more Americans. He is co-chairman emeritus of the Council on Foreign Relations, and is a member of the Africa Progress Panel, a group of ten distinguished individuals who advocate at the highest levels for equitable and sustainable development in Africa. Rubin also serves as chairman of the board of the Local Initiatives Support Corporation, the nation's leading community development support organization, and serves on the board of trustees of Mount Sinai-NYU Health. Additionally, Rubin serves as counselor at Centerview Partners, an investment banking advisory firm based in New York City.

Family, education, and early career

Rubin was born in New York City, the son of Sylvia and Alexander Rubin, a wealthy Jewish family. He 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 with an A.B. summa cum laude in economics from Harvard College. He then attended Harvard Law School for three days before leaving to see the world. He later attended the London School of Economics and received an LL.B. from Yale Law School in 1964.
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, becoming a general partner in 1971. He joined the management committee in 1980 along with Jon Corzine. 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 is married to Judith Leah 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 Rubin, and Philip Rubin. Jamie is married to writer Gretchen Rubin. The Rubins were long time members of Temple Beth Sholom on Miami Beach.

Clinton administration

From January 25, 1993, to January 10, 1995, 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.
Robert S. Strauss 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."

1990s global financial crisis

In January 1995, one year after the signing of the North American Free Trade Agreement 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.
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 promote U.S. policy in response to 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."
In 1998, Rubin received the U.S. Senator John Heinz Award for Greatest Public Service by an Elected or Appointed Official, an award given out annually by Jefferson Awards.
Rubin was succeeded on July 1, 1999, as Treasury Secretary by his deputy, Lawrence Summers.

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. Following the interview, Clinton's assistant Doug Band reaffirmed those statements saying Clinton still wished he had pursued legislation to regulate derivatives while confirming that he still believed he had received excellent advice on the economy and the financial system from Rubin and others during his presidency.
"During his tenure as Treasury Secretary", Senator Chuck Hagel said, "Bob was an ideal public servant who put policy before politics."
In 1997, Rubin and Federal Reserve chairman Alan Greenspan strongly opposed giving the Commodity Futures Trading Commission oversight of over-the-counter credit derivatives when this was proposed by Brooksley Born, the head of the CFTC. Rubin's role was highlighted in a Public Broadcasting Service Frontline report, "The Warning". Over-the-counter credit derivatives were eventually excluded from regulation by the CFTC by the Commodity Futures Modernization Act of 2000. According to the Frontline documentary, they played a key role in the 2008 financial crisis.
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." However, in 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.
Rubin and his deputy Lawrence Summers also steered through the 1999 repeal of the Glass–Steagall Act, which had separated investment banking from the retail side. It allowed the banks to develop and sell the mortgage-backed instruments that became a principal factor in the financial collapse. In September 2011, the UK Independent Commission on Banking released a report in which it recommended a separation of investment and retail banking to prevent a repeat of the 2008 crisis.
In a December 2009 Newsweek article, Rubin described the extraordinary combination of circumstances that led to the global financial crisis, including market and credit excesses, low interest rates, massive increase in the use of complex derivatives, misguided AAA ratings, stagnant median real wages, abusive mortgage practices, and the over-leveraging 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 "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."
On January 9, 2009, Citigroup announced that Rubin had resigned as a senior adviser and would not seek re-election as a director of the corporation. Press reports noted that Rubin had drawn criticism for his role in the bank's recent problems that drove it to seek U.S. Government assistance after he received significant personal compensation.

Post-government career

Upon leaving the Clinton administration, Rubin joined the board of the Local Initiatives Support Corporation, 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."
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". The Wall Street Journal called this mix of oversight and management responsibilities "murky". In an interview with the Journal, Rubin said: "I think I've been a very constructive part of the Citigroup environment." 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. 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. Earlier, Rubin had also come in for some criticism for his actions on Citigroup's behalf during the 2001 collapse of energy giant Enron Corp., a major client of the bank. With the troubled Enron facing a credit ratings downgrade - a potentially disastrous development for the energy company's investors, the company itself and ultimately, its lenders - Rubin called a ranking Treasury Department official, unsuccessfully seeking the Bush Administration's help in forestalling the downgrade. Rubin later maintained that he had acted both as a Citigroup executive protecting his company's position and as a former Treasury official concerned about the impact that Enron's failure might have on the larger economy, brushing off the notion of any possible conflict of interest, and said that if faced with the same choice, he would do it again.
Rubin received over $17 million in compensation from Citigroup and a further $33 million in stock options as of 2008 and total compensation of $126 million from Citigroup between 1999 and 2009.
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. He served as a member of the Harvard Corporation until June 2014.
Rubin has written a memoir, In an Uncertain World: Tough Choices from Wall Street to Washington, co-written by Jacob Weisberg. It was a New York Times bestseller as well as one of Business Weeks ten best business books of 2003.
Rubin had been suggested as a possible appointee to a cabinet post for President Barack Obama. Rubin, alongside Austan Goolsbee and Paul Volcker, was one of Obama's economic advisers.
In 2013, Rubin became a member of the Africa Progress Panel, a group of ten distinguished individuals who advocate at the highest levels for equitable and sustainable development in Africa. Every year, the Panel releases a report that outlines an issue of immediate importance to the continent and suggests a set of associated policies.
In January 2014, Secretary Rubin joined former Senator Olympia Snowe, former Education Secretary Donna Shalala, former Secretary of State George Shultz, former Housing and Urban Affairs Secretary Henry Cisneros, Gregory Page the Chair of Cargill, and Al Sommer, the Dean Emeritus of the Bloomberg School of Public Health as members of the U.S. Climate Risk Committee. They oversaw the development of an analysis of the economic risks of climate change in the United States that was published on June 24, 2014.
In an address at the Climate Leadership Conference on March 4, 2015, Mr. Rubin spoke about the economic effects of climate change and the costs of inaction. Calling climate change "the existential threat of our age," he called for the adoption of three proposals – revising estimates of the Gross Domestic Product to reflect climate change externalities, disclosure to investors by companies of the costs of carbon they emit that they might be required to absorb, and including in the U.S. government's fiscal projections the future costs of dealing with climate change – to help catalyze a more active response to climate change risks. He first outlined the proposals in a Washington Post op-ed column titled "How Ignoring Climate Change Could Sink the U.S. Economy."
In April 2016, he was one of eight former Treasury secretaries who called on the United Kingdom to remain a member of the European Union ahead of the June 2016 Referendum.

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. He has been co-chairman of the board of directors of the Council on Foreign Relations since June 2007. On November 4, 2007, he became the Chairman of Citigroup and on January 9, 2009 he resigned from the position of Senior Counselor at Citigroup and announced he would not stand for re-election to the board.

Recognition

There is an exhibit about Robert Rubin's public service in FIU's Jewish Museum of Florida in Miami Beach.
On January 8, 2001, he was presented with the Presidential Citizens Medal by President Clinton.

Criticism

As Clinton's two-term Secretary of the Treasury, Rubin sharply opposed any regulation of collateralized debt obligations, credit default swaps and other so-called "derivative" financial instruments which—despite having already created havoc for companies such as Procter & Gamble and Gibson Greetings, and disastrous consequences in 1994 for Orange County, California with its $1.5 billion default and subsequent bankruptcy—were nevertheless becoming the chief engine of profitability for Rubin's former employer Goldman Sachs and other Wall Street firms. When Brooksley Born, head of the Commodity Futures Trading Commission, circulated a letter urging increased regulation of derivatives in line with a 1994 General Accounting Office report, Rubin took the unusual step of going public in June 1998 to denounce Born and her proposal, eventually urging that the CFTC be stripped of its regulatory authority.
Rubin sparked controversy in 2001 when he contacted an acquaintance at the U.S. Treasury Department and asked if the department could convince bond-rating agencies not to downgrade the corporate debt of Enron, a debtor of Citigroup. The Treasury official refused. A subsequent congressional staff investigation cleared Rubin of having done anything illegal.
Journalist Robert Scheer claims that 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. The law was repealed by Congress in 1999 during the Clinton presidency while Rubin was Treasury Secretary.
Writer Nassim Nicholas Taleb noted that Rubin "collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn't write any check—he invoked uncertainty as an excuse."
According to Bloomberg Businessweek, Rubin pursued a romantic interest with Iris Mack and did not tell her that he was married.