Robert Rubin

Robert Scheer ~ The Democrats Who Unleashed Wall Street and Got Away With it

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Nation Of Change | February 3 2012

That Lawrence Summers, a president emeritus of Harvard, is a consummate distorter of fact and logic is not a revelation. That he and Bill Clinton, the president he served as treasury secretary, can still get away with disclaiming responsibility for our financial meltdown is an insult to reason.

Yet, there they go again. Clinton is presented, in a fawning cover story in the current edition of Esquire magazine, as “Someone we can all agree on. … Even his staunchest enemies now regard his presidency as the good old days.” In a softball interview, Clinton is once again allowed to pass himself off as a job creator without noting the subsequent loss of jobs resulting from the collapse of the housing derivatives bubble that his financial deregulatory policies promoted.

At least Summers, in a testier interview by British journalist Krishnan Guru-Murthy of Channel 4 News, was asked some tough questions about his responsibility as Clinton’s treasury secretary for the financial collapse that occurred some years later. He, like Clinton, still defends the reversal of the 1933 Glass-Steagall Act, a 1999 repeal that destroyed the wall between investment and commercial banking put into place by Franklin Roosevelt in response to the Great Depression.

“I think the evidence is that I am right about that. If you look at the big players, Lehman and Bear Stearns were both standalone investment banks,” Summers replied, referring to two investment banks allowed to fold. Summers is very good at obscuring the obvious truth—that the too-big-to-fail banks, made legal by Clinton-era deregulation, required taxpayer bailouts.

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The Case for Regulation. The Failure of Free Market Economics

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by Paul Craig Roberts | Global Research
November 10 2011

The economic mess in which the United States and Europe find themselves and which has been exported to much of the rest of the world is the direct consequence of too much economic freedom. The excess freedom is the direct consequence of financial deregulation.

Brooksley BornThe definition of free markets is ambiguous. At times  it  means  a  market  without  any  regulation.  In other cases it means markets in which prices are free to reflect supply and demand. Sometimes it means competitive markets free of monopoly or concentration. “Free market” economists have made a mistake by elevating an economy that is free of regulation or government as the ideal. This ideological position overlooks that regulation can increase economic efficiency and that without regulation external costs can offset the value of production.

Before going further, let’s be clear about what is regulated. Economists reify markets: the market did this, the market did that. But markets don’t do anything. The market is not an actor; it is a social institution. People act, and it is the behavior of people that is regulated. When free market economists describe the ideal as the absence of any regulation of economic behavior, they are asserting that there are no dysfunctional consequences of unregulated economic behavior.

If this were in fact the case, why should this result be confined to economic behavior? Why shouldn’t all human behavior be unregulated? Why is it that economists recognize that robbery, rape, and murder are socially dysfunctional, but not unlimited debt leverage and misrepresentation of financial instruments? The claim, as expressed by Alan Greenspan along with others, that “markets are self-regulating” is an assertion that unrestrained individuals are self-regulating. How did anyone ever believe that?

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Too Big to Jail

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by Robert Scheer (Truthdig) | Common Dreams
November 3 2011

Can we all agree that a $1 billion swindle represents a lot of money, and the fact that Citigroup agreed last week to pay a $285 million fine to settle SEC charges for “misleading investors” demonstrates a damning admission of culpability?

Former Citigroup Chief Executive Officer Charles Prince, left, and former Treasury Secretary Robert Rubin

So why has Robert Rubin, the onetime treasury secretary who went on to become Citigroup chairman during the time of the corporation’s financial shenanigans, never been held accountable for this and other deep damage done to the U.S. economy on his watch?

Rubin’s tenure atop the world of high finance began when he was co-chairman of Goldman Sachs, before he became Bill Clinton’s treasury secretary and pushed through the reversal of the Glass-Steagall Act, an action that legalized the formation of Citigroup and other “too big to fail” banking conglomerates.

Rubin’s destructive impact on the economy in enabling these giant corporate banks to run amok was far greater than that of swindler Bernard Madoff, who sits in prison under a 150-year sentence while Rubin sits on the Harvard Board of Overseers, as chairman of the Council on Foreign Relations and as a leader of the Brookings Institution’s Hamilton Project.

Rubin was rewarded for his efforts on behalf of Citigroup with a top job as chairman of the bank’s executive committee and at least $126 million in compensation. That was “compensation” for steering the bank to the point of a bankruptcy avoided only by a $45 billion taxpayer bailout and a further guarantee of $300 billion of the bank’s toxic assets.

Those toxic assets and other collateralized debt obligations and credit default swaps were exempted from government regulation by the Commodity Futures Modernization Act, which Rubin helped design while he was treasury secretary and which was turned into law when Rubin protégé Lawrence Summers took over that Cabinet post.

In arguing that the derivatives market in housing mortgages and other debt obligations required no government oversight, Summers told Congress, “First, the parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies. … Second, given the nature of the underlying assets—namely supplies of financial exchange and other financial instruments—there would seem to be little scope for market manipulation. …”

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Corruption, America-Style

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by Tom Engelhardt | Common Dreams
November 2 2011

In the U.S., corruption is seldom “corruption.”  Take as an example our president, who has been utterly clear: he will not take money for his electoral campaign from lobbyists.  Only problem: according to the New York Times, 15 of his top “bundlers,” who give their own money and solicit that of others — none registered as federal lobbyists — are “involved in lobbying for Washington consulting shops or private companies,” and they are raising millions for him.  They also have access to the White House on policy matters.  According to a June report from the Center for Public Integrity, “President Obama granted plum jobs and appointments to almost 200 people who raised large sums for his [2008] presidential campaign, and his top fundraisers have won millions of dollars in federal contracts.”

The president’s spokespeople insist, of course, that he’s kept to his promise, as defined by the labyrinthine lobbying legislation written by a Congress filled with future lobbyists.  And keep in mind that Obama looks like Little Mary Sunshine compared to the field of Republican presidential candidates who seem determined to campaign cheek to jowl with as many lobbyists as they can corral.  More than 100 federal lobbyists have already contributed to Mitt Romney’s campaign, while Rick Perry has evidently risen to candidate status on the shoulders of Mike Toomey, a former gubernatorial chief of staff, friend, and money-raising lobbyist whose clients “have won $2 billion in [Texas] state government contracts since 2008.”  And that’s just the tip of the top of the iceberg.

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