No one has ever been able to explain to us exactly what former Treasury Secretary Bob Rubin does at Citigroup in exchange for that $10-15 million a year compensation he's said to have been receiving. This weekend's NY Times paints a picture suggesting that Rubin was very involved in upping Citi's risk profile which led it to its current sorry state. If that's true, and he was an architect of the money sucking mess known as Citigroup, why isn't he history? Why does he still have a job?
But while Mr. Rubin certainly did not have direct responsibility for a Citigroup unit, he was an architect of the bank’s strategy.
In 2005, as Citigroup began its effort to expand from within, Mr. Rubin peppered his colleagues with questions as they formulated the plan. According to current and former colleagues, he believed that Citigroup was falling behind rivals like Morgan Stanley and Goldman, and he pushed to bulk up the bank’s high-growth fixed-income trading, including the C.D.O. business.
Former colleagues said Mr. Rubin also encouraged Mr. Prince to broaden the bank’s appetite for risk, provided that it also upgraded oversight — though the Federal Reserve later would conclude that the bank’s oversight remained inadequate.
Once the strategy was outlined, Mr. Rubin helped Mr. Prince gain the board’s confidence that it would work.
After that, the bank moved even more aggressively into C.D.O.’s. It added to its trading operations and snagged crucial people from competitors. Bonuses doubled and tripled for C.D.O. traders. Mr. Barker drew pay totaling $15 million to $20 million a year, according to former colleagues, and Mr. Maheras became one of Citigroup’s most highly compensated employees, earning as much as $30 million at the peak — far more than top executives like Mr. Bushnell in the risk-management department.
In 2005, as Citigroup began its effort to expand from within, Mr. Rubin peppered his colleagues with questions as they formulated the plan. According to current and former colleagues, he believed that Citigroup was falling behind rivals like Morgan Stanley and Goldman, and he pushed to bulk up the bank’s high-growth fixed-income trading, including the C.D.O. business.
Former colleagues said Mr. Rubin also encouraged Mr. Prince to broaden the bank’s appetite for risk, provided that it also upgraded oversight — though the Federal Reserve later would conclude that the bank’s oversight remained inadequate.
Once the strategy was outlined, Mr. Rubin helped Mr. Prince gain the board’s confidence that it would work.
After that, the bank moved even more aggressively into C.D.O.’s. It added to its trading operations and snagged crucial people from competitors. Bonuses doubled and tripled for C.D.O. traders. Mr. Barker drew pay totaling $15 million to $20 million a year, according to former colleagues, and Mr. Maheras became one of Citigroup’s most highly compensated employees, earning as much as $30 million at the peak — far more than top executives like Mr. Bushnell in the risk-management department.
Citigroup Saw No Red Flags Even as It Made Bolder Bets - NY Times
This is only the tip of the iceberg! Rubin also pushed Citigroup to invest in Brazilian debt and then used political contacts to push for US aid to Brazil in 2002 which was really just taking care of Citibank. He played a major role in loosening government control of banks when he was Treasury Secretary under Clinton, and then received his fee when he left government and joined Citi. And we, the taxpayers, are still paying for the luxury lifestyle for this man, and will be for a long time to come. He has already become part of Obama's transition team.... to make sure that the Changer's Team still pays for his yachts. Is he dumb, or a crook? If the former he should have to return some of his millions to the taxpayers whom he ripped off, if the latter he should cool off in the most elegant country club federal lock-up.
Posted by: Arthur | November 24, 2008 at 03:34 PM