Thursday, February 5, 2009

Robert Rubin, aka Gordon Gecko

"My great regret is that I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today," Robert Rubin wrote in his January resignation letter from Citigroup. (In other words, "Hey. Everyone else got it wrong, too.")

This statement after earning $115 million over ten years on the Citi board of directors in the role of a senior adviser, and until August 2008 as head of the Executive Committee.

In this letter to CEO Vikram Pandit, Mr. Rubin added, "As you know, when we officially changed my title six months ago, my first choice had been also to reduce my advisory and client-oriented role. However, after you and I spoke, I decided to continue in those roles as you and your management team settled in and began to implement proactively your program of substantial and important changes at Citi. But now, as you and your team have made the tough decisions I mentioned earlier and established yourselves, the time has come for me to reshape the structure of my life." (In other words, "Things are getting a little hot around here, and, hey, I really don't need this aggravation any more. I made my nut.")

After ten years of providing expensive advice, Mr. Rubin bristled when criticized for his role as an adviser to the bank which he counseled to take on extreme levels of risk in the mortgage market, telling the Wall Street Journal in November that he could have "earned a lot more elsewhere."

Unfortunately an impairment calculation, whereby a company's assets are marked down on the corporate balance sheet to reflect current market rates, doesn't involve clawing back advisory fees paid to the knuckleheads who got you into the mess.

Mr. Rubin, who was also an economic adviser to Barack Obama's campaign, served his country with distinction as Secretary of the Treasury under Bill Clinton, but since then he has taken on the characteristics of a twenty-first century Gordon Gecko by his "greed is good" self-enrichment at Citigroup, followed by his attempt to absolve himself of any responsibility in the bank's meltdown.

How many people do you know that after earning $115 million would dare to whine, "Don't blame me. I'm just an adviser, plus--hey--they were lucky to have me."?

Let's see: $115 million. That's roughly $1 million per month over ten years, with say, twenty work days per month, that makes $250,000 per week. Mr. Rubin withdrew from Citigroup the equivalent value of about one average foreclosure per week. Mr. Rubin could single-handedly help five-hundred foreclosed families remain in their homes, if he was so philanthropically inclined.

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