Secretary Robert Rubin - who watched his reputation as an economic
titan shattered after leaving the Clinton White House - is decidedly
out of favor in the nation's capital.
Except one place - the Obama administration.
Behind the scenes, Rubin still wields enormous influence in Barack
Obama's Washington, chatting regularly with a legion of former
employees who dominate the ranks of the young administration's policy
team. He speaks regularly to Treasury Secretary Tim Geithner, who once worked for Rubin at Treasury.
According to Geithner's public calendar, the Treasury Secretary spoke
or met with Rubin at least four times in the first six months of
Geithner's tenure. Three of those chats, including an hour-long session
in Rubin's New York office, came before President Obama released his Wall Street regulatory reform proposal in June of 2009.
Rubin's is a discreet kind of influence, though, because the veteran
Wall Street hand is still dealing with the fallout from his post-White House career. He took a job at Citigroup, where the bank's collapse was averted only by the injection of $45 billion in taxpayer bailout cash.
Some of the ideas he espoused at Treasury in the go-go 1990s - such an
aggressive push to deregulate financial markets - were blamed by some
for the recent financial meltdown.
And as Obama battles critics on the left who believe his financial reform
push lets Wall Street off the hook, his team can't afford to be seen
taking advice from Rubin - who won a reputation among his party's
liberals as too pro-market and too anti-worker.
"The people whose careers he cultivated are now doing all these things,
but Rubin can't be the kind of sounding board he had been," said a
senior administration official.
"Rubin's being a lot more careful about who he talks to in government
and what he talks about," the official said. "But it's not like you can
say, ‘Oh, I'm never going to talk to that guy again.' "
On Thursday, Rubin will face what is undoubtedly a career low point - testifying before a committee on Capitol Hill, to answer for his role in the global financial collapse in front of national television cameras.
Before the congressionally created Financial Crisis Inquiry Commission,
Rubin is expected to face questions about his roughly $15 million
per-year Citigroup pay package, for a job that required him merely to
travel the world meeting with clients. He'll also be grilled about
whether he urged Citi to engage in more risky activities at a time when
the bank was careening toward insolvency.
Still, with his legion of former employees and regular phone calls, Rubin remains influential in the capital.
The long list of Rubin acolytes working for Obama includes National Economic Council Director Larry Summers,
Geithner counselor Gene Sperling, Budget Director Peter Orszag, deputy
assistant to the president Michael Froman (who worked with Rubin at
Treasury and at Citigroup), National Economic Council official Jason
Furman, Deputy National Security Adviser Tom Donilon, and Gary Gensler,
the head of the Commodity Futures Trading Commission. Summers and many
of the other officials also get regular phone calls from Rubin.
many of the basic assumptions underlying Obama's approach to the
economy can be traced to Rubin's ideas about the way capitalism should
work, say former colleagues.
Although Obama's team faces very different economic circumstances than
Rubin did at Treasury, "the basic philosophy of free market liberalism
is still there," said Alice Rivlin, who worked with Rubin when she ran
Bill Clinton's Office of Management and Budget.
"If I were running things again, I would certainly want to know what
Bob Rubin thought," Rivlin said. "I wouldn't necessarily do it, but I'd
want to know what he thought."
Rubin's critics say they see his fingerprints on proposals in Obama's
regulatory reform proposal. Obama would force derivatives trades onto a
public exchange -- but still leave Wall Street free to keep
"non-standard" trades hidden from public view. And critics complain
that the administration's resistance to calls to break up the
too-big-to-fail banks is classic Rubin. Rubin declined to comment.
Rubin's tattered reputation is a far cry from where it stood a decade
ago, when Rubin, then-Federal Reserve Chairman Alan Greenspan and
then-Deputy Treasury Secretary Larry Summers appeared in an iconic
image on the cover of Time magazine after the successful bailout of the
Mexican economy under the headline "The Committee to Save the World."
Greenspan testified Wednesday before the crisis committee, saying he
was right 70 percent of the time during his 21 years in public service.
That's a humbling admission from the man once lauded in a book by Bob
Woodward called "Maestro."
Rubin's record, too, has been tarnished to the point that it raised
eyebrows inside the Obama administration when CFTC chief Gary Gensler
invoked Rubin's name in a recent interview. "What's so marvelous about
Bob," Gensler told the New York Times in March, was that "he fostered
in people the ability to think. He wanted to hear differing ideas."
That's not something many others will say out loud. Gensler "was one of
the few people willing to go on the record saying he likes Bob Rubin,"
said the senior administration official. "But privately, there's still
a huge amount of respect for Rubin's thinking."
The mere mention of Rubin's name invokes cringes on the political left
- where "Rubinomics" is derided as an approach that coddles Wall Street
at the expense of Main Street.
is the guy whose policies basically allowed Wall Street to play Russian
Roulette with our future, and now millions of Americans are out of work
as a result," said Daniel Pedrotty, director of the AFL-CIO's office of
investment. "He took his money and fled the scene of the crime."
Executive pay is to be one area in which Rubin is likely to come under
fire from the commission. New York Times columnist Andrew Ross Sorkin
excoriated Rubin on Tuesday for giving outgoing Citi CEO Chuck Prince a
$12.5 million bonus even though the company was nearly destroyed under
In his book, "The Sellout," Charles Gasparino argues that Rubin was
largely responsible for driving Citigroup's appetite for risky trades
into dangerous territory.
But sources close to Rubin say the former Treasury chief isn't the type
to sweat such criticism. Famous for drawing out the pros and cons of
any issue on a yellow legal pad and methodically working out the best
course of action, Rubin has always been able to maintain a level of
"I get the sense that he's comfortable with his role at Citi," said a
financial industry executive who knows Rubin. "There's not a lot of
angst there. He's an extremely calm guy."
Kenneth Posner, the former head of Morgan Stanley's financial services
research group and author of the book Stalking the Black Swan, said
he's wary of placing too much blame on any one of the officials who
held office before the crash. "I don't think it's about Rubin, or even
Greenspan," Posner said. "The price we pay for a market economy is
uncertainty and even surprise."
Today, Rubin spends the bulk of his time in an office he pays for
himself at the Council on Foreign Relations headquarters in New York's
Upper East Side. As co-chairman of the board, he spends his time
talking about China and Russia with Henry Kissinger and African
development ideas with Kofi Annan. He is the chairman of the Local
Initiatives Service Corporation, a community development organization.
He's also vice chairman of Mt. Sinai hospital, sits on Harvard's
governing board, and oversees the Hamilton Project, an economic
initiative of the Brookings Institution.
And in December, he wrote a lengthy article for Newsweek in which he
urged Washington not to give up on the global economy - and offered a
few personal thoughts that may presage his Capitol Hill testimony. Very
few global prognosticators, he wrote, foresaw the possibility of a
"I regret that I, too, didn't see the potential for such extreme
conditions despite my many years involved in financial matters and my
concern for market excesses," Rubin wrote.
And he warned of a new crisis, from a massive federal budget deficit
that has grown under Obama. "This cannot continue indefinitely," Rubin
wrote, "and change can occur with great force - and unpredictable
Alexandra Arkin contributed to this article.