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Robert Rubin, Raise Your Right Hand . . .

Posted by Larry Doyle on April 8, 2010 9:15 AM |

Robert Rubin

Perhaps no one single individual is more representative of the Wall Street-Washington incestuous relationship than Robert Rubin.

Today, Mr. Rubin will provide testimony to the Financial Crisis Inquiry Commission which is charged with investigating the root causes of the economic crisis which emanated on Wall Street. Will the FCIC allow Mr. Rubin to hide behind the veil of platitudes, unnamed consultants, unknown risks, and the like? Will the FCIC finally stand up for American citizens and drill Mr. Rubin to expose the deeply embedded, culturally corrosive nature of the incestuous relationship between Wall Street and Washington?

A cursory review of Mr. Rubin’s career highlights the following:

Goldman Sachs and Co.: 1966-1993; variety of roles, culminating as Co-Chairman of the firm.
Clinton Administration: 1993-1999; served as Assistant to President for Economic Policy from ’93-’95, Secretary of Treasury from Jan. ’95-July ’99
Citigroup: 1999-2008; served as Director, Chairman of the Executive Committee, and Member of the Office of the Chairman of Citigroup. Also served as an economic adviser to Barack Obama’s campaign.

I am not optimistic that America will learn much from Mr. Rubin today, but if I were on the FCIC I would demand that Mr. Rubin address the following:

1. What was the full extent of your involvement in derailing the initiative of Brooksley Born to mandate that the CFTC (Commodities Future Trading Commission) have oversight of over the counter derivatives? In hindsight, what do you think of allowing these derivatives to trade in an unregulated fashion? How do you reconcile your involvement on this front back in the late ’90s with the developments at AIG?

2. What was the full extent of your involvement in the repeal of Glass-Stegall which allowed for the merger of institutions forming Citigroup? Please address the topic of lobbying dollars and campaign contributions paid specifically by Citigroup to members of Congress to support this legislation. Be specific. Was there a prearranged agreement in place for you to join Citigroup upon your departure from the White House in return for your support of this repeal? That is, was there a quid pro quo? Be specific please. Please provide access to your books and records.

3. What was the full extent of your involvement and relationship with the executives at Freddie Mac and Fannie Mae, specifically Leland Brendsel at Freddie Mac and Franklin Raines and James Johnson at Fannie Mae? Please address how you might reconcile the fact that these aforementioned executives walked out with tens of millions of dollars in compensation while having effectively cooked their books.

4. Please address the justification for your compensation in excess of $100 million dollars while at Citigroup, while the firm’s stock sank over 70% during your tenure.

5. How do you respond to the exceptionally incriminating testimony provided to this FCIC yesterday by your former colleague Richard Bowen? If you missed it, Mr. Bowen, the former chief underwriter within the consumer lending at Citigroup, highlighted how he was sending warning signals inside of your organization about the very questionable nature of mortgages purchased, packaged, and distributed by your organization. Please be specific.

6. Please address the nature of your relationship with former FINRA head and current SEC chair Mary Schapiro. Are you supportive of a requirement mandating that FINRA open all its books and records for a comprehensive review of their investment activities? If not, why not? Are you aware that FINRA owned and liquidated an investment of $647 million of auction-rate securities in mid-2007, mere months before that market sector totally collapsed? Do you think there is a chance that FINRA may have engaged in front running the ARS market at that time? Are you aware that an outstanding complaint against FINRA (Amerivet Securities vs. FINRA) alleges that the FINRA internal investment portfolio had funds directly or indirectly with Bernie Madoff? Are you supportive of an independent investigation of FINRA as directed by Sense on Cents Calls for Independent Investigation of FINRA.

Thank you for your time, Mr. Rubin. Please make yourself available for follow-up questioning in the future.

To Phil Angelides and other members of the commission, do you have the stones to truly serve the public interest and demand comprehensive answers to these questions? The historical record will judge you accordingly.

America deserves full and complete answers to all of these questions. Will you, Robert Rubin, be a statesman and provide them? America is watching and listening.


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