From Saturday’s WSJ:
Under fire for his role in the near-collapse of Citigroup Inc., Robert Rubin said its problems were due to the buckling financial system, not its own mistakes, and that his role was peripheral to the bank's main operations even though he was one of its highest-paid officials.Citibank stock is down 70% since Rubin joined the firm in 1999, and down 86% since its peak two years ago.
Its troubles have put the former Treasury secretary in the awkward position of having to justify $115 million in pay since 1999, excluding stock options, while explaining Citigroup's $20 billion in losses over the past year and a government bailout of at least $45 billion.
"Even though he has no 'operating' responsibilities, he still has a fiduciary responsibility as a board member," said William Smith, a New York money manager and frequent critic of Citigroup's current management and board. "He has overseen the entire meltdown, yet been compensated as an operating employee while bragging about having no operating responsibility." Mr. Rubin can't "have it both ways," Mr. Smith added.
Citibank is the most egregious example of banks saying that everything is OK as the financial collapse built this year, and systematically underestimating the risk posed by complex derivative instruments.
I guess NY bankers have the same attitude towards personal accountability as Washington politicians. (Of course, Rubin is both, having served as US Treasury Secretary from 1995-1999). If Wall Street is supposed to have the smartest financial minds in the world, why is it that they couldn’t create
Decades from now, historians may look at Enron and Worldcom as rare examples when leaders of business collapses actually paid a price for their malfeasance. Meanwhile, “leaders” like Rubin get millions for their pockets, billions in taxpayer bailouts, and help destroy trillions in US equity market value, while continually dodging any responsibility for their actions.