The legendary calm kung fu, coupled with decades of economic and market expertise, has always made Rubin very popular. Since 2007, he has been the co-chairman of the American Council on Foreign Relations. He is regarded as the founder of Hamilton Project of Brookings Institution, which is devoted to studying the correlation between government expenditure and unemployment rate. He is a frequent visitor to the annual Billd Berg conference. Compared with this mysterious conference, the Davos conference is like the recording scene of American idol. He is also a low-key member of the Harvard Council, which manages Rubin's alma mater, Harvard University. He regularly meets with members of Congress and foreign leaders, and contacts with the Obama administration through timothy geithner and other students.
After Rubin left the post of Finance Minister from 65438 to 0999, he joined Citigroup and served as the chairman of the executive committee of Citigroup until 2009, during which he also served as the chairman of the board of directors. During his employment with Citigroup, the federal government had to use taxpayers' money to inject $45 billion into Citigroup and guarantee about $300 billion in illiquid assets. Rubin gave up part of his contract salary-but the total amount of cash and stock he got during his tenure was about $65.438+$26 million, and during this period, his calm seemed more like helplessness. Nassim nicholas taleb, the author of Black Swan, said: "No one in the world can describe the fraud in the banking industry more vividly than him." . "He earned $6543.8+$200 million from Citigroup, which has gone bankrupt in a strict sense. Now, we taxpayers are paying for it. "
It is an arduous task to evaluate Rubin's role in the financial crisis, but now, this "elephant turtle" has shrunk into its shell, which makes this task even more arduous. As we all know, Rubin used to be very good at dealing with the media-Outlook magazine published an article introducing Rubin in 2007, and the author of this article said that he "could hardly find a feature article that was unfavorable to Rubin as a whole"-however, Rubin declined numerous interview requests in the past four years.
In April this year, Rubin appeared at an event of the American Council on Foreign Relations. The white "Booker Brothers" shirt on him is furry, and the gray suit looks wrinkled, as if he had slept in it the night before. He took me aside and told me why he had been considering whether to make public statements for months. "I have been trying to balance work and life." He said, "I'm really busy. I'm not sure if I have a good balance." A few weeks later, a representative said that the interview almost achieved its goal, but Rubin followed the advice of the consultant, who told him not to talk.
Rubin's four-and-a-half-year tenure in the Ministry of Finance was criticized, but it was not his personality that annoyed his critics, but his failure to stop the abolition of 1999 glass-steagall act and the crazy expansion of OTC derivatives. "To some extent, the transformation promoted by Rubin in the 1990s undoubtedly planted the seeds of economic collapse." Angelides said.
Many of Rubin's supporters are excited at the mention of glass-steagall act. The Act was implemented in 1933, separating the activities of commercial banks from those of investment banks. "Some people believe that Rubin pushed for the repeal of the bill." "I was there," said Michael Schlein, a former head of the SEC office and a former Citigroup executive. That was not the case. "
20 10 in March, when testifying to the financial crisis investigation Committee, Rubin admitted that he had "advocated the abolition of glass-steagall act". However, "by the time we abolished the bill, the restrictions of the bill had disappeared, except for the insurance business, which had nothing to do with what happened afterwards." What Rubin means is that commercial banks have been able to underwrite bonds and securities for a long time and engage in M&A consulting business. They have been buying investment banks for most of the 1990s. Rubin told the investigation committee that the abolition of glass-steagall act eliminated the "red tape" experienced by banks engaged in these businesses. In other words, he thinks he is just pushing for the abolition of a law that has become a dead letter.
"Of course, it would be much better if we had foresight and political determination to prepare the protective measures set in advance after the financial crisis to 20 10." LawrenceSummers said. He is a friend of Rubin and the next finance minister after Rubin. "But this has nothing to do with the abolition of glass-steagall act. In the decade before the repeal of the bill, a series of measures by the Federal Reserve made it almost impossible for large banks to engage in investment banking. " On July 18, 2008, Rubin just said: "The abolition of glass-steagall act led to the financial crisis, which is a myth."
But this is not known to everyone. Besides Paul Volcker, Rubin's former colleagues at Citigroup have recently changed their views. In a letter to The New York Times on June 5438+ 10, 2009, john reid, who served as the co-CEO of Citigroup on June 5438+0998, wrote: "As an older banker, I also experienced the times before and after glass-steagall act. I agree with Paul Volcker (and mervyn king, Governor of the Bank of England) that those institutions that mainly do business in the capital market, and those institutions that involve more traditional business. Richard parsons, former chairman of Citigroup, said in Washington this spring, "To some extent, the economic collapse in 2007-2008 was the result of the abolition of glass-steagall act. "What people are most familiar with is what Sandy Will said to the American Consumer News and Business Channel in July 20 12. He said that to restore confidence in the financial system, the bill must be restored in some form. " Let banks accept deposits and issue commercial and real estate loans, "Will said." Let them do things that will not bring risks to taxpayers' money. "
Summers said it was revisionism, distorted by hindsight and political convenience. On the contrary, he put forward an inference: if allowing commercial banks and investment banks to merge led to the financial crisis, why should we rely so much on commercial banks to acquire investment banks to solve the crisis? The reality is that many companies that benefited from the abolition of glass-steagall act (such as Citigroup, JPMorgan Chase and Bank of America) still exist. However, a few investment banks (Bear Stearns, Lehman Brothers and Merrill Lynch) only left souvenirs auctioned in Yi Bei.
Perhaps because of the complexity of the derivatives market, Rubin's role in relaxing the supervision of the OTC derivatives market has not received much attention. 1In March, 998, Brooksley Born, Chairman of the Commodity Futures Trading Commission of the United States, hoped to issue a "policy summary", which may cause a series of problems about the supervision of derivatives.
Bowen's plan is to let the Commodity Futures Trading Commission supervise these often confusing new financial products. Rubin, Summers, Federal Reserve Chairman Ben Allen Greenspan and Securities and Exchange Commission Chairman Arthur Levitt raised objections that Bourne had intervened. (Levitt is a member of the board of directors of Bloomberg, which owns Bloomberg Businessweek. In their view, the Committee does not have the corresponding authority or expertise to supervise complex derivatives in a rapidly developing market. Their great strength made Bourne unable to resist. These people persuaded Congress to ignore Bourne's opinion.
In his memoir The Uncertain World published in 2003, Rubin wrote that he was in favor of making derivatives "subject to comprehensive and higher profit restrictions". He just disapproved of Bowen's method, calling it "too sharp". But even if Rubin and others had an alternative, they didn't come up with it quickly enough. In September, 1998, the hedge fund long-term capital management company closed down, partly because it lost1600 million dollars in interest rate swap transactions. The Federal Reserve Bank had to organize its major creditors to carry out a $3.6 billion rescue operation so as not to affect the whole market. Jim Leach, then chairman of the House Banking and Financial Services Committee, introduced Bourne at a hearing and said, "You are welcome to defend yourself if you want." Ritchie also opposes handing over supervision to the Commodity Futures Trading Commission.
Even now, Summers still believes that he and Rubin are not wrong in opposing Bourne's "seizure of power". "We are not considering the willingness to regulate derivatives." Summers said Bourne didn't know what she was trying to regulate. Bowen declined to comment on this article.
Greenspan, Levitt and others all admit that in retrospect, some misjudgments they made at that time may have laid the groundwork for the financial crisis.
Rubin didn't look back, at least not in public. He also persuaded a president who was attacked by politics to implement Rubin's economics. Linking a person's name to a policy that led to the biggest postwar economic development in American history suddenly made other arguments seem insignificant. "Rubin is called the most efficient US Treasury Secretary after alexander hamilton," Clinton said on July 2 1999. "I think this praise is well deserved." That was the day Rubin stepped down as Treasury Secretary.