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Too Big to Jail

Posted on Nov 2, 2011
AP / J. Scott Applewhite

Former Citigroup CEO Charles Prince, left, and former Treasury Secretary Robert Rubin, who was a senior adviser and chairman of Citigroup during the mortgage and financial crises, testify on Capitol Hill in 2010.

By Robert Scheer

Can we all agree that a $1 billion swindle represents a lot of money, and the fact that Citigroup agreed last week to pay a $285 million fine to settle SEC charges for “misleading investors” demonstrates a damning admission of culpability? 

So why has Robert Rubin, the onetime treasury secretary who went on to become Citigroup chairman during the time of the corporation’s financial shenanigans, never been held accountable for this and other deep damage done to the U.S. economy on his watch?

Rubin’s tenure atop the world of high finance began when he was co-chairman of Goldman Sachs, before he became Bill Clinton’s treasury secretary and pushed through the reversal of the Glass-Steagall Act, an action that legalized the formation of Citigroup and other “too big to fail” banking conglomerates.

Rubin’s destructive impact on the economy in enabling these giant corporate banks to run amok was far greater than that of swindler Bernard Madoff, who sits in prison under a 150-year sentence while Rubin sits on the Harvard Board of Overseers, as chairman of the Council on Foreign Relations and as a leader of the Brookings Institution’s Hamilton Project.

Rubin was rewarded for his efforts on behalf of Citigroup with a top job as chairman of the bank’s executive committee and at least $126 million in compensation. That was “compensation” for steering the bank to the point of a bankruptcy avoided only by a $45 billion taxpayer bailout and a further guarantee of $300 billion of the bank’s toxic assets.

Those toxic assets and other collateralized debt obligations and credit default swaps were exempted from government regulation by the Commodity Futures Modernization Act, which Rubin helped design while he was treasury secretary and which was turned into law when Rubin protégé Lawrence Summers took over that Cabinet post. 

In arguing that the derivatives market in housing mortgages and other debt obligations required no government oversight, Summers told Congress, “First, the parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies. ... Second, given the nature of the underlying assets—namely supplies of financial exchange and other financial instruments—there would seem to be little scope for market manipulation. ...”

Oops. One wonders if Summers, who went on to be president of Harvard after playing such a disastrous role in the federal government, ever asked his mentor Rubin what went wrong. After all, it was Rubin who was a honcho at the “sophisticated financial institution” of Citigroup when, as the Securities and Exchange Commission filing against the bank explains, Citigroup structured and marketed a $1 billion toxic asset to investors without disclosing that it was simultaneously betting against that asset.

Back in January of 2008, knowing full well of the chicanery of his own bank and others with which he was quite familiar, Rubin nonetheless told an audience at Cooper Union in New York that the turmoil in the markets was “all part of a cycle of periodic excess leading to periodic disruption.” CNNMoney, reporting on his talk, noted that Rubin “doesn’t seem particularly alarmed. ... And the economic problems that he did acknowledge were blamed on just about everyone but the major financial players.”

Rubin, who became a key adviser to the Obama campaign, has long cultivated an image as a do-gooder by making philanthropic contributions that deflect attention from the consequences of his own grievous actions. He has played a major role in shaping Obama administration economic policy not only through former aides like Summers and Treasury Secretary Timothy Geithner but through the Hamilton Project, which he has funded at the Brookings Institution. The Hamilton Project has had much influence over the Democratic Party, and President Barack Obama as a young senator was the project’s first public speaker.

But facts these days tend to intrude in ways inconvenient to the superrich, who assume they can control the narrative. This month the Hamilton Project released a depressing assessment of the results of the era of radical market deregulation that Rubin’s policies launched, particularly as it had a horrendous effect on children. 

Referring to the “Great Recession,” dismissed by Rubin at its inception as a mere blip in the business cycle, the report noted that the family income of the median child in the U.S. has fallen nearly 14 percent in the past five years and is now 7 percent lower than in 1975, concluding that while the income of the top 10 percent of families with children has increased 45 percent in the last 35 years, “half of America’s children are worse-off than their counterparts 35 years ago.”

That’s a telling obituary for the illusion, fostered by Robert Rubin as effectively as anyone, that the 22 percent of children in the United States who suffer below the poverty line and the offspring of multimillionaires like Rubin are living in the same America.


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darkcycle's avatar

By darkcycle, November 3, 2011 at 8:08 am Link to this comment

Madoff is in jail because he stole money from rich folks. Rubin is on top of the world because he only stole from the 99%.

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By kazy, November 3, 2011 at 8:02 am Link to this comment
(Unregistered commenter)

oddsox your point is well taken. Jailing any of the billionare boyz doesn’t change the corruption within the financial system but wouldn’t jail time be an incentive for them to play nice? Or will that “carrot” be so tempting, the ability to make millions and billions of dollars through casino like finances be too compelling to be ethical? I guess one can argue if Washington had the desire and will and ability to jail these crooks, they would also be of the mind set to bring back the Glass-Stegall Act. But they don’t, because they like it just fine the way it is, they’re part of the problem - there’s no difference between those who govern and those who are in finance. The revolving door is quite apparent now. We are the 99%

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By Diana, November 3, 2011 at 7:48 am Link to this comment
(Unregistered commenter)

These FAT CATS are free to do as they please, just as George Bush said, “we are the haves and the haves more”. It has been disturbing to see Obama being so friendly with that jerk, and it was obvious those warmongers would never have to pay for their crimes.

Nothing will ever change in this country until we find a courageous leader(s) who care about this dying nation: we are rotting from within. Yes, Obama has been a big disappointment, but staying home (election 2012) will NOT accomplish anything other than “sending a message” while putting the Republicans back in charge.

Why should the rich want it any other way?  Who else will they get to do these shitty jobs?  Makes you want to bring out a big guillotine: off with their heads!

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prisnersdilema's avatar

By prisnersdilema, November 3, 2011 at 7:29 am Link to this comment

As Lao Tse once said, sometimes, laws and bars, and locks, only make things safe for the bigger crook to steal a whole country…. Their only fear once they cart their treasure away, is that laws, and bars, and locks will fail…

And whats worse is that our government protects them, congress and the Senate protect them, while putting the rest of the population in penury to pay for it all….

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By Mark, November 3, 2011 at 7:25 am Link to this comment
(Unregistered commenter)

Just returned form 4 weeks in China on business…some observations…

1) There is NO recession in China…let me repeat, THERE IS NO RECESSION in China…

2) They spend money like its going out of style…

3) Shopping malls with high end boutiques JAMMED with buyers…

4) I could not help but think what would of happened to the Robert Rubin’s in China had they created this mess in China…

5) Answer: They would be in jail for life or shot by a firing squad…

6) Now I’m a favorite of democracy…but this Chinese system works…you know why??? Because they take care of there own first and foremost…

7) Imagine a country of 1.3 billion that can’t feed themselves…

8) Also, they don’t stick their nose into other peoples business ie: Iraq, Afghanistan and possibly Iran…

9) And I’m sure I’ll hear from all the Amnesty people and their Human Rights record…mind your business, make money and you will do very well in China…

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caped amigo's avatar

By caped amigo, November 3, 2011 at 7:22 am Link to this comment

I will continue to nonviolently dissent as long as the Robert Rubin-type hold power and go uncharged for heinous crimes. E. Pluribus Unum. It should be “I’ve got mine, now kiss my ass”. Now that’s a motto I recognize to be true.

Just saw the new release “Margin Call” with Jeremy Irons and Kevin Spacey. Riveting and cold-blooded truths.

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oddsox's avatar

By oddsox, November 3, 2011 at 7:17 am Link to this comment

Jailing Rubin and other high-profile execs may serve justice.
But it won’t prevent another meltdown.
(not any more than BofA’s reversal on their $5/month debit card scheme will stop them from seeking to raise fees in other ways.)

Here’s what will:

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By ElkoJohn, November 3, 2011 at 6:27 am Link to this comment

Robert, you know the answer: government of, by and for the 1-Percenters.
The purpose of the Democratic Party is to throw a few bones to the
peasants to keep us from taking to the streets—Obama Inc. had their
chance to throw some bones, they screwed it up.
Long live the 99-Percent Populist Party.

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By Billy Jones, November 3, 2011 at 6:13 am Link to this comment
(Unregistered commenter)

And people still wonder why we occupy…

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By lasmog, November 3, 2011 at 5:53 am Link to this comment

We are such a cowed people. We can’t conceive of arresting our corporate masters because they always project an air of confidence and control. When we see them on TV making their stately pronouncements on financial matters we are comforted. Someone competent is apparently in control of our economy. Arresting our elites would send a shocking message to the masses that something is rotten in the state of Wall Street.

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By erichwwk, November 3, 2011 at 5:39 am Link to this comment

BTW, folks may want to review Bill Greider’s interview of Rubin in 2006 at the Nation entiled “Born Again Rubinomics”

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By erichwwk, November 3, 2011 at 5:35 am Link to this comment

“So why has Robert Rubin, the onetime treasury secretary who went on to become Citigroup chairman during the time of the corporation’s financial shenanigans, never been held accountable for this and other deep damage done to the U.S. economy on his watch?”

C’mon Robert, get real.  Even US Bank CEO publicly stated at the shareholders meeting “everyone steals,.... get over it.”

As Bill Black has pointed out, during his reign as regulator during the 1980’s S&L scandal, over 10,000 folks were referred to the FBI, resulting in over 1,100 arrests.

In this crisis, 20 times as big, with criminality even more flagrant, not a SINGLE criminal referral.

See a pattern yet?

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Allan Krueger's avatar

By Allan Krueger, November 3, 2011 at 5:28 am Link to this comment

ROBERT RUBIN: I don’t give a FUCK, I got’s mine!

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By Keith Bender, November 3, 2011 at 4:39 am Link to this comment
(Unregistered commenter)

This petition request aims in that direction.
Take a look if you would please.Inspired by the NNU
Nurses union efforts on Nov 3rd,2011.

“Tax Timmy and All his friends”

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By Frank, November 3, 2011 at 4:12 am Link to this comment
(Unregistered commenter)

The Republicans don’t hide the fact that they represent the one percent while the Democrats masquerade as ‘the party of the people’, while in reality, do everything they can to enrich the wealthiest.

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By madisolation, November 3, 2011 at 4:10 am Link to this comment

ardee, you wrote:

“Can our esteemed Justice Dept. head, Eric Holder, either cite that list or explain why no investigations are apparent and certainly no indictments are forthcoming.”

He’s too busy arresting dying cancer patients who smoke marijuana to relieve their pain.

In my opinion, when the law is applied unequally, the justice system in this and other countries will eventually cease to exist. Our society will crumble when those in charge grant special dispensation to their powerful friends. Obama and his Justice Department can play their games now, but how long before they’re brought to task?

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RenZo's avatar

By RenZo, November 3, 2011 at 3:49 am Link to this comment

Laissez rouler les têtes!
Sharpen the French razors!

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Ronald Thomas West's avatar

By Ronald Thomas West, November 3, 2011 at 3:41 am Link to this comment

Why isn’t Rubin in jail? IMPUNITY is a class of corporate executive, the word is no
longer limited to to behaviors of a few and is why Judge Garzon is no longer on
the bench in Spain. He dared take on what few dare, including Robert Scheer, or
we’d see more of this sort of exposé [links below] naming names to specific
criminal acts across the board:

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Billy Pilgrim's avatar

By Billy Pilgrim, November 3, 2011 at 3:41 am Link to this comment

I received a phone call yesterday on my land line
phone from a friendly young lady from the Democratic
National Committee. I let her give her programmed
spiel regarding the evil John Boehner and how we
Democrats must ensure that the Republicans do not
continue to control the House after next year’s
elections. Then came the request for money. I
politely told the young lady that I do not believe in
private contributions to political parties and/or
candidates. I restrained myself from lecturing the
woman nor did I bore her by letting her know that in
2008, I foolishly donated a few hundred dollars to
the Obama campaign and that I would never be so
stupid to waste my money again. I wished her good
luck, she sheepishly thanked me, and that was the end
of our conversation. The only way I will ever donate
money again would be to form a third party; a party
that does not accept donations from any corporate
entity, any union, any lobbyist, etc. I’m pretty
confident that said donation will not be forthcoming
any time soon.

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By Jane, November 3, 2011 at 3:36 am Link to this comment
(Unregistered commenter)

This is what happens when the main stream media is owned by corporations—the real crooks, like Rubin, get away.  People cannot connect the dots if they’re constantly led to look in the other direction—to be distracted.  This country’s newspapers and radio are to blame—the 4th estate has been usurped, and ultimately the government. 

So instead of informing citizens, newspapers’ task is to distract and spread propaganda. 

Thank god for the internet.  Let’s see how long this lasts.

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Leefeller's avatar

By Leefeller, November 3, 2011 at 3:34 am Link to this comment

Far as I can tell, accountability is not on the table especially for the 1 percent!

Occupy Wall Street is calling attention to these kinds of inequalities, disenfranchisement and exposing who the corrupt lack of integrity good old boy follow the money 1 percent are!

Money is not people nor are corporations, we have a real problem when our court system is bought and sold like Congress.  Occupy Wall Street is a beacon of light exposing the mooning rear ends of the system.

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By ardee, November 3, 2011 at 3:23 am Link to this comment

Just one name in a rather long list of those culpable in the crashing of our economy for personal gain.

Can our esteemed Justice Dept. head, Eric Holder, either cite that list or explain why no investigations are apparent and certainly no indictments are forthcoming.

Here’s a list of top Justice dept. heads, just as culpable as those on the other list:

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David J. Cyr's avatar

By David J. Cyr, November 3, 2011 at 3:00 am Link to this comment

The highest crimes go unpunished because the American people have routinely provided popular vote mandates for the corporate (R) & (D) party’s organized crime syndicate to decide what is legal, and which class should be punished for corporate crimes committed.

That’s why Rubin is smiling contentedly, while hundreds of millions of poor and working people pay the price for banksters’ crimes.

Will 99% of the American voters continue to obediently give the corporate party’s Republican and Democrat gangsters popular vote permission to keep punishing the public for all the highest crimes that gangster government gives the greatest criminals full immunity?

Voter Consent Wastes Dissent:

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By Memory Stick, November 3, 2011 at 12:25 am Link to this comment
(Unregistered commenter)

Hopefully articles like this will convince citizens to disregard these silly party labels and focus on what is good for the country and the next generation.

If Mr. Hope and Change had done even a bit of what he had promised during his loooooong campaign of lies there would be no #OWS. Those people would be doing what they did 3 1/2 years ago, that is working for real change.

Party Loyalty has literally ruined our country.

Can we put Humpty back together? It’s a good question.

Here’s an example: There is ONE candidate (...) ONLY One that will actually end the wars and return us to the vision of the founders, detailed in the Farewell Address of George Washington. That in itself is telling, isn’t it.

But many people that ostensibly agree with that vision won’t even consider voting for this candidate because he wears the wrong letter after his name.

The Democrats are apparently very happy with the continuation of the worst of the Bush policies, because they are carried out by a (D)emocrat. Wars, Drone Bombing, Government Secrecy, Bailing out Wall Street and on and on.

So, really, the voters get what they deserve.

Not much more, and a whole lot less, and they’re willing to eat that sandwich. It would be funny if it wasn’t so sad.

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By Desert Dude, November 2, 2011 at 11:30 pm Link to this comment
(Unregistered commenter)

And we send people like Lindsey Lohan to jail while these guys roam free.  She
only harms herself while America’s bankers do major harm to millions.  And yet
who’s getting all the press coverage?  Disgusting.

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