Attached herewith is an important report in the Guardian. It places the deregulation of Wall Street during the Clinton Administration into a particularly smarmy perspective by examining documents just released by the Clinton library. Note the connections to players now in the Obama Administration.
This report paints a revealing albeit depressingly familiar portrait of how the iron triangle of individuals and money moving between government executive positions, and private sector, together with friendly legislators in Congress encourages corruption that leads ultimately to taxpayer bailouts. Consider please the following:
1. Note how the memos make it look like President Clinton was being rushed, implying a certain degree of passivity and manipulation by advisors. But before taking this at face value, bear in mind, Clinton was never a passive actor; quite the opposite, he was a highly energetic president. He set the tone, and he picked these advisors; he stayed with them; and he passed many of them on to President Obama.
2. Note that the repeal of Glass Steagall — Clinton’s signature deregulation of the financial markets and perhaps the major contributor to the rise of speculation that culminated in 2008 crash — was not a last minute affair. In fact, the memos show effort to repeal reaches bat to at least in February 1995 and May 1997 and the reference to eating the paper after you read it suggests a degree of malevolent cynicism.
3. Note the tight connection between the repeal Glass-Steagall and the pending Citigroup merger with Travelers Group, and particularly, the central the role played by Secretary of the Treasury Robert Rubin in the promotion of the of that repeal. Rubin was Secretary of the Treasury from 11 January 1995 to 2 July 1999 — the period covered by the memos contained in the Guardian report.
4. Finally, the reader should note that four months after leaving the Treasury Department, in Oct 1999, Rubin joined Citigroup. Here is a contemporary portrait painted by a 27 October 1999 report in the New York Times,
“Mr. Rubin, 61, a former top official of Goldman, Sachs & Company, said yesterday that he had joined Sanford I. Weill and John S. Reed, the chairmen and chief executives Citigroup, in what Mr. Reed described as a ”three-person office of the chairman” that will oversee what has become the first true American financial conglomerate since the Depression.
The appointment came less than a week after the Clinton Administration and Congress agreed on a compromise bill that would overhaul the laws that regulate the financial industry, a measure that removes many of the restrictions preventing banks, securities firms and insurance companies from buying one another or engaging in one another’s businesses. Both Mr. Rubin and Citigroup strongly supported the bill, which would greatly benefit the company. Mr. Rubin said he played a role in arranging the final compromise that will probably lead to the repeal of the so-called Glass-Steagall legislation. But he said that had nothing to do with his decision to join the company.”
By 2007 Rubin was Chairman of Citigroup. And in 2008, nine years after the repeal of Glass Steagall, the worst financial crisis since the Great Depression hit Wall Street to trigger the worst and longest recession since the Great Depression. That crisis, among other things, collapsed the stock markets, destroyed retirement nest eggs, wrecked the housing markets, and put millions of people out of work — and our nation has still not recovered. Then the “best government money can buy” added insult to injury by bailing out of the banks that created the mess, while ducking the issue of re-regulating their behaviour with anything close to proven power of defunct Glass-Steagall Act. Some observers are now warning the government’s failure to reign in speculative behaviour is setting the stage for yet another crash (e.g., here and here)
And what about Rubin’s role? According to information in Wikipedia, on 3 December 2008, shortly after the financial collapse, the Wall Street Journal characterized Rubin’s mix of oversight and management responsibilities at Citigroup “murky.” In an interview with the Journal, Rubin defended himself, saying: “I think I’ve been a very constructive part of the Citigroup environment.”But, the Journal reported that Citigroup shareholders suffered losses of more than 70 percent since Rubin joined the firm and that he encouraged changes that led the firm to the brink of collapse. Investors filed a lawsuit in December contending that Citigroup executives, including Rubin, sold shares at inflated prices while concealing the firm’s risks. A Citigroup spokesman said the lawsuit was without merit..
But what happened to Rubin personally? According to a 20 September 2012 report in Bloomberg, Rubin received a total compensation of $126,000,000 from Citigroup between 1999 and 2009. Among other things, the former eagle scout is now co-chairman of the prestigious Council on Foreign Relations.
Wall Street deregulation pushed by Clinton advisers, documents reveal
Previously restricted papers reveal attempts to rush president to support act, later blamed for deepening banking crisis
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