Did Rubin really say that?

By Felix Salmon
March 4, 2010
This Huffpo article has no byline, and the quote is mostly an indirect one, but if Bob Rubin said anything like this he deserves all the pillorying that he's getting, and more:

Much of the blame for the current crisis falls on the shoulders of the fiscal policy decisions of the Bush administration, Rubin said, under which "we lost a decade to some extent."

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This Huffpo article has no byline, and the quote is mostly an indirect one, but if Bob Rubin said anything like this he deserves all the pillorying that he’s getting, and more:

Much of the blame for the current crisis falls on the shoulders of the fiscal policy decisions of the Bush administration, Rubin said, under which “we lost a decade to some extent.”

Rubin, here, is conflating three different issues to make himself look good. It’s true that the Bush administration made bad decisions from a fiscal-policy perspective, cutting taxes massively just as it was about to spend trillions on going to war. And it’s also true that the Bush decade was a lost one. But it’s simply not true that the Bush administration can or should shoulder the blame for the crisis. Frankly, Rubin himself is much more blameworthy in that regard than Bush or any of his appointees.

There’s a lot of blame to go around when it comes to this crisis, of course. But let’s see who deserves huge chunks of it:

  • Traders at investment banks, who levered up and started making so much money that they ended up ousting the investment bankers who had historically run them.
  • Arbitrageurs who made enormous sums of money by making leveraged bets that something with a 95% chance of happening was, indeed, going to happen.
  • Senior management at investment banks, who urged their traders to take on ever more risk and leverage.
  • Senior US politicians who urged the deregulation of the derivatives industry over the objections of, among others, Brooksley Born.
  • Senior US politicians who were responsible for dismantling Glass-Steagal.
  • Senior US politicians who ran US fiscal policy for the benefit of Wall Street, while asking for nothing but cheap debt in return.
  • Bankers-turned-politicians-turned-bankers who institutionalized the revolving door between Wall Street and Washington, making it clear that if you did the banking industry’s bidding during your tenure in DC, you’d be rewarded on the other side with a highly remunerative job.
  • Senior executives at big commercial banks who had no idea what risks they were running.
  • Senior executives at big commercial banks who urged their fixed-income departments to take on ever-increasing amounts of risk.
  • Board members at big commercial banks who failed to implement any kind of succession strategy should their CEO suddenly have to leave.
  • Grandees who bullied lesser mortals into doing what they wanted just because everybody assumed they knew what they were talking about and because they were paid eight-figure salaries to just sit around and be grand.
  • People so blind to their own weaknesses that even after the crisis happened, they refused to admit any responsibility for it at all.

You’re probably getting the picture by now: Robert Rubin, Goldman Sachs arbitrageur and chairman, US treasury secretary, and Citigroup grandee, was the Forrest Gump of this crisis, turning up in all the key places at all the key times. The fact that he’s still trying to deflect blame off himself and onto the hapless George W Bush is simply pathetic. There’s more than enough bad stuff to pin on Bush that he really shouldn’t blame the crisis on him as well. Especially not when he’s so personally culpable for the crisis. Indeed, there’s probably no one individual, with the possible exception of Alan Greenspan, who deserves more blame for this crisis than Rubin does. Let’s not lose sight of that.

Update: The byline was originally left off by mistake: credit for the HuffPo article goes to Grace Kiser.

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