Fortune has the story: Robert Rubin Was Targeted for DOJ Investigation by Financial Crisis Commission
In late 2010, in the waning months of the Financial Crisis Inquiry Commission, the panel responsible for determining who and what caused the financial meltdown that lead to the worst recession in decades voted to refer Robert Rubin to the Department of Justice for investigation. The panel stated it believed Rubin, a former U.S. Treasury Secretary who has held top roles at Goldman Sachs and later Citigroup, “may have violated the laws of the United States in relation to the financial crisis.” Rubin, the commission alleged, along with some other members of Citi’s top management, may have been “culpable” for misleading Citi’s investors and the market by hiding the extent of the bank’s subprime exposure, stating at one point that it was 76% lower than what it actually was.
The revelation comes from a set of documents released by the National Archives last week.
According to the minutes, the commission voted on September 29, 2010, on whether to refer persons related to an item titled “Potential Fraud and False Certifications: Citigroup” to the office of the Attorney General of the United States. The staff notes that describe the item names Rubin, along with then Citi CEO Charles Prince, as having potentially violated the law. At the meeting, the commission’s general counsel Gary Cohen said that what the commissioners were voting on was just a referral and “not a recommendation for prosecution.” The vote was unanimous to refer the Rubin matter among the commission members present at the meeting, 6-to-0.
Rubin was part of Sandy Weill’s three person Chairman’s office for much of his 9+ year tenure at Citigroup. He was paid $126 million over that time. He briefly served as Chairman of the board as well. Though he tried to stay out of day to day operations, he was involved in decisions to increase risk-taking at the bank’s Fixed Income division (NY Times):
Citigroup insiders and analysts say that Mr. Prince and Mr. Rubin played pivotal roles in the bank’s current woes, by drafting and blessing a strategy that involved taking greater trading risks to expand its business and reap higher profits. Mr. Prince and Mr. Rubin both declined to comment for this article.
Despite all this experience, Rubin disclaimed responsibility for what happened at Citi and across the street.
Rubin has said that Citigroup’s losses were the result of a financial force majeure. “I don’t feel responsible, in light of the facts as I knew them in my role,” he told the New York Times in April 2008. “Clearly, there were things wrong. But I don’t know of anyone who foresaw a perfect storm, and that’s what we’ve had here.
I’ve written earlier about the Phil Angelides’ view that senior executives must be prosecuted. He chaired the Financial Crisis Commission and had this to say:
“It’s been a disappointment to me and others that the Justice Department has not pursued the potential wrongdoing by individuals identified in the matters we referred to them. At the very least, they owe the American people the reassurance that they conducted a thorough investigation of individuals who engaged in misconduct.”
PS. Rubin was also involved in the Enron mess (from Bloomberg):
During the Enron scandal in 2001, Rubin called Peter Fisher, under secretary of the Treasury for domestic finance, and asked if the Bush administration might find a way to intervene and avoid a downgrade of Enron’s credit rating. Later, Rubin said that even though Citigroup faced huge losses—the bank ultimately paid $3.66 billion to settle legal claims against it and lost billions more when Enron cratered—he had placed the call as both a bank executive protecting a financial position and a concerned former Treasury official. “I’d do it again,” he told the New York Times, brushing off even the perception of a conflict of interest.