Rubin Resigns from Citi; Bank to Sell Smith Barney « naked capitalism

Friday, January 9, 2009

Rubin Resigns from Citi; Bank to Sell Smith Barney

Rubin’s departure from Citigroup would seem to imply that his continued service there, amid the newly critical commentary on his failure to rein in the bank’s pursuit of risk, was no longer a plus. But the real question is: not a plus for him, or not a plus to the bank?

Citi has also decided to sell Smith Barney. A brokerage unit, which provide solid revenues even in bad times (brokers have increasingly migrated towards asset under management pricing structures) would presumably be attractive to a large bank. But there are comparatively few well capitalized large retail banks these days.

26 Comments:

Anonymous says:

January 9, 2009 at 4:02 pm

Yves said-

“On the verge of a face plant now.”

I have no idea what that means??? Plastic surgery?

Anonymous says:

January 9, 2009 at 4:27 pm

In Snowboarding / Skating, when you face plant you take a nasty landing face first.

STS says:

January 9, 2009 at 5:16 pm

$115M for lending his inflated reputation to Citi for 9 or 10 years? That’s rather better than the return on Citi shares during the past decade. Let’s just say he “made the most of his opportunities.”

Anonymous says:

January 9, 2009 at 5:21 pm

Directed Here from Jesse

Teflon Bob and Banking Deregulation

http://lists.essential.org/corp-focus/msg00048.html

Steve says:

January 9, 2009 at 5:26 pm

Funny, neither Rubin’s letter of resignation nor Citi’s press release mentions that the bank was insolvent without the $300B government rescue. Such a small detail alongside Rubin’s incomparable value to the franchise over the last 10 years.

Anonymous says:

January 9, 2009 at 6:49 pm

The smart and savvy know that there are only different varieties of mafia operating nationally to internationally.

independent

Stuart says:

January 9, 2009 at 8:25 pm

rats leaving the ship?

jmd says:

January 9, 2009 at 9:38 pm

Revolting…try to take the high road for once RR, and acknowledge that your advice led Citi on the path to self-destruction. It would be great if Geithner and Summers would make the same kind of acknowledgment, preferably before taking office. Oh yes, acc. to Cheney, no one could have predicted this kind of financial collapse. Except every single Lb risk officer with whom I spoke for the 18 mos. before I left. Uniformly, their view was that no one in management wanted to hear it. Good luck fly-fishing Rob’t, maybe your compatriort Madoff can join you in some kind of joint plea deal!

Stuart says:

January 9, 2009 at 10:19 pm

maybe we’ll get lucky and both Rubin and Madoff will go hunting with Cheney.

Anonymous says:

January 9, 2009 at 10:38 pm

Rubin, Geithner and Summers – Change you can believe in.

Anonymous says:

January 9, 2009 at 10:55 pm

Wall Street and traders. WTF, who cares. These are the scum of the earth people. There has never been a more potent terrorist organization than “wall street” but you can bet your ass that no one is looking at these criminal fucks.

Anonymous says:

January 9, 2009 at 11:13 pm

I suppose he was bad for the bank’s image, after famously saying that he couldn’t be expected to know the facts of the bank’s operations and positions; that was the job of the Risk department.

Blaming the Risk department is indeed the industry standard; their job is to take low pay and take the risk, someone to fire when things go wrong. But he goofed and said it publicly. Oops.

WalrusBank says:

January 9, 2009 at 11:31 pm

Check this out:

http://changealley.blogspot.com/

This part is particularly crazy:

“The government has received warrants valued at $13.8 billion in the 25 biggest capital injections from TARP, according to Bloomberg data. Under the terms Buffett negotiated for his $5 billion stake in Goldman Sachs, the TARP certificates would have been worth $130.8 billion.”

Ten times as much!

Anonymous says:

January 9, 2009 at 11:44 pm

I see J. Ezra Merkin also resigned
today, apparently at the request of the government. I wonder if RR wasn’t also ‘invited’ to leave Citi
by the same and for the same reasons.

YK says:

January 9, 2009 at 11:47 pm

Somehow Citi got from the government what it needed to survive. Had Rubin worked for Lehman, would Lehman be alive now?

Yves Smith says:

January 9, 2009 at 11:58 pm

YK,

I am certain the answer is yes. Rubin would have been able to persuade the powers that be that a failure would be a systemic event.

However, Rubin never in million years would have gone to Lehman, and perhaps more important, Fuld never would have asked him. Fuld was a crazy person and a control freak. Rubin would have represented a huge threat to him. Lehman had a weak board by design (with all due respect to Henry Kaufman, who is smart, he is not the sort who would have ever crossed Fuld).

YK says:

January 10, 2009 at 12:38 am

Just trying to establish that, in a cynical way, Rubin’s services were worth the money Citi paid him.

bg says:

January 10, 2009 at 12:38 am

I liked your comment questioning who would benefit from Rubin leaving, it crossed my mind immediately.

I don’t think soviet companies worried a whit about having KGB members on their board. But I think Citicorp was tarnishing Rubin’s KGB credentials.

Oh dear. I posted another cynical comment. It must be catching.

Yves Smith says:

January 10, 2009 at 12:46 am

Sadly, Mr. Market disagrees with us. The WSJ says that Citi sold off badly on the announcement of Rubin’s departure, and that contributed to the sell-off at the end of the day.

And Citi was probably less able under the new regime to feed at the trough than under the Bushies. Even they both wore the magic Goldman decoder ring, Rubin and Paulson were not buddies, while Rubin was thick with Summers and all the other ex-Clintonites that have are being recycled. And Obama is much more careful about appearances than the Bushies were on their best days.

So I think this is a plus for Citi all around, and should be seen that way.

john says:

January 10, 2009 at 1:31 am

‘The magic Goldman decoder ring”

folks, I think that there is is what we could call an YS “TM” or trademark

Anonymous says:

January 10, 2009 at 3:34 am

Rubin’s tired alright…..tired from counting all that money everynight before going to bed, all $110m dollars worth.
Note the timimg of his departure…just before Obama comes into office, yep he’s got some political plans in the works (him and Summers).Remember this is the guy who claims no responsbility for the demise of Citigroup so its well within his ego to think “business as usual” in a new role with the Obama camp.

Gentlemutt says:

January 10, 2009 at 9:06 am

Two (sort of) down, one to go!
http://www.time.com/time/covers/0,16641,19990215,00.html

Bob Rubin is the Charles Mitchell of this era. I can only hope that Obama has elected to spin all these Clintonite jerks through the DC sausage-maker as fast as possible, so the wooden stakes really penetrate the vampires’ hearts. Then maybe Obama can finally hire some genuinely civic-minded talent.

Anonymous says:

January 10, 2009 at 11:22 am

From the archives:

Former Treasury Secretary Joins Leadership Triangle at Citigroup

Eric L. Prentis says:

January 10, 2009 at 2:53 pm

Mr. Rubin’s tenure at Citigroup is a complete failure, in spite of his $115 million dollar compensation. Citi is bankrupt and only kept in business by the US government committing approximately $309 billion taxpayer dollars to prop up the company. To add insult to injury, Citi continues to pay management bonuses, dividends, go on junkets and spend many millions of dollars on the NY Mets new Citi Field and the Rose Bowl Game presented by Citi. The financial ruling class thinks they are entitled to business as usual supported by the taxpayer, their motto, “what’s good for Citi is good for America.”

Anonymous says:

January 10, 2009 at 4:12 pm

Rubin, Summers et al. circa 1999

Ariel says:

January 10, 2009 at 10:13 pm

It’s interesting how the news shows up to confirm what the charts signal. Citi stock broke when it fell under $10-11 and hasn’t been able to get up. Just looking at that chart has been making me feel queasy! Won’t be surprised if some more nasty news slithers out.

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