Merging Finance and Health Care Leadership – Robert Rubin Proteges Running DHHS, Spouse of Hedge Fund Magnate Running the FDA

Yves here. This post describes a pair of examples in the mistaken assumption that financiers, or at least people with connections to financiers, are the best people to put in charge of anything. Of course, whether people actually believe that assumption, or use that as a cover to curry favor with the 0.1% remains to be seen. But there is evidence that at least some people in positions of influence actually do believe it. For instance, during the famed auto bailouts, for instance, that the government brought in a dealmaker, Steve Rattner, whose investment banking experience was concentrated in media companies. And the crisis showed that the Masters of the Universe were better at lining their pockets rather than doing the job that ostensively justifies their elevated position and outsized pay: allocating capital efficiently, to the best outcomes for society as a whole.

By Roy Poses, MD, Clinical Associate Professor of Medicine at Brown University, and the President of FIRM – the Foundation for Integrity and Responsibility in Medicine. Cross posted from the Health Care Renewal website

Hidden between the lines of some not very prominent news stories were reminders of how close health care and financial leadership have become in these times of continuing economic unrest after the global financial collapse/ great recession.

After the events of 2008, it became more apparent that the dysfunction in academics and health care  paralleled that seen in finance.  One reason may have been the overlapping leadership of finance and health care.  For example, in 2008 we first posted about how Robert Rubin, who was then a Fellow of the Harvard Corporation, the top group responsible for the governance of that great academic and medical institution, bore responsibility for the global financial collapse/ great recession.  Mr Rubin as Treasury Secretary was a proponent of financial deregulation in the Clinton administration.  Later, he became a top leader of Citigroup, whose near collapse helped usher in the crisis of 2008 (look at our 2008 post here and our 2010 post here.  Rubin just stepped down from his Harvard position this year,)  Since 2008 we found many other links among the leadership of Wall Street and of academic medicine and of big health care corporations.  These links, if anything, seem to be getting stronger.

From the Department of Health and Human Services to Citigroup and then back to the Department of HHS

A tiny, four sentence Reuters story noted an apparently routine appointment to upper management at the US Department of Health and Human Services.  The first three sentences were:

U.S. Health Secretary Sylvia Burwell named Citigroup Inc executive Kevin Thurm as senior
counselor of the U.S. Department of Health and Human Services (HHS)
, which is implementing the controversial U.S. Affordable Care Act.

Thurm has served in a number of roles at Citi since joining the bank in 2001, including senior adviser for compliance and regulatory affairs and deputy general counsel.

Before joining Citi, Thurm, a former Rhodes scholar, was the deputy secretary of the U.S. Department of Health and Human Services.

Why is that significant?  First, the near bankruptcy of the huge, badly led Citigroup was widely acknowledged to be a cause of the global financial collapse.  A 2011 New Yorker article on the role of the revolving door between Washington and Wall Street (“Revolver,” by Gabriel Sherman) summarized the plight of Citigroup and the role of Robert Rubin in it,

Citigroup was the most high-profile of Wall Street’s basket cases, the definitionally too-big-to-fail institution. With massive exposure to the housing crash and abysmal risk management, the firm cratered, surviving as a virtual ward of the state after the government injected billions and took a 36 percent ownership position. Along with AIG and Fannie and Freddie, Citi came to be seen as a pariah institution, felled by management dysfunction and heedless greed in pursuit of profits.

Complicating matters for Citi, the wounded bank found itself tangled in the populist vortex that swirled in the crash’s wake. On the left, there were calls that Citi should be outright nationalized, stripped down, and sold off for parts. Pandit was called before irate congressional-committee members to answer for Citi’s sins, an ignominious inquisition captured on live television. In January 2009, under pressure, Citi canceled an order for a new $50 million corporate jet.

There was plenty of blame to go around at Citi. Chuck Prince, a lawyer by training who succeeded Citi’s outsize former CEO Sandy Weill, had little grasp of the complex mortgage securities Citi’s traders were gambling on. As late as the summer of 2007, when the housing market was in free fall, Prince infamously told the Financial Times that ‘as long as the music is playing, you’ve got to get up and dance.’

Bob Rubin himself pushed the bank to take on more risk in order to increase its profitability, a move that Citi’s dismal risk management was ill-equipped to handle. Pandit, whom Rubin had helped to recruit in 2007 just as the economy began to unravel, was tasked with cleaning up the mess when he became CEO in December of that year, and his early tenure had a deer-in-headlights character. Eventually, he realized that the asset class Citi lacked most was human capital, of the blue-chip variety.

The article also summarized Rubin’s role in the fervor of deregulation in service of market triumphalism that lead to the financial collapse,

In tapping Rubin to run Treasury, Clinton was sanctioning a revolution in the Democratic Party, one that fundamentally redefined the party’s relationship with Wall Street. Rubin, along with Alan Greenspan and Larry Summers, believed in an enlightened capitalism, which would spread prosperity widely. This enchantment with the beneficence of markets became the dominant view in Democratic Washington, hard to argue with when the economy was booming, as it was in the second half of the nineties. Rubin recognized that derivatives posed a risk but effectively blocked efforts to regulate them and pushed for the repeal of the Glass-Steagall Act, the Depression-era legislation that prevented commercial banks from merging with investment and insurance firms (the new law essentially legalized the $70 billion merger in 1998 of Citicorp and Travelers Group that created Citigroup).

Circling back to recent events, Once he got to Citigroup, Rubin assembled a team, partially from his old associates in the Clinton administration,

He also recruited several former Clinton aides to Citi, including former Health and Human Services deputy secretary Kevin Thurm….

So Kevin Thurm became something of a Robert Rubin protege at Citigroup. In fact, he rose to an important leadership position at the same time Citigroup was getting ready to become a “basket case,” in part apparently because of the advice of Robert Rubin.  According to a 2013 version of Mr Thurm’s official Citigroup bio,

Kevin L. Thurm is Senior Advisor for Compliance and Regulatory Affairs at Citigroup.

Previously, Thurm served as the Chief Compliance Officer of Citi. In that role, Thurm led Global Compliance which protects Citi by helping the Firm comply with applicable laws, regulations, and other standards of conduct, and is responsible for identifying, evaluating, mitigating and reporting on compliance and reputational risks and driving a strong culture of compliance and control. Since joining Citi in 2001, Thurm has also served as Deputy General Counsel of Citi, where he led the Corporate Legal group, overseeing a number of Company-wide Legal functions and providing support on day to day matters, including issues involving the Board, senior executives, and regulators; Chief  Administrative Officer of Consumer Banking North America, where he helped lead the business group and was responsible for a variety of functions including Community Relations, Compliance, Legal and Public Affairs; Director for Administration in the Corporate Center; Chief of Staff to the President and Chief Operating Officer of Citigroup; and as the Director of Consumer Planning in the Global  Consumer Group.

To recap, Mr Kevin Thurm was a top compliance executive of Citigroup while the company was imploding, and being a protege of Robert Rubin, an architect of the financial deregulation that led to the global financial collapse, and a leader of Citigroup responsible for the risky behavior of that company that led to its near collapse, which was another precipitant of the global financial collapse or great recession.  It is not obvious that these are great qualifications to be Senior Counselor at DHHS.

Moreover, Mr Thurm’s responsibilities at DHHS would not be limited to compliance or financial leadership.  According to the official DHHS press release announcing his appointment,

As a Senior Counselor, Thurm will work closely with the Department’s senior staff on a wide range of cross-cutting strategic initiatives, key policy challenges, and engagement with external partners.

Yet, there is nothing in Mr Thurm’s public record to indicate that he has any actual experience in health care, medicine, public health, or biologic science.  So it is not obvious why he should be entrusted with leading “cross-cutting strategic initiatives, [and] key policy challenges.”

On the other hand, Mr Thurm might be simpatico with the new Secretary of DHHS, Ms Sylvia Burwell.  According to a Washington Post article at the time of the hearings about her nomination,

despite her Washington experience, … is not well known in health-policy circles, and, during her confirmation hearings, she gave little concrete sense of the direction in which she will take the complex department she will inherit.

This seems to be a polite way to see she also has no actual experience in health care, medicine, public health, or biologic science.   Her official biography lists no such experience.  However, she was also a Robert Rubin associate, and perhaps protege, during the Clinton administration,

During the Clinton administration, Burwell held several economic roles — as staff director of the White House National Economic Council, as  chief of staff under then-Treasury Secretary Robert Rubin,…

To summarize so far, the new Secretary of the Department of Health and Human Services, and now her new Senior Counselor, were both closely associated with Robert Rubin, who seems to bear major responsibility for the global financial collapse, and the new Senior Counselor worked with Rubin at Citigroup, whose near bankruptcy helped accelerate that collapse.  On the other hand, neither of these leaders has any experience in health care, public health, medicine, or biological science.

Hedge Funds, Tax Avoidance, and the US Food and Drug Administration

This story is even less obvious.  A July, 2014, report in Bloomberg recounted plans for a Senate hearing on tax avoidance by huge, lucrative hedge funds.  The basics were,

A Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6 billion in U.S. income taxes over 14 years through transactions with Barclays Plc and Deutsche Bank AG, a Senate committee said.

The hedge fund used contracts with the banks to establish the ‘fiction’ that it wasn’t the owner of thousands of stocks traded each day, said Senator Carl Levin, a Michigan Democrat and chairman of the Permanent Subcommittee on Investigations. The maneuver sought to transform profits from rapid trading into long-term capital gains taxed at a lower rate,
he said.

An accompanying Bloomberg/ Businessweek story described testimony at a Senate hearing by the Renaissance co-Chief Executive Officer Peter F Brown,

Renaissance was founded by the mathematician James H. Simons, whose fortune is now estimated by Bloomberg Billionaires Index at about $15.5 billion.

Brown became co-CEO with Robert L. Mercer in 2010 after Simons retired and became non-executive chairman. Before joining the firm in 1993, he was a language-recognition specialist at International Business Machines Corp.

Mr Brown testified that the company was not so much trying to avoid taxes by the complex strategy but simply to make even more money.    But, per the New York Times, Senator Levin

focused on the lucrative nature of the transactions, most of which took place using Renaissance employees’ money. Between 1999 and 2010, the fund used basket options to produce profits of more than $30 billion, Mr. Levin said. Barclays and Deutsche Bank together made more than $1 billion in revenue.

Mr Brown’s firm seems, unlike Citigroup, to have a record of financial success, and no one is accusing Mr Brown or his firm of being responsible for the global financial collapse.  However, Mr Brown is certainly a very rich Wall Street insider.  Also, as we noted in 2009, his firm clearly has had major involvement in health care investments.   And the current hearings emphasize concerns that his firm has been executing questionable tax avoidance strategies.

Mr Brown has one other very major tie to health care.  As  noted in 2009 on Health Care Renewal, but apparently only parenthetically by one recent news article, (again from Bloomberg, written before the Senate hearing),

Brown lives in Washington with his wife, Margaret Hamburg, the commissioner of the U.S. Food and Drug Administration. She was appointed by President Barack Obama in 2009.

In 2009, we noted that as a condition of Dr Hamburg’s leadership of the US FDA, her husband, Mr Brown, would have to divest his shares of four Renaissance funds.  However, it is obvious that he remained at and became the co-CEO of Renaissance since.

While the current leader of the FDA clearly has medical and health care experience, she is also steeped in the culture of finance and Wall Street.


Thus we have two recent stories of how top health care leadership positions in the US government are held by people with strong ties to the world of finance, but not always with any direct health care or public health experience.  Why was the wife of a hedge fund magnate the best person to run the FDA?  Why was a person not known in “health policy [or health care] circles” the best person to run the Department of Health and Human Services?  Why was a Robert Rubin protege from Citigroup the best person to be a Senior Counselor at DHHS?  Presumably there were many plausible candidates for these government positions.  Why was it not possible to find people to fill them who were not tied to Wall Street?  Why was it not possible to find people with profound understanding of and sympathy for the values of health care and public health to fill all of them?

The leadership of health care and finance continue to merge.  This seems to be one broad explanation for why both fields continue to be notably dysfunctional.  While Wall Street has spread around plenty of money to influence public opinion and political leaders, many still remember how its foolish and greedy leadership nearly caused another great depression.  It is likely that the influence of Wall Street culture on the leadership of health care organizations, be they governmental, academic, other non-profit, or commercial, has fostered the continuing financialization of health care, with its focus on “shareholder value,” that is, putting short-term revenue ahead of patients’ and the public’s health.

I strongly believe health care would be better served by leadership that puts patients’ and the public’s health first.  Occasionally people with such values may come from a finance or economics background.  However, in an era where many people continue to believe “greed is good,” we at least ought to confirm that health care leaders really are about health care first, and money a distant second.

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  1. proximity1

    Did somebody say “Robert Rubin”?

    Well, then, yes, again, for invaluable background and context, I commend under “for further reading” Janine R. Wedel’s book, The Shadow Elite: How the World’s New Power Brokers Undermine Democracy, Government, and the Free Market, (See at the link : ) indispensable for understanding essential parts of an important story I’d describe as, “A Modern History of How Everything Went to Hell.”

  2. timbers

    So it begins….

    Have long believed the biggest miscalculation supporters of ACA made is not seeing that in theory up to 20% of ACA’s $1.4 trillion over 10 years can be spent to Citizen Unite us. That’s about $280 billion, more than the Koch Bros might spend in their lifetimes. Therefore, built into ACA is the inevitable fact is will change not for the better but for the worse for us, and better for corporations, in a very big way over time. This is opposite of what ACA supports said would happen. They said it would be improved over time.

    It seems Obama is already putting things in place to make ACA better for corporations and worse for us.

    1. Jim Haygood

      Thank goodness the Republican party has (as usual) fallen into line … for the greater good!

  3. Katniss Everdeen

    Legend has it that when Willie Sutton was asked why he robbed banks, he replied, “Because that’s where the money is.” Snopes claims he never said it, but the belief that he did is “so commonplace that a handful of social scientists have dubbed the process of considering the obvious first as “Sutton’s Law.”

    So , as to why Rubin and his acolytes are getting involved in “healthcare,” check out the amazing maps in this article titled “Maps: Health Care, Social Assistance Top Industries in Most States.” 34 states, to be exact.

    Rubin et al. need to get their hands on “healthcare” because that’s the only place there’s any money left.

  4. proximity1

    Speaking of “maps,” Readers not acquainted with the website “” may find “” an eye-opening exercise to try:

    Going to the site, on may start with a search-term—a person, firm or organization. By double-clicking on the + sign in the upper-right corner of a displayed item, one sees the picture of connections enlarged to display other relationships. ( Open the “Tools” menu (at the far left edge of the screen) and select from the menu, “View fullscreen” for easier viewing. N.B., careful how you navigate as you can lose your developed map by leaving/changing the page without saving the data displayed in certain ways. Individual boxes may moved, repositioned by clicking and dragging with the mouse device.)

    E.g. you can search on “Robert E. Rubin” or “Kevin Thurm” (latter brings no connections).

    Here are some suggestions to look up: Jack B. Dunn, James W. Crownover, FTI Consulting, C2 Group LLC, Peter Orszag, George P. Stamas, –and then play around clicking on the various “+ signs” to enlarge the scope. Enjoy.

  5. Ed

    In defense of small, incestuous elites, historically they have worked out OK when they have devoted one or two days out of the week in furthering the public interest.

    1. 1 Kings

      Yeah, just let us know what two days in his whole life Rubin has devoted to the public interest v. his greedy

    2. proximity1

      RE: “In defense of small, incestuous elites, historically they have worked out OK when they have devoted one or two days out of the week in furthering the public interest.”

      Historically they worked out OK, huh? One or two days a week furthering the “public interest” ? These people don’t “further” the “public interest,” they collectively help determine how they’d like that term to be defined.

      Here, try this: as I suggested above, go over to the site, and in the search-term field, put in the name “Sylvia Mathews Burwell” — she gets a whopping connected insider score of “97” (even the exalted Robert E. Rubin’s score is only 2 points higher at “99”). Now, double-click on the boxes for Robert Rubin, The Aspen Strategy Group, and the pale-green box which reads “47 member”, The Hamilton Project, and another pale-green box labelled “27 member advisory,” and, by now, you’re going to need to open the full-screen view of the map to see the extent of this constellation of connections. To do that, look over to the extreme left edge of the map for the extendable menu and click on that, then on “view fullscreen” about mid-way down the list of options.

      Now, notice among this intricate web of lines the major “hubs”. Using your mouse-device, you can click-and-drag them way, way out to the edge of the image for a better view of their reach. Here, Iill help you: click and drag outward, away from the centre of the map these items:
      Mondelez International, Inc. (Never heard of it? They were formerly Kraft Foods Corp.), Robert Rubin, Centerview Partners, Pepsi Co. Inc., Ford Motor Corp., Citigroup, Met Life, The Aspen Strategy Group, News Corp., The Council on Foreign Relations. And we haven’t even mentioned such other heavy-hitters as General Electric Corp., Skadden, Arps, Slate, Meagher & Flom, The Business Roundtable or the Trilateral Commission.

      Now reconsider your comment and think of these “nice people” (Historically, they’ve worked out OK?) sitting around”one or two days a week” to “further the public interest.”

      Ed, I think you’re either an interested party to the continued incest or, failing that, perhaps you’re simply daft.

  6. Jacob

    “Chuck Prince, a lawyer by training who succeeded Citi’s outsize former CEO Sandy Weill, had little grasp of the complex mortgage securities Citi’s traders were gambling on.”

    This is the only mention of Sanford Weill in the article, yet, according to reliable books and articles about the cause(s) of the financial crisis, it was at Weill’s behest that Congress repealed Glass-Steagall. Weill’s Citibank was already violating Glass-Steagall, so the majority of Congress approved the Gramm-Leach-Bliley Act to legalize Citibank’s gambling in the markets. The Gramm-Leach-Bliley Act was created by three Republican congressmen, led by Dr. Phil Gramm (R-TX), who were working for Sanford Weill and the bank lobby (the bill wasn’t created by Democrats nor by President Clinton, although Clinton was required to sign it into law). The repeal of Glass-Steagall is widely regarded as being the prime enabler of the financial predators who caused the financial crisis.

    1. Yves Smith Post author

      The formal repeal of Glass Steagall was a non-event. The ONLY thing it impacted was the pending merger of Citigroup into Travelers. It had been sufficiently shot full of holes that commercial banks only had to go through a few structural hoops to do investment banking business.

      Let me give you one example: Glass Steagall was dead as of 1988 (no typo). Credit Suisse, a commercial bank, acquired First Boston, an investment bank.

  7. cnchal

    And the crisis showed that the Masters of the Universe were better at lining their pockets rather than doing the job that ostensively justifies their elevated position and outsized pay: allocating capital efficiently, to the best outcomes for society as a whole.

    Allocating capital efficiently. Another phrase that means different things to different people.

    For the bankster it is defined as “lining their pockets”. What can be more efficient than raising the millions required to purchase a yacht, for example than by stealing those millions from your customers and having the “accessory to the crime” and “obstructer of justice” Attorney General cover those crimes up.

    How else is a bankster supposed to eat and have a yacht. They create no wealth on their own, so they have to steal it.

    Words. What they mean depends on who is talking.

  8. Don Levit

    Can you tell us about Citizens Unite Us?
    I am curious what all that money is being used for.
    The comments above show that they know a lot about the corruption which occurs when power is obtained.
    The corruption is human corruption, and can occur at power levels in the private sphere or the public sphere.
    I, personally, have been concerned about insurers’ abuse of powers since I entered the life and health insurance industry in 1980.
    I am honored to have had the opportunity of starting an insurance company, along with my 3 partners.
    National Prosperity Life and Health should be approved as an insurer by the Texas Department of Insurance within the next mont.
    I can’t wait to stir up some trouble, and do the honorable thing so that all parties win in the short run, and especially, over the long run.
    Don Levit

    1. timbers

      In the context of my post, Citizens United is the Supreme Court ruling that allows corporations to buy our government and representatives, so the corporation can pass laws that benefit it while screwing you and me.

      1. Don Levit

        Thanks for your reply. How did the ACA help fund that decision?
        You provided a specific amount.
        Corporations are free to be people, but does that extend to tax-exempt people?
        Don Levit

        1. timbers

          Did you read what I wrote? I didn’t say ACA funded Citizens United, I said it can be used to buy future changes to ACA that favor corporations and screw people.

          Corporation are not people and as such is it an error of the most basic sort to allow them to be “free to be people.”

          ACA give about $1.4 trillion to medical and insurance corporations, 80% must be spent on healthcare, up to 20% can be spent buying favorable government policy due to Citizens United ruling.

  9. impermanence

    If the leadership of the health professions cared about anything other than their personal fortunes, none of this would be taking place. Doctors are the only ones licensed to practice, so the ultimate power resides there.

    It’s a complete sell-out, throwing the ‘rank and file’ along with every patient under the bus.

    1. Beans

      Give me a break. You think doctors by virtue of a state regulated license can stop this? That would require the state regulators to enforce rules and actually hand out penalties. Many doctors would gladly support strong enforcement – we know how bad things are and how much worse they are going to be. We have to face the patients and deal with the consequences of ACA “compliance”. This whole article was about how Wall Street and the politically connected are running the show. Did you even read it?

  10. proximity1

    Yves’ reading reference above from New York magazine was spot-on. “Revolver” is a seven-part essay which is not to be missed. Also from the same issue of New York Magazine is another * (See below) article by John Heilemann, “The Wall Street Mind: Triumphant.” Brilliantly illuminating stuff

    Also, look back on 25 May, 2010, where Yves had a commentary ( Link : ) on Obama’s use of creatively revising history’s facts. That makes for interesting re-reading alongside the present commentary above. In her article she refers to a (*) New York Magazine article from 22 May of 2010 by John Heilemann, “Obama Is From Mars, Wall Street Is From Venus : Psychoanalyzing one of America’s most dysfunctional relationships”–which, again, makes for interesting review at this time.

  11. Don Levit

    The 20 percent not used for medical care is supposed to be used for administrative expenses.
    Lobbying should not be included in that category.
    Don Levit

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