Under The Radar Media

Puppet Obama’s economic foxes guard financial hen house

Posted in Barack Obama, Economy by maasanova on November 24, 2008

Obama and his Cabal of Financial Demons

Steve Watson
ay, Nov 24, 2008

Newly announced team consists of the very people who created the economic crisis

Today President elect Obama officially introduces his economic team to the world. What many may fail to recognize, however, is the fact that those tasked with rescuing the economy are the very people who helped create the financial crisis in the first instance.

We already know that the team will include Tim Geithner as Treasury Secretary; Lawrence Summers as head of the National Economic Council; Peter Orszag as director of The Office of Management and Budget; and Jason Furman, Austan Goolsbee and Jack Lew in other senior economic positions.

The man that ties almost all these people together is former Treasury Secretary and current Citigroup executive Robert Rubin.

Rubin is as much to blame for the creation of the current financial crisis as Alan Greenspan is, as both men ignored the advice of the Commodity Futures Trading Commission (CFTC) and strongly opposed the regulation of derivatives. Over-exposure to credit derivatives of mortgage-backed securities – or credit default swaps (CDS) was a key reason for the failure of Bear Stearns, Lehman Brothers, Merrill Lynch, American International Group, and Washington Mutual in 2008.

At Citi, Rubin was one of the grand strategists of the speculation in securitized loans, on November 4, 2007, he became the Chairman there.

Rubin is also currently co-chairman of the board of directors of the Council on Foreign Relations and a member of the Group of Thirty.

Every one of the afore mentioned economic “experts” to be appointed by Obama, with the exception of Skull and Bones representative Austan Goolsbee, is a protégé of Rubin.

Furthermore, as the New York Times pointed out in a weekend feature:

Even the headhunters for Mr. Obama have Rubin ties: Michael Froman, Mr. Rubin’s chief of staff in the Treasury Department who followed him to Citigroup, and James P. Rubin, Mr. Rubin’s son. All three advisers – whom Mr. Obama will officially name on Monday and Tuesday – have been followers of the economic formula that came to be called Rubinomics: balanced budgets, free trade and financial deregulation, a combination that was credited with fueling the prosperity of the 1990s.

Today the government approved a radical plan to stabilize Citigroup in an arrangement in which will see the taxpayer assume the risk on $306 billion of Citigroup’s predatory loans, including billions in mortgage-related securities.

In addition, the U.S. Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program (TARP), on top of the $25 billion that the government gave Citi in October.

Critics have called it the worst and most undeserved bailout to date, pointing out that less than two months ago, the agencies tried to give Citigroup the whole of Wachovia, portraying Citi as a savior.

The Financial Times’ chief business commentator writes:

The downfall of Citigroup has taken place over a long time and involved many people, but attention is now focussing on the role of Robert Rubin, the former US Treasury Secretary, who is a Citi director and senior adviser and was briefly its chairman. Mr Rubin has had an influential role at Citi since being brought on board by Sandy Weill in 1999 but has not been an executive. Having formerly been co-chairman of Goldman Sachs, he preferred to exercise influence behind the scenes.
(…) Now, of course, a big loss has been disclosed at Citi and various people are asking what Mr Rubin had to do with it. That was among the subjects covered in a long article in The New York Times on Saturday. It found that Mr Rubin and Chuck Prince, Citi’s former chairman and chief executive, played “pivotal roles” in the bank’s disastrous push into underwriting and trading collateralised debt obligations. The man in charge of this effort was Tommy Maheras, the former head of capital markets at Citi, who lost his job a year ago, shortly before Mr Prince resigned. Mr Rubin was then influential in selecting Vikram Pandit to succeed Mr Prince…

As a New York magazine’s headline states Robert Rubin Helped Break Citigroup and Now He Must Fix It.

“This seems a little awkward. We’re giving the guys that broke the system the contract for the reconstruction project?” the article concludes.

Perhaps of even greater concern is the fact that Rubin does not even acknowledge his own role in the crisis.

As Matthew R. Lee of Inner City Press has noted, Rubin has no regrets, does not acknowledge that he has damaged the economy and has stated that it was “not under my aegis” to reign in Citigroup’s predatory lending.

The only “change” Obama’s economic team represents is that the foxes are now guarding the hen house, rather than plundering it.

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