Reputation Bubble Pop

Marion Maneker has the right call on the fall of Robert Rubin (link):

John Kenneth Galbraith’s dictum about the end of financial euphorias states that a previously omnipotent figure from the boom must be dethroned in the bust. Robert Rubin seems to fit that bill.

That's good, but two things. One, there are other and perhaps better candidates for the Galbraith prize. Just as a first approximation, I'd nominate Bernie Madoff. Maybe Hank Greenberg was a bit ahead of the curve, a canary in the coal mine.

But two, it is remarkable how many such swashbucklers do not look any worse now than they did before. Start with Warren Buffett. Add George Soros.

Oh, and a third point. I guess there is a separate category for people like Nouriel Roubini and John Paulson--perhaps Robert Shiller--who appear (in retrospect) to have been right when they were swimming against the stream.

I guess I'll have to make a special category for Rubin's old pal Lawrence Summers--someone whose reputation is being salvaged in tough times?

Citgroup's Toxic Dunghill: Gone Fishin'

I think the money shot in the New York Times' morning tictoc about the fall of Citigroup is the one about the too-cozy relationship between the cowboy bond-trader and the green-eyeshade risk policeman (think Robert deNiro and Charles Grodin lashed together in Midnight Run). The Times reports:

It was common in the bank to see Mr. Bushnell [the regulator] waiting patiently — sometimes as long as 45 minutes — outside Mr. Barker’s [the trader's] office so he could drive him home to Short Hills, N.J., where both of their families lived. The two men took occasional fly-fishing trips together; one expedition left them stuck on a lake after their boat ran out of gas.

(link--and I wonder, did he have to wait in a plastic chair, like a Bronx trial judge outside the office of his local mob boss?) . That kind of detail is the answer to a reporter's prayer and rightly so, but recall: the presence of this detail in the story means that somebody told it which means that somebody saw it and understood its importance when it was happening. Interesting to wonder what else he saw and what he did about it. Tell the boss? Sell short? Run for the exit?

The piece also offers an inglorious (apparent) farewell for Robert Rubin, who tells us that he was only tickling the ivories in the parlor and had no idea what the girls were doing in the cribs upstairs. Too bad: coming out of the Clinton years, I counted myself among the legions of Rubin admirers, but it's hard to believe he will be occupying a position of high visibility in the Obama regime.

Footnote: I admit I gasp to hear that Charles O. Prince, chief executive, said that "our job is....to incent people." Is he too busy to say "incentivize"? I am incentsed.

Upate: As Felix Salmon points out, all those nasty things said about Bob Rubin this weekend don't just say themselves.

Psst--R*b*rt R*b*n

Jason Furman is joining Barack Obama’s economic team. The Bloomberg story—tracking the press release?—hypes the fact that he is close to Robert Rubin, Treasury Secretary under Bill Clinton (link).

Steve Clemons is not impressed (link). Clemons sees Furman, (the neo-Rubin?) as emblematic of a kind of neoliberalism that Clemons would like to see shunted aside.

As a card-carrying neoliberal, I'm happy to see Furman on board A while back I might have said that my choice for president would be: anybody who would listen to Robert Rubin.

On the other hand—Rubin was on the board at CitiCorp last year when owned up to a $17 billion-ish loss (he stepped in as chairman last November; before that he was drawing $15 million a year plus use of a jet to serve as chairman of the executive committee—link). Did Rubin miss that meeting? Ws he out getting the coffee? There may be two good reasons for Obama not to showcase Furman’s intellectual ancestry here.