Rubin resigns from Citigroup


By Jonathan Stempel and Dan Wilchins
Friday, January 9, 2009

NEW YORK -- Robert Rubin, the former Treasury secretary, resigned from Citigroup Inc. on Friday, following months of criticism of his performance at the giant U.S. bank.

Rubin, 70, is stepping down immediately as senior counselor at New York-based Citigroup. He will remain a director until the bank's annual meeting later this year. Rubin joined Citigroup in 1999.

In a letter to Chief Executive Vikram Pandit, Rubin praised management for making the "tough decisions" to restore Citigroup to health, following $20.3 billion of losses in the year ended Sept 30.

But he admitted to not having foreseen the credit crisis and market deterioration, which caused nearly 90 percent of Citigroup's share price to evaporate over the last two years.

The bank has taken $45 billion from the government's Troubled Asset Relief Program, and in November won a federal bailout that will limit losses on $306 billion of toxic assets.

"It's a long time coming," said Walter Todd, a portfolio manager at Greenwood Capital Associates in Greenwood, South Carolina. "The near-collapse of the firm was under his watch. But he's more than a regular board member. He advised the board, and he received a lot of money. It leaves a bad taste in your mouth if you're a shareholder."

Rubin said he plans to focus more on outside activities and organizations, and "intensify" his work in public policy.

"My great regret is that I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today," Rubin wrote in a letter to Chief Executive Vikram Pandit.

In a separate statement, Pandit praised Rubin for his "invaluable contributions" to the nation's third-largest bank by assets. Citigroup operates in more than 100 countries.

A November 23 front-page story in The New York Times called Rubin "an architect of the bank's strategy" to chase profit by expanding in collateralized debt obligations and other risky products.

The strategy backfired as credit markets tightened and housing prices fell. Many commentators, editorial pages, websites and blogs have also faulted Rubin's role.

Citigroup is now trying to shore up investor confidence as it sells assets and sheds 52,000 jobs.

In late afternoon trading, Citigroup shares were down 34 cents, or 4.6 percent, at $6.82 on the New York Stock Exchange.

Rubin joined Citigroup just after the Clinton administration and Congress agreed to abandon a Great Depression-era rule, known as Glass-Steagall, designed to keep banks, securities firms and insurance companies separate.

He joined a three-person Office of the Chairman with Sanford "Sandy" Weill, who had lobbied to end such rules, and John Reed. The latter would retire from Citigroup in 2000, and Charles Prince took over from Weill in 2003.

When Prince resigned under pressure in Nov 2007 as losses from mortgage and other toxic debt began to mount, Rubin briefly became chairman. He ceded that role the following month to Sir Win Bischoff, a Citigroup executive in Europe. Pandit became chief executive at the same time.

Rubin copped tens of millions of dollars of compensation in his years at Citigroup. But he tried to maintain an "eminence grise" presence and not have a day-to-day management role, leaving him open to criticism that it wasn't clear what he was doing to earn his keep.

Globally, Rubin may be best known as U.S. Treasury Secretary between 1995 and 1999. He was the brains behind several multibillion dollar packages to bail out ailing emerging market economies, helping address an economic crisis in Mexico, and handling the Asian financial crisis of 1997.

Within the nation's capital, Rubin was perhaps second only to his friend Alan Greenspan, then head of the Federal Reserve, in commanding the ears of politicians and executives on economic policy and financial markets.

Rubin was known as a moderate Democrat with fervent beliefs in free markets and the need for U.S. leadership in the global economy. He was also a vocal supporter of tackling America's social ills, especially in its inner cities. He won respect for his coolness under pressure, helped by a wry sense of humor.

Before heading for Washington, Rubin had spent 26 years at Goldman Sachs & Co.

Born in New York City on August 29, 1938, Rubin has a bachelor's degree from Harvard College and a law degree from Yale University, and spent a year in Britain at the London School of Economics. He and his wife have two adult sons.

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