Tuesday, May 4, 2010

Why the Iris Mack Tell-All about Former-Treasury Secretary Robert Rubin Is More Trouble for Former -Treasury Secretary Larry Summers

I see that Iris Mack is out with her story about former-Treasury Secretary Robert Rubin, who is now chairman of the Council on Foreign Relations.

I am following the story closely since Iris originally came to me with it. After extensive phone conversations, many emails and some fact-checking, I decided not to go with the story, which doesn't mean Iris isn't a fascinating woman.
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Iris grew up in the The Calliope Projects of New Orleans, an area of New Orleans that gained nationwide notoriety for its extremely high violent crime rate. She says because of this she knows how to fight. "You have to pick your fights though," she told me. "If you fight all the time you will get killed."

She has 16 siblings – "1 half, 9 full, and 6 steps."

She says her family was too poor to afford fast food, but her mother cooked and they never went without.

She also says there were plenty of cousins in the project. "One of my mom’s oldest sisters had 18 kids. So that’s 18 cousins right there. I think she had at least 3 sets of twins. I remember as a child thinking, Jesus is she not tired! I have so many first, second, third, fourth….cousins, I would need a detective to help me count them all.

"Don’t even begin to ask me about nieces and nephews because I don’t know how many" she says.

Somehow, Iris found a way out of the projects. She graduated from Vassar College with a Dual B.S. degree in  Mathematics and Mathematical Physics, then she went on to the University of California and received an M.S. in Mathematics. As a Sloan Fellow she attended London Business School and received an Executive M.B.A. She also has a PhD in Applied Mathematics from Harvard.

Her doctoral dissertation, "Block Implicit One-Step Methods for Solving Smooth and Discontinuous Systems of Differential/Algebraic Equations: Applications to Transient Stability of Electrical Power Systems," was published by Harvard University Press.

She was also semifinalist for the NASA Astronaut Program. From 1988 to 1991 she was a Lecturer, Researcher and Consultant in the fields of Applied Mathematics, Financial Engineering, Statistics and Operations Research at the MIT Sloan School of Management

A long journey brought her to Enron where she was assigned to evaluate the British division. She saw serious problems with the division and wrote them up in a report. When she got back to the states, her boss and her boss's boss took  her to dinner and told her that was not the kind of reports they write at Enron.

At the time, she thought the problem was with the British division and not the entire firm. She ultimately left Enron and ended up at Harvard Management Corporation. HMC is the Harvard firm that manages the Harvard endowment. After awhile, she realized that HMC was taking on a number of very risky trades (The trades ultimately cost the Harvard endowment billions of dollars in losses). After going through the Enron experience, she decided to speak up. She sent an email to Larry Summers, then-Harvard President, and current top economic adviser to President Obama, about her concerns. Despite a recent positive review that resulted in her getting a bonus, following the email to Summers, she was fired. She retained a lawyer and reached a monetary settlement with Harvard.

She is now a consultant in Europe and is apparently popular on the European speaking circuit. She has speaking gigs in London, Paris and Zurich.

During my conversations with her, she vacillated somewhat on going public with the Rubin story, but now that she has, I am convinced her focus has returned to Summers. At one point, she mentioned to me that the Rubin story was a chapter in a book she is writing. When I asked her what the rest of the book was about, she told me that it was going to be about how she managed to get herself out of the projects, and also about what happened with Harvard and Summers.

Thinking for sure that she must have signed some kind of confidentiality, nondisclosure agreement with Harvard, when she reached her settlement with them, I asked her how she was going to be able to write about Harvard and Summers. She explained she had found a loophole in the nondisclosure agreement drawn up by the Harvard lawyers. The loophole, she says, will allow her to say anything she wants about the people she worked with at HMC and about Summers. "Harvard lawyers really aren't that bright," she told me.

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