Thursday, September 20, 2012

Iris Mack and Former Treasury Secretary Robert Rubin

William D. Cohan is out with a profile of Robert Rubin. It ends with Cohan recounting Rubin "pursu[ing] her [Iris Mack] romantically."

The impression that is left is that Rubin became derelict in his duties because of this pursuit. Cohan writes:
In his testimony to the FCIC, Rubin disputed Paulson’s recollection. “I don’t think that mine was a Citi-specific call,” Rubin said. He claimed his intent was to represent all the bank stocks being pecked to death by short sellers, and to alert Paulson to the severity of the problem. “I think mine was a general call.” 
Paulson’s call log from those months is filled with bank CEOs asking for help, and it wouldn’t have been strange for Rubin to do so, too. Rubin’s insistence that his was “a general call” seems a last attempt to reinforce his role as the ethical colossus linking banking and the public, or a final statement of detachment from Citi. Whatever the case, he didn’t appear to be willing to put his credibility as a wise man on the line at a moment of reckoning.
It’s a mystery why Rubin vanished at such a crucial moment in the nation’s financial history, but there were distractions. In October 2007, as Citigroup was imploding, Rubin went to South Beach to visit his father, who died a year later at 101. In line at an upscale grocery, he met Iris Mack. One of the first African American women to get a Harvard Ph.D. in applied mathematics, Mack also worked at Enron and the Harvard Management Co. Over the next 14 months, Rubin pursued her romantically. They would meet, according to Mack, in his Ritz-Carlton Hotel suite, where he would stay after flying in on the Citigroup corporate jet. “It’s one of the perks,” Mack says Rubin told her.
This is not news, but it does call into question how hard Rubin was working for his $15 million annual salary.

The implications he are absurd. First, the entire big bank financial sector was imploding. Was Rubin somehow supposed to stop this on his own? There's really very little that Rubin could have done outside of calling his crony buddy Paulson and indicating the severity of the problem. Paulson is not stupid, he would understand what a call from Rubin meant, that Citi (and the rest of the big bankers) needed major bailout money. Rubin is as skilled an insider as you can get. He knows how the game is played and he would have delivered the insider message to Paulson in as few words as possible. They understand how to talk code. Rubin's call to Paulson would be all that was needed.

Now, it just so happens that I am probably one of the few people who talks to both Mack and Rubin. And, Cohan's spin is way off base. The implication that Rubin "vanished" to pursue Mack  is absurd. Mack and Rubin tell slightly different stories as to what went down, but the Cohan implication that Rubin was jetting in to South Beach and escorting Mack around for 14 months is laughable. Aside from the initial encounter in a cafe, they met in person only two other times. They had phone conversations over a longer period of time, but that's understandable. Mack is very sharp person, insightful and fun to talk to.

But, there was no grand romance. And certainly not one that took Rubin away from saving the world. When the Austrian business cycle turns to the downside, not even Bob Rubin is going to be able to stop it.


  1. The difference between the National Enquirer and the "mainstream media" these days is the National Enquirer is much more reliable.

    1. Bill Clinton, everyone who served in the Clinton Administration, and Robert Rubin need to seek professional sex addiction therapy.