Reporters rustling furiously through the story of Enron’s demise in search of a political scandal seem determined not to find one in former Treasury Secretary Robert Rubin’s Nov. 8 phone call to Treasury Undersecretary Peter Fisher. Rubin asked Fisher, a fellow Democrat, what he thought about having Treasury intervene to avoid a downgrading of Enron’s debt rating. Rubin is chairman of the executive committee at Citigroup, which happens to be one of Enron’s biggest creditors. Because Fisher told Rubin he thought Treasury intervention a bad idea, the media herd concluded that you couldn’t nail the Bush administration for any ethical infractions and moved on. But wait! What about impropriety by a former member of the Clinton administration? Rubin was trying to use his access to the Treasury Department to bring financial benefit to his employer, and, thereby, himself. Isn’t that … unethical?
You wouldn’t get that impression from the coverage. The Jan. 14 Wall Street Journal carried a story by Jeanne Cummings and Greg Ip summarizing the weekend’s developments on the Washington angle of the Enron story. The first few paragraphs focused on the failure of Commerce Secretary Don Evans, White House Chief of Staff Andrew Card, and Treasury Secretary Paul O’Neill to inform President Bush that each of them received she’s-gonna-blow phone calls from Enron chairman Kenneth Lay prior to the company’s collapse. As Chatterbox noted previously, that’s a completely phony issue; it’s much easier to argue that it would have been unethical for Cabinet members and White House aides to give Dubya a heads-up. The Journal story didn’t get to the genuinely troubling Rubin phone call until the last three paragraphs, and, astonishingly, it left out the crucial information that Citigroup (and therefore Rubin) had a financial stake in Enron. The Times has been burying the Rubin angle, too. The Washington Post’s Dana Milbank and Susan Schmidt, to their credit, made Rubin the lead of their Jan. 12 Page One story on political fallout from Enron. But even the Post appears to view Rubin’s involvement as a one-day story.
It isn’t against the law for Rubin to lobby the Treasury Department (unless the matter concerns something Rubin had direct policymaking involvement in while in government, which doesn’t apply here). The legal prohibition on government employees lobbying their old department on any matter lasts only one year, and Rubin left office two and a half years ago. The practice is, however, sufficiently questionable from an ethical standpoint that Bill Clinton signed an executive order in 1993 extending that ban for senior appointees to five years. The only thing that keeps Rubin from being in formal violation of the executive order is the fact that Clinton rather shamelessly revoked it on his way out the door in 2001.
Why is Rubin getting a free pass? Apparently because he’s put out the word, through an anonymous intermediary, that he prefaced his remarks to Fisher by saying, “This is probably not a good idea.” He was just thinking out loud! But of course, if Rubin really thought it was a bad idea, why was he calling a Treasury official in the first place? In fact, self-effacement can be an excellent strategy for manipulation and/or self-protection. Chatterbox would guess that at least 60 percent of all adulteries begin with somebody saying, “This is probably not a good idea, but why don’t we rent a hotel room?”
Some have observed that a government-organized bailout of Enron is just the sort of thing Rubin might have advocated when he was treasury secretary. That’s true. But Rubin is in no position, as chairman of Citigroup’s executive committee, to portray himself as a disinterested steward of the common good (unless you believe that what’s good for Citigroup always coincides with what’s good for America). This has been a long-standing problem for Rubin: He’s always had difficulty making up his mind whether he wanted to be Jesus Christ or J.P. Morgan. For the most part, a wildly adulatory press has let Rubin have it both ways. One notable exception was an Al Hunt column headlined “A Rare Disappointing Rubin Move” that ran in the Wall Street Journal on Nov. 4, 1999. In it, Hunt criticized Rubin for accepting the Citigroup job on the grounds that it would take valuable time away from Rubin’s prior commitment to chair the Local Initiatives Support Corp., a nonprofit community development group that offered Rubin an opportunity to make good on his long-standing claim that he wanted to help people trapped in the inner city. Hunt pointed out that Rubin was already worth several hundred million dollars, so he hardly needed the cash. “I think I can do more for LISC by being at Citigroup,” Rubin explained to Hunt, but Hunt, quite rightly, didn’t buy it. Sure enough, in August 2000 Christopher Swope reported in Governing magazine that Rubin wasn’t raising money for LISC as aggressively as LISC officials had hoped because he was too busy fulfilling his commitment to Citigroup.
Rubin’s stewardship of LISC remains, of course, uncompromised in any moral way by his role at Citigroup. It would be hard to argue that anything Rubin did for LISC was aimed at maximizing Citigroup’s profits. You can’t say the same about Rubin’s playing free-lance consultant on the advisability of allowing Enron to suffer the largest bankruptcy in U.S. history. For Rubin, it just wasn’t simply a matter of promoting the best policy, and the press isn’t doing nearly enough to make that understood.