This had been in the cards for a few months, but now it’s official: Bob Rubin is leaving Citigroup. He joined up in 1999 after a spectacularly successful stint as Treasury Secretary. His presence was supposed to smooth the troubled relationship between the two heads of the just-merged company, John Reed (Citi) and Sandy Weill (Travelers). That didn’t really work out: Reed left a few months later. And now, after ten years, Citigroup is a ward of the state and Rubin is out.
In a mostly admiring 2003 Fortune profile, Carol Loomis wrote:
He accepted the risk of joining co-chairmen Sandy Weill and John Reed (the latter now gone, of course) at the top of a company almost certain to have its octopus arms in every crisis. Citi’s reach, in fact, got Rubin himself awkwardly entangled with Enron. But his contract, though splendidly lucrative, largely insulates him from executive peril by specifically sparing him line responsibilities. Instead, his beat is “strategic managerial and operational matters.” The risk assessment on all that: If the world blows up, and tries to take Citi with it, fixing the mess won’t be Rubin’s job.
Now the world has blown up, with Citi helping lead the way. Fixing the mess isn’t Rubin’s job, but getting into it has severely tarnished his reputation. No, he had no line responsibilities, but he was paid more than $115 million and got lots of perks (use of the company jet among them, of course) to advise the leaders of a corporation that in the end had to be bailed out by taxpayers (and not just in the way that JP Morgan Chase and Wells Fargo and Goldman Sachs and Morgan Stanley were bailed out, but seriously bailed out). In my mind, that‘s really the issue. Rubin is a smart, decent guy, with a good record of accomplishment at Goldman Sachs and Treasury and a public-spirited nature. But he’s not superhuman, and Citi was paying him on a scale that, given his (lack of) day-to-day responsibilities, demanded superhuman advice-giving. You just can’t get paid that kind of money and not get stuck with some of the blame when things go awry. (This is more or less true of just about everybody on Wall Street, come to think of it.)
Still, I imagine Rubin will find ways to rehabilitate himself. I’m not so sure about Sandy Weill, the guy who hired him and the chief architect of the mess that is Citigroup. The other bit of news out of Citi today was that it’s trying to sell Smith Barney, its brokerage arm. So much for the financial supermarket to end all financial supermarkets.