Having ties to Robert Rubin shouldn't be an automatic disqualifier for becoming Treasury secretary, but it does deserve some attention. Here's why.
Robert Rubin had a 26-year career at Goldman Sachs before he became Treasury secretary under President Clinton. There he worked with Larry Summers to help repeal Glass-Steagall, among other things. In 1999, Larry Summers became Treasury secretary, and he, following Rubin's ideology, pushed to deregulate all derivatives.
During that time, Rubin and Summers mentored Tim Geithner, who was also part of the Treasury. Geithner later became Treasury secretary himself under President Obama, where he worked to make sure that the megabanks were bailed out 100 cents on the dollar, and where he announced he would exempt certain derivatives from regulation—an announcement that came on a Friday at 5:00 pm, right before Thanksgiving break (a great time to leak something you don't want leaked too widely).
This leads us to Jack Lew, President Obama's pick to replace Tim Geithner. Lew spent most of his career working for the government, but he did work at Citi from 2006 to 2009 while Robert Rubin was a chairman there. (In fact, Rubin brought Lew onboard at Citi.) Lew spent his time at Citi managing hedge funds and making $2 million, and he currently shares Rubin's ideological views about Wall Street deregulation.
None of this is especially good news for people who think we need to reform the megabanks and their activity with derivatives. We would like to think that there are smart economists out there who don't have ties to Wall Street (or Robert Rubin) who could also serve as Treasury secretary. There have to be. We'd like to see the revolving door between Washington and Wall Street come to an end.
(See our revolving door diagram here.)