WASHINGTON -- Robert Rubin, the former financial superstar once lionized for his global crisis-fighting prowess, was scolded Thursday over the mortgage-securities disaster at Citigroup Inc. when he was a top executive there. His claim that he didn't know of the risks piling up drew a sharp retort.
"You can't have it both ways: You either were pulling the levers or asleep at the switch," the head of the panel investigating the roots of the financial crisis told Rubin at a hearing.
Rubin expressed regret. Yet he insisted he didn't know until late in the game, when the subprime mortgage crisis erupted in September 2007, about the $43 billion in high-risk mortgage securities on Citigroup's books.
The Citi trading-desk executives who built up that mountain of risk "acted in good faith and did what they felt was appropriate," Rubin said. He said they thought, as many others on Wall Street did, that the triple-AAA rated securities were safe from default.
But Phil Angelides, chairman of the Financial Crisis Inquiry Commission, told Rubin that as head of the executive committee of Citigroup's board, "You were not a garden-variety board member. ... I'm not so sure apologies are as important as assessment of responsibility."
Critics have said Rubin, with his vast experience, should have picked up on the warning signs and taken a more active role in preventing Citigroup's debacle.
"All of us in the industry failed to see the potential for this serious crisis," he told the congressionally chartered panel on Thursday. "We all bear responsibility for not recognizing this, and I deeply regret that."