Interview of Robert Rubin by the Financial Crisis Inquiry Commission. Some interesting material. The title and a good explanation of this interview comes from Stephen Gandel at Fortune. Full transcript below.
Interview – ROBERT RUBIN
MR. GREENE: On the record.
Good morning, Mr. Rubin. My name is Tom Greene. I am the executive director of the Financial Crisis Inquiry Commission. We are conducting an interview this morning in support of our mission, which is a statutory one, to investigate the causes of the financial crisis of 2007, 2008, arguably through 2010, but certainly in those key years.
You are not under oath today, but since it is a federal investigation there are provisions of the federal code that apply. 18 USC, Section 8001, indicates that truthfulness is the right answer here, which I am sure you would do anyway, but I do need to forewarn you.
In the event that any of my questions are not clear, stop me and ask me to make them clearer if at all possible. If you want to take a break, don’t be shy, let me know. I understand you have some back issues, so if you need to stand up, we understand that is something you may need to do and we will certainly take that into account as we proceed.
BY MR. GREENE:
Q Let’s start initially with a little bit of background on you. Obviously you have had a stellar career at Goldman Sachs. Briefly, what were the top two orthree achievements from your perspective of your time at Goldman?
Robert Rubin: Achievements of mine or theirs?
Q Yours.
Robert Rubin: Mine? That is an interesting question. I don’t think of it that way.
I don’t know that I had any particular outstanding achievements. I started there in the risk arbitrage area, and for a variety of reasons became a partner at a very early age.
And then after several years of doing that, I began to take on a managerial responsibility more broadly for trading activities, and then as time went on I just became more and more senior.
And then at about the mid-1980s — no, I will go back one step further. In roughly 1980 or ’81, Goldman made the only acquisition it made during the entire time I was there. It bought J. Aaron, which was commodity trading and then eventually became currency trading and energy trading. And it turned out to be very troubled, although we hadn’t realized it when we bought it, so about six months in they asked me to take responsibility for it.
And what I did was to set up a process with a bunch of the younger people who knew about the business, because I certainly didn’t know very much about it, and they developed a plan to go forward which turned out to be extremely successful. And so that turned around, not because of me but because of them. And then about the mid-1980s, John White had left in 1984 as co-senior partner, so Steve Friedman and I became the co-COOs.
At that point Goldman had begun to get a little bit, a little set in its ways, and Steve and I felt that if we didn’t change,that we could fall by the wayside, gradually, but nevertheless fall by the wayside, and so we initiated a very dynamic strategic focus, and the consequence I think was a lot of change at Goldman that was very constructive.
And then I became co-CEO in December 1990, I guess, when John Weinberg decided to retire, and then I left Goldman to go to the Treasury.
Q Just to follow up on that, what was the nature of the strategic focus you and your co-CEO developed?
Robert Rubin: We felt at the time that others had become more innovative than we had in finding ways to do what clients needed to do in what was then the earlier stages, but nevertheless an occurrence, early stages of a globalizing economy, so we felt that we needed to be more innovative.
We felt that we needed to expand abroad, we felt that we should begin — I guess we had already begun to some extent, but expand our private equity and real estate areas. And then we felt very strongly that there was a tremendous opportunity to build an asset management business which would provide regular fees that weren’t dependent on the cycles of the market; to some extent affected by, but not as dependent on cycles in the market as our trading activities.
Then we also we also, or the firm had a whole array of processes for dealing with reviewing people and advancing people or not advancing people, one thing or another. We felt that a lot more could be done in that area, and so we moved further into that realm, if you will, of reviewing people regularly, and extended that not only to the non-partners but to the partners.
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