Money talks: Robert Rubin remembers clintonomics

Washington Monthly, Dec, 2003 by Steven Mufson

Rubin portrays Clinton as smart, engaged, and willing to take political risks to do what seemed right. In a fast-paced chapter about the Mexican financial crisis of 1994, Rubin recalls going to Clinton, describing the situation, and telling him that the rescue plan that Rubin and his team had devised with the IMF would be "massive, potentially unpopular, and risky." It would be criticized as "bailing out" wealthy American and European investors, Rubin predicted, and it would bring a battle with Congress, which in elections nine wecks earlier had fallen under control of the Republicans.

White House Chief of Staff Leon Panetta, who supported the package, still told Clinton it could cost him the election in 1996. Nonetheless, Rubin says, Clinton did not hesitate to support the rescue package for Mexico. "He gained nothing politically by helping Mexico and risked much at a time when his political capital had already been greatly diminished," Rubin writes. It was, he says, a Bill Clinton "the public too seldom saw".

Keeping his distance

Rubin is charmingly candid about how he first came to the attention of Democratic Party leaders for a wholly different kind of economic acumen: political fundraising. As a senior partner and co-chairman at Goldman Sachs, he was a campaign finance rainmaker, and that gave him entree. Rubin became Walter Mondale's New York State finance chairman in the 1984 presidential campaign. He concedes bluntly that "my place at the Mondale table came from fund-raising." In 1991, he co-hosted a series of small dinners held by a group of 15 wealthy New York business and media figures with prospective Democratic presidential candidates. One was named Bill Clinton.

But Rubin does come by his twin interests in finance and politics quite naturally. Rubin's paternal grandfather fled to the United States from Minsk, Russia. Like many Jewish immigrants he arrived penniless, but grew wealthy speculating in Florida real estate during the 1920s before losing his fortune in the land bust that followed the stock market crash of 1929. Rubin's maternal grandfather was a lawyer and real estate investor whose real passion was politics. He ran a Democratic club in Brooklyn, part of the party's machine, and was a major figure in his dice of Brooklyn.

Unlike his grandfathers, however, Rubin entered the worlds of business and politics from the top. A graduate of Harvard College and Yale Law School, be joined Goldman Sachs, one of the most respected investment banks, after becoming bored with practicing law at Cleary Gottlieb. He touches on some of the giants of Goldman Sachs, the tempestuous Gus Levy and legendary "Bunny" Lasker. And he is not too proud to recount how he lost half a million dollars of the firm's money by guessing wrong on a merger. He must not have bet wrong too often, because he rose to the top of the firm.

Rubin spent 26 years on Wall Street as a trader, but he came to Washington unburdened by the arrogance and missionary zeal many businessmen bring to government. In business and politics, both known for their rude, over-the-top ways, Rubin was distinguished by his courtesy and reserve. He writes that when he came to the nation's capital in 1993 as head of the newly created National Economic Council, he had much to learn from the more experienced political hands, even if many of them were 20 years younger than he was. But those young political hands in the White House learned much from Rubin--especially a respect for the power of financial markets.