Former Treasury Secretary and Citibank Chair Bob Rubin was cited by a special congressional panel as someone who should have been the subject of a criminal investigation for activities related to the 2008 subprime mortgage meltdown.
The Financial Crisis Inquiry Commission (FCIC) had told the Justice Department that it should open an investigation of Rubin, Treasury Secretary under President Bill Clinton, for alleged securities fraud perpetrated as a member of Citibank’s board.
Rubin was among nine executives recommended for a criminal probe by the FCIC that were cited in a letter sent Thursday from Sen. Elizabeth Warren (D-Mass.) to Justice Department Inspector General Michael Horowitz.
Warren asked the department auditor this week to look into why zero criminal inquiries were launched as a result of the FCIC recommendations, which were publicly disclosed for the first time earlier this year.
“An FCIC referral alone does not indicate guilt. And not every DOJ investigation results in a criminal conviction,” Warren wrote. “Nonetheless, the DOJ record of action on these individuals, nearly six years after DOJ received the referrals, is abysmal.”
“The DOJ has not criminally charged or taken any of these nine individuals to trial. None have been convicted or sent to prison,” she added.
Rubin was one of the architects of the disastrous financial deregulation that took place under former President Clinton. As Treasury Secretary, he pushed the Clinton administration to back a Republican-supported repeal of the Glass-Steagall Act, the Great Depression-era law that had created a firewall between consumer finance and investment banking.
A Goldman Sachs executive prior to joining the Clinton Administration, Rubin is also widely regarded as one of the most egregious travelers through the “Revolving Door.”
Before Glass-Steagall was repealed, an exemption to the law was granted to the 1998 merger that created Citigroup. Three months after retiring from the Department of the Treasury, in 1999, Rubin was hired to serve on Citigroup’s board and as a strategic adviser.
Rubin is currently co-chair of the Council on Foreign Relations.
The others cited by the FCIC were: former Fannie Mae CEO and CFO, Daniel Mudd and Stephen Swad; former Citigroup CEO and CFO Chuck Prince and Gary Crittenden; former AIG CEO and CFO, Martin Sullivan and Stephen Bensinger; and former Merrill Lynch CEO and CFO Jeffrey Edward.
All men, including Rubin, were believed by the panel to have violated laws on securities fraud and making false statements. As Warren pointed out, only Crittenden was punished. He received a $100,000 civil fine as part of a Citigroup settlement with the Securities and Exchange Commission.
Rubin and Prince were also cited for a second potential violation. The pair were believed to have knowingly approved the sale of substandard securities to Fannie Mae and Freddie Mac — publicly-sponsored wholesale mortgage lenders that had to be taken over by the government after the crisis.
“The DOJ has not criminally charged or taken any of these nine individuals to trial,” Warren wrote. “None have been convicted or sent to prison. Not one paid a fine commensurate with their alleged actions.”
Warren sent the request to Horowitz alongside a separate letter to FBI Director James Comey, calling on him to publicly release information about the recommendations.
“Your recent actions with regard to the investigation of former Secretary of State Hillary Clinton provide a clear precedent for releasing additional information about the investigation of the parties responsible for the financial crisis,” Warren wrote.
“If Secretary Clinton’s email server was of sufficient ‘interest’ to establish a new FBI standard of transparency, then surely the criminal prosecution of those responsible for the 2008 financial crisis should be subject to the same level of transparency,” she added.