Did the CBOT Strongarm Bob Rubin?

Are you in the mood for 4,000 carefully-balanced words on the subject of Bob Rubin and the degree to which he may or may not be responsible for Citigroup’s recent woes? Well, here you go. The article’s good, but it’s easy to miss the bit picked up on by Dean Baker:

Shortly before leaving Goldman to head up President Clinton’s National Economic Council, Mr. Rubin says, he met with Richard B. Fisher, the chairman of Morgan Stanley, to discuss the idea of imposing stricter margin requirements on futures trading. Mr. Rubin says the idea died after the Chicago Board of Trade told him “we will make sure Goldman Sachs never trades another future on the C.B.O.T. if this went ahead.”

Baker is shocked:

This is an incredibly important news story. The implication is that a top official in the Clinton administration, who subsequently became Treasury Secretary, altered regulatory policy based on a threat made against his former firm.

If such a threat was actually made, then it should have been reported to the F.B.I. and some people connected with the C.B.O.T. should be sitting in jail right now. If Mr. Rubin was actually prepared to alter regulatory policy to serve his former firm, then he clearly had conflicts of interest that made him unqualified to hold a top government position.

I do think that Rubin should clarify exactly what he and Fisher were talking about, and when. Were the conversations explicitly about what Rubin could or might do when he entered public service? What was the CBOT’s role in those conversations? And did Rubin take the CBOT’s threats seriously?

Baker says that "the company that now owns the C.B.O.T. denies that any such threat was ever made," but in fact it’s more of a non-denial denial:

A spokeswoman for the CME Group, which now owns the Chicago Board, contends that “Goldman was and continues to be a valued customer and we would never deny access to our markets.”

The NYT might have almost inadvertently stumbled across a juicy little scandal here; I do hope they follow up.

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