Rubin, Schmubin - I'll Take O'Neill

Conventional wisdom about the two treasury secretaries is, well, dumb. Give Paul a chance, says this latest Against the Grain commentary from CBSNews.com's Dick Meyer.

The market of conventional wisdom has spoken with certainty and unanimity on these two guys.

O'Neill has tanked. The vultures are circling and the guess-the-successor game is gearing up. It's gotten so bad that President Bush had issue the perfunctory, "He's doing a fine job."

Lord Rubin's stock is through the roof. Bring Back Bob. This crash wouldn't be so bad if Bob were here. Paul is no Bob. Neither is Ringo.

It's not easy to root for a gaffe-prone, zillionaire treasury secretary during a terrifying bear market, but I'm rooting for him. He's a whipping boy, the underdog, albeit a really rich one.

But I admit it may just be the sheer volume of the unctuous Rubin worship that has me feeling contrarian.

"Robert Rubin," declared the Associated Press recently, "who held the treasury post under President Clinton, is widely viewed on Wall Street as the best treasury secretary since the nation's first, Alexander Hamilton."

Well, here's my question: if Rubin was such a genius, how come Wall Street and Main Street were so blindsided and devastated by this epidemic of financial scandal.

Chairman Rubin (former chairman of Goldman Sachs, current chairman of the executive committee of Citigroup Inc. – the big Enron lender) has repeatedly said that what's happening now was very predictable. If it was predictable, shouldn't the worst of it be preventable?

Let's do a little deconstruction on Rubin's latest public position, an op-ed piece published July 21 in The Washington Post entitled, "To Regain Confidence."

"These accounting and corporate governance problems developed over time -- as seems to happen after extended good times -- but only really came to the fore during the past year," he wrote.

"Accounting and corporate governance problems": a tortured euphemism for corporate crime ala Enron, Arthur Andersen, Adelphia, and WorldCom. That's be honest about what happened, please.

"Only came to the fore during the past year": translation – it happened after my watch, don't blame me. In fact, his watch missed it; the deeds were done during his tour.

"As seems to happen after extended good times": this is the key phrase. If these "problems" are predictable, if they 'seem to happen after good times,' then shouldn't the then treasury secretary have taken preventive measures?

If it was obvious to the wise that book-cooking and other frauds would become rampant at the end of a market boom, then shouldn't the SEC budget have been boosted long ago, during the boom, when the government was flush with tax revenue? Same for the IRS. Shouldn't state regulators and accounting oversight organizations have been put on notice?

Shouldn't small investors have been warned to the point of browbeating? Shouldn't the smartest-money-man-in-the-world now be able to point to a track record of prophylactic measures he put in place?

Rubin wrote that an "adjustment period was inevitable. How difficult that period was going to be would be affected by many factors, very much including the actions of government."

Well, it looks like the "adjustment" is going to be pretty damn "difficult." And the adjustment, the bursting of the bubble, is being made more difficult by the scandals that Rubin says were inevitable. Again, if they were so predictable, why weren't they more preventable? I'd say that's a fair question.

Now to be perfectly fair myself, these questions should be asked not just of Rubin but also of Greenspan, Clinton, and Bush.

And to be fair to scapegoat O'Neill, he didn't create this mess.

Consider this: Citigroup is in some hot water for deals it did with Enron. Is Rubin, now at the top of Citigroup, getting blamed for those deals, or for the Enron fiasco? No, not Lord Rubin.

When the market went up a near-record 480 points on Wednesday, did O'Neill get the credit? Obviously not.

Much of the criticism of O'Neill is simply that he isn't Rubin. And that he travels.

When the market got hinky in late May, O'Neill was pilloried for going on an extended fact-finding mission to Africa with rock star crusader Bono. Well, sorry: I kind of think that African poverty is a big issue and that O'Neill's commitment to rethinking his position on foreign aid is impressive.

In the midst of the worst of the July meltdown, O'Neill was visiting various "stan" countries and was duly lambasted. Bob would have know not be traveling. Bob would have uttered the perfect platitude to calm worldwide capital markets. Come on.

I'll admit that O'Neill can blunder in the sound bite world. When told about criticism of his rhetorical reticence last week, O'Neill said, "I'm constantly amazed that anybody cares what I do." Honest, but stupid. I'm a sucker for honest, though.

I doubt Bob Rubin could have said much to influence this wild market. But I've no doubt that he would have looked good doing whatever he did.

I'll reserve judgment on O'Neill until I see what he gets done over the long haul with corporate fixes, fiscal policy and macroeconomic policy. I'm not optimistic.

But for the moment, I'm pulling for the country's most rich and powerful underdog.

Dick Meyer, a veteran political and investigative producer for CBS News, is Editorial Director of CBSNews.com based in Washington.

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Against the Grain

By Dick Meyer