I figured that if any good came out of the recent battering the financial firms have taken, it would be a frank, critical look by the media at the CEOs hired to set things straight. Foolishness, thy name is optimism."Rubin to the Rescue" shouted a Drudge Report headline on a piece about Robert Rubin being named chairman of the reeling Citigroup ( C) -- which did all its reeling, it bears mentioning, while Rubin stood watch as chairman of the executive committee. This means that as Citigroup got involved in the actions and activities that are now helping it unspool, Rubin was the Tom Hagen, or consigliere, of the past two CEOs, sitting in the office next to Sandy Weill and Chuck Prince, giving his esteemed advice for $15 million a year and use of a jet. It's good work if you can get it, but that a man who was part of the problem can be written up as white-hat savior -- even in this day of endless write-offs and fired CEOs -- is a prime example of just how sycophantic the business media is. And just how careful you, the savvy investor, must be. Here's the thing: The Business Press Maven has historically been a big Rubin fan. Though I don't by nature or nurture like government figures of any political affiliation -- normally scared off by the personality disorders that got them into politics in the first place -- I do think Rubin served well as Treasury secretary under President Bill Clinton. And there can be little disputing that, leading up to his tenure in Washington, Rubin had a brilliant career at Goldman Sachs.
But in the years since at Citigroup, there can also be little argument that he either a) was just collecting a paycheck while napping with his feet up on his desk or b) gave some advice that defines him more as part of the current problem than any automatic solution. No matter. We have seen this so many times before: A new CEO comes in and gets a honeymoon period from the business media, one that invariably pushes up expectations (and the stock price) more than is warranted, even when the CEO does show promise. But in this case, the ridin'-in-on-a-white-horse story lines are a particular stretch, considering Rubin's record at Citigroup. With all the write-offs and all the apparent distrust of corporate leaders -- particularly of financial companies -- I expected more critical thought. Silly Business Press Maven. Anyhow, take a tour of this worshipful article. And make sure you don't go falling for anything like it, for it's the verbal personification of expectations that are too high and thought that does not take into account a morsel of history. Here is the tongue bath of a lead from a
piece by Eric Dash: "Throughout a long, public career, Robert Rubin spanned the highest reaches of Wall Street and Washington, and succeeded wherever he went."
Mind you, Rubin has been doling out advice at Citigroup since 1999. Considering the breathtakingly bad condition of the company, it is safe to say that Rubin has not succeeded everywhere he went. We then hear about how the company was built by Weill and that the problem became "so deep" under Prince, but, uh, no mention of Rubin in relation to Citigroup until this line: "That Rubin was named chairman and not interim chairman suggested a degree of urgency." What is at stake? The future of Citigroup (true 'dat) and "the reputation of Rubin as an executive with a Midas touch." Again, I am a big Rubin fan overall, but if he can still be said to be an executive with a Midas touch, then The Business Press Maven can be said to have a tree limb growing out of his ear lobe. We are then told that Rubin "has experience navigating crisis." But look at those bad loans, bad trades, huge costs, bad structure as a financial supermarket -- in this one case, Rubin had a hand in creating, not navigating, a crisis. At this point in his career, Rubin was willing to take $15 million a year to nap. In perhaps the only head nod in this direction, the article posits that the offer to become chairman was one that Consigliore Rubin could not refuse, while shareholders, said a quoted analyst, were "frustrated" that he was "speaking to think tanks and not to them at a company that has been so underperforming."
Fair enough. But wasn't he saying anything behind the scenes? On the strength of an anonymous friend, Rubin is quickly absolved of all blame: "While Rubin is publicly behind the bank's current growth plan, he has often asked provocative questions behind the scenes, a person who has worked with him said." Anyhoo, I thought that if the billions in progressively larger write-offs and the open season on sitting CEOs brought about any good, it was that when a man first sat down in the hot seat, he would be profiled with a bit of critical thought -- in a way that serves investors well, because it portrays reality accurately and does not let expectations get too far ahead. But old story lines die hard. And Rubin is riding to the rescue! As a side note, I ended Monday's article -- about
banking trouble coverage -- with a series of questions. I have only done that a few times in the thousands of articles I have written -- and, here, for good reason. I'm a bit undecided about these Wall Street firms and am still making up my mind on their fate. It's interesting, though, because the few times I've ended articles with questions, I get some complaint letters from readers. One told me that I should go back to journalism school. And sure enough, the very first thing they teach in journalism school is that journalists should answer questions, not ask them. Of course, this is where so many errors are made, especially in the business media. In a fast-moving, multifaceted reality, it's impossible to always answer questions neatly. Sometimes you have to wait a bit. Anything else is the sort of intellectual dishonesty that frequently misleads savvy investors.