Rubin Out, Summers In

[Robert Weissman <rob@essential.org>]

May 12, 1999
REUTERS

          Treasury Secretary Rubin to Resign;
          Summers Will Take His Place

          By REUTERS

                 WASHINGTON -- Treasury Secretary Robert Rubin, a former
                 Wall Street wizard who masterminded U.S. efforts to combat
          what President Clinton called the world's worst financial crisis
in 50
          years, has submitted his resignation, the White House said on
          Wednesday. 

          Rubin's exit from the political scene after four years at the
helm of the
          Treasury Department comes as the U.S. economy enters its ninth
year of
          unbroken expansion and world financial markets are recovering from
          recent turmoil. 

          The White House said Clinton plans
          to nominate Deputy Treasury
          Secretary Lawrence Summers to
          succeed Rubin in the top post.
          Summers worked closely with
          Rubin on fighting the global financial
          crisis as point-man on international
          economic policy, and observers say
          he should be able to slide smoothly
          into the job. 

          Rubin's 26 years at prestigious
          New York investment house
          Goldman Sachs and Co., including
          a stint as co-chairman, made him a
          multimillionaire and brought him a
          degree of financial sophistication
          and respect on Wall Street that few
          cabinet members have ever enjoyed. 

          When Rubin, and his friend Alan Greenspan, head of the U.S. Federal
          Reserve, spoke, financial markets listened. Frequently, their
words alone
          could prompt major moves in stock and bond prices and the U.S.
          dollar's exchange rate. 

          As the brains behind several multibillion dollar rescue deals
under the
          auspices of the International Monetary Fund to bail out ailing
emerging
          market economies, the 60-year old Rubin played a pivotal role in
          restoring at least some market stability after Asia's crisis
started in the
          summer of 1997. 

          Combined with his tireless campaign for a strong U.S. dollar, Rubin's
          attempts to douse the global financial firestorm are widely seen
as having
          boosted the health of the robust U.S. economy. 

          Straightforward and well-mannered, Rubin never really felt at
home in the
          muddy world of Washington politics since taking the Treasury job in
          early 1995. Talk of his imminent departure, fueled by his coyness in
          discussing his own plans, has been a mainstay of the Washington rumor
          mill. 

          Instead of settling down in the capital, Rubin kept a suite at a
luxury
          downtown hotel and shuttled to New York City most weekends to
          spend time with his wife Judith, who refused to give up their
Manhattan
          apartment and move to Washington. 

          Rubin is a moderate Democrat with a fervent belief in free
markets. He
          has strong ties to the business community, but is also a vocal
advocate of
          the need to tackle America's social ills, especially those of its
troubled
          inner cities. 

          A political novice when he first came to Washington in early 1993 as
          Assistant to the President for Economic Policy, Rubin won respect
for his
          ability to keep cool under pressure. His wry sense of humor also
helped
          him cultivate the image of a no-nonsense operator who gets things
done. 

          Those qualities served him well when he arrived at Treasury and was
          confronted first by an economic crisis in Mexico and then by a
plunge in
          the dollar. 

          Rubin won plaudits for his shrewd handling of the Mexican crisis,
tapping
          a little-known fund at Treasury to provide America's neighbor
with some
          $20 billion in emergency help. Sophisticated investors also
admired his
          savvy efforts to help engineer a drastic recovery in the U.S.
dollar against
          the Japanese yen. 

          During a 1995 government shutdown amid a budget battle between
          Clinton and the Republican-led Congress, Rubin helped prevent a
          government debt default by juggling other funds. 

          Recently, Rubin spent most of his time devising strategies
against financial
          turmoil that scared investors around the globe in the wake of
collapsing
          emerging markets. 

          A strong advocate of the need for U.S. leadership in the world
economy,
          Rubin's nagging fear of a protectionist backlash at home was a
key force
          behind his attempts to contain the fallout of the crisis. 

          Criticized for missing the boat when the U.S. Treasury declined
to take
          part in an international rescue for Thailand, the first country
that fell victim
          to Asia's woes in 1997, Rubin quickly moved to claim center stage in
          subsequent IMF-led bailouts for Indonesia and South Korea. 

          But the more than $100 billion allotted to keeping Asia's flu in
check
          failed to prevent its spread to Russia and Brazil, which both needed
          international rescue deals. 

          Rubin leaves plenty of unresolved issues for his successor. Russia's
          economy is in tatters and Japan is mired in recession, although
there are
          signs of recovery in crisis-hit Asia and Latin America. 

          And at home, weak manufacturing exports that have boosted the trade
          deficit to new highs still threaten the economy. 

          Rubin has a law degree from Yale University and spent a year in
Britain
          at the London School of Economics. He joined Goldman in 1966 and
          ran its stock trading business in the late 1970s. In 1990, he
became the
          firm's co-chairman. 

          Rubin, who enjoys fishing and playing tennis in his rare spare
time, was
          born in New York City on Aug. 29, 1938. The Rubins have two adult
          sons.