Rubin's Steady Hand Guided World Finances

Credited as the engineer of former President Bill Clinton’s economic vision for America and the savior of the world’s financial stability on two occasions, Robert E. Rubin ’60 returns to Harvard today to address the 350th Commencement.

Rubin, now chair of Citigroup, is the former Secretary of the Treasury and a mentor to Harvard president-elect Lawrence H. Summers.

“In a world in which you are constantly taught that success comes through sharp elbows, power plays and manipulation, Bob is living proof that you are more likely to be successful through a contained ego and building openness and trust among people,” says Gene Sperling, former chief economic advisor to Clinton and former director of the National Economic Council.

Rubin, the third economist in three years to speak at Harvard’s Commencement ceremonies, has been called the “steward of America’s economy” by former White House Chief of Staff John D. Podesta. Rubin follows Federal Reserve Chairman Alan Greenspan and the Nobel prize-winning scholar of the developing world’s economics, professor emeritus Amartya K. Sen.

Rubin is seen as a preeminent figure in domestic and international economics with an unparalleled understanding of global markets, says economics Professor Kenneth S. Rogoff.

“He has a level of respect in the international community over a broad range of issues,” Rogoff said. “It’s something we haven’t seen since Alexander Hamilton or James Baker.”

An Inflating Education

Rubin may have saved Mexico from defaulting on its loans and prevented the Asian economic crisis from catapulting the world into economic disarray, but his path to the Commencement podium began much more humbly.

Though he considers himself a New Yorker and his wife is involved in New York City politics, Rubin moved to Miami, Fla., at age nine where he attended public schools.

When Rubin arrived at Harvard in the fall of 1956, the economics concentrator was intimidated by the College’s academic demands.

Rubin remembers attending an English class his sophomore year in which he was unfamiliar with authors most of his peers already knew.

“For me, it was quite daunting,” Rubin said. “Harvard was a very different world. There were people there who had far more highly developed academic backgrounds than I did.”

Despite his initial fears, Rubin excelled in academics. A Winthrop resident who graduated summa cum laude, Rubin participated in intramural athletics and enjoyed the “usual lounging around wasting time that college students do.”

He has been interested in the developing world and international economics since the beginning of his career, and wrote his undergraduate thesis on inflation and its relationship to economic development in Brazil.

“Brazil has long been called a country of the future and it seemed to me a fascinating place. I was bedeviled at the time by the interesting question of the effect inflation had on the country,” Rubin said.

Though accepted to Harvard Law School, Rubin attended only three days before deciding, “I didn’t want to do this.”

Though Rubin got a late start in planning for his year, he managed to cable an application to the London School of Economics.

He describes the experience as a “wonderful year” and remembers interacting with an international community “very different than Harvard.”

As a non-degree student, Rubin says, “I could do what I wanted to do. I could get up at some hour convenient for me and attend lectures for the day that interested me.”

At the London School of Economics, Rubin met a thriving community of scholars from the developing world. This experience would later influence his approach to the global marketplace.

“In a funny way, the LSE experience taught me how different the world looks when viewed from a developing country than from viewing the world from the world I was used to,” Rubin says.

Into the Money

After leaving the London School of Economics, Rubin headed to New Haven for Yale Law School. But he practiced only briefly after graduating in 1964, joining Cleary, Gottlieb, Steen & Hamilton in New York City for just two years. He moved on to Goldman Sachs, where he remained for 26 years.

“The financial world was an interesting place to me,” Rubin says.

During his time at Goldman Sachs, Rubin honed his managerial skills. He is known for ignoring traditional hierarchy when attempting to find the best solution to a problem.

White House spokesperson Jake Siewert says of Rubin, “He would listen to everyone and ask lower-level people for advice. That came out of the environment at Goldman Sachs, where everyone has equal responsibility for trading.”

In addition to his career at Goldman, Rubin became interested in Democratic politics in 1972.

He met then-governor of Arkansas Bill Clinton a year and a half before his first presidential election.

Rubin’s involvement in the Clinton administration began when he was named to Clinton’s small group of “outside economic advisors.”

“We didn’t do very much advising,” Rubin says. He was offered a position in the administration shortly after the election while visiting the then-president-elect in Little Rock. “I had always wanted to have the opportunity to have a senior position in an administration,” he says.

Siewert says Rubin was always interested in public service and Clinton gave him the chance to have the experience.

“In 1992 there was a lot of uncertainty about the future of the American economy,” Siewert says. “He thought the economy just needed strong leadership. Above all [Rubin] likes taking smart risks and tackling big challenges.

1600 Pennsylvania Ave.

Rubin began his tenure with the Clinton administration in 1993 as an assistant to the President for economic policy. In that capacity he directed the newly created National Economic Council until 1995.

“In his first job with the NEC, he had a great background and was a coordinator of a lot of different people with a lot of different backgrounds,” Siewert says. “He took an institution that never existed before to treat international economic matters in the same way we treat national security matters.”

Rubin said his experience in the business world informed his approach to formulating economic policy.

“The bottom line is that your experience in the private sector is useful but government is very different,” he says. “You have to recognize the government’s objectives and the process it takes to achieve them.”

He stepped up to serve as the 70th Secretary of the Treasury in June of 1995. Rubin quickly drew many powerful people around him, retaining their loyalty with his willingness to share credit with others and consider staff suggestions.

“He’s a very low-key operative,” says economics Professor Richard Zeckhauser. “The thing he does better than anyone is elicit information from anyone in the room with him.”

Rubin is often lauded for his ability to keep his ego in check.

“He knows that containing one’s ego and helping the people around them shine instead of competing with them is not only a nice way to live but is actually the most effective way to be successful in the long run,” Sperling says.

Podesta adds that Rubin is far from a stereotypical Washington insider.

“He doesn’t have typical political attributes,” Podesta says. “He is kind of reserved rather than what passes for leadership in Washington, which is often bombastic and self-aggrandizing.”

Teamwork

Rubin’s commitment to partnership and cooperation is particularly evident in his close relationship with Summers, his Deputy Secretary and successor as Secretary at the Treasury. Together, the Secretary and his deputy heralded Clinton’s new economic plan.

“The Rubin-Summers treasury team will long be remembered as a really imaginative and creative,” Rogoff says. Together, the two introduced the inflation index as a measure of the country’s economic health and engineered “mundane and archaic ways of raising money, reducing debt and lowering interest costs. They really ruled the roost in the Clinton administration.”

The Rubin-Summers team was particularly successful because each player brought different skills to the administration.

“They were more than just partners. Their personalities really seemed to complement each other,” says Aida Alvarez, a former member of the Harvard Board of Overseers who was instrumental in selecting Summers as president and worked with Rubin on a small business mentorship program. “Larry had a more academic background and [Rubin] had a more business background,” she says.

Rubin and Summers spent over six years together in the White House. Podesta said Summers would accompany Rubin t o management meetings each day. “We understood that they complemented each other. They were a bit yin and yang,” Podesta says.

Rubin’s ability to cooperate with his deputy reveals much about his personality. “People in Washington give him a world of credit for bringing in Summers. It takes a very confident person to have someone who is so extraordinarily smart and outspoken to have as a number two,” Rogoff says.

Although Rubin denies extensive involvement in Summers’ selection as the University’s next president, it took three key phone calls from him to defuse Harvard Corporation concerns about rumors of Summers’ temper.

Rubin called search committee members personally, reassuring James R. “Jamie” Houghton ’58, D. Ronald Daniel and Robert G. Stone Jr. ’45 that years in government had softened Summers’ temper.

Rubin says only, “I think he was an outstanding choice,” and admits to being “asked about him” by the Harvard Corporation.

Refocusing the Money

With Summers backing him, Rubin went about Clinton’s mission of refocusing the direction of America’s political economy to secure the country’s role as the dominant force in the international marketplace.

“The areas I most focused on in the White House Treasury was the whole question of the deficit and fiscal discipline,” Rubin says. “I also focused on international economic policy.”

On the domestic front, Rubin considered the plight of the economic situation in the inner cities and emphasized the importance of strengthening the investment opportunities and financial support for small businesses.

“He was very concerned about microbusinesses and micro loans,” Alvarez says. “Rubin really saw a need to focus on the needs of the small entrepreneur and cared about cities.”

On the international front, Rubin’s defining moments came in the form of two international crises, both averted in part because of his leadership abilities as Secretary of the Treasury.

During the Asian Economic Crisis, Rubin went “out of his way to share credit with Larry to build him up and to let people know what a valuable player and indeed star Larry was,” Sperling says.

“Bob’s approach to a difficult budget or financial crises was to recognize the extreme uncertainty and then bring the smartest people he could in each relevant area and then grill them until you had done everything possible to reduce the uncertainty, “ Sperling adds.

Rubin also heralded strong leadership during the Mexican financial crisis and helped lead a bipartisan effort to control the effects of the loan defaults.

“He brought integrity and courage to the Clinton White House,” Podesta says. “During the Mexican bailout he put together an unprecedented financial maneuver. With Rubin’s encouragement and advice we put through something that had only 20 percent approval in the opinion polls.”

After handpicking Summers as his successor, Rubin returned to the private sector in May 1999 to become a director of Citigroup, an $82 billion company that combines Citibank with one of the largest insurance firms, Travelers group, to provide investor services, according to the company’s website.

The Man

Behind the careful leadership and decision-making Rubin is known for in the professional world lies a private man committed to his family. Although he worked there for years, Rubin never established a personal residence in Washington D.C., choosing to reside in the Jefferson Hotel while his wife and children resided in New York City.

“I don’t think many people saw him outside of work,” Siewert says. “He would fly back to NY where his family lived and when he had time off he would go fishing. He certainly didn’t know Washington cocktail parties.”

Rubin is an avid fly fisherman who often flies his own plane to remote areas in order to pursue his hobby. On one occasion, Rubin flew his own plane to Vermont so he could fish after speaking at an engagement.

In the Clinton White House, Rubin was known for being notoriously out of touch with pop culture.

“The President would constantly tease him about his gaps in current cultural knowledge,” Sperling says. “It was a running joke with the president that Rubin did not seem too sure who Aretha Franklin was.”

Podesta says, “If you asked him who President Bartlet is, or even Martin Sheen for that matter, he probably wouldn’t know.”

Despite his lack of cultural currency, Rubin is known by his co-workers for his candor and self-deprecating humor, qualities that may be revealed with today’s speech.

“I think he’ll take it really seriously and spend a lot of energy thinking about what he wants to say wrapped in a package of self-deprecating humor,” Podesta says.

This humor may not be enough to satisfy the American Indians who plan to protest Rubin’s speech. They accuse Rubin and the Treasury Department of not paying millions of dollars the Federal government owes to Indians living on reservations.

Rubin is not concerned about the protesters.

“It’s litigation with the Department of the Interior and never reached my desk,” he said.

Rubin would not reveal the details of his speech but plans “sort of personal reflections on the way I did things and thought about things and how these were affected by my Harvard experience.”

—Staff writer Nicole B. Usher can be reached at usher@fas.harvard.edu.