Monday, October 19, 2015

Today In Irony: Robert Rubin Reviews A History Of the Fed (yes the same fed that rescued citi)

Before we get to the current irony here's another sweet irony, TIME magazine's February 1999 cover:

To understand how Rubin, Greenspan and Summers tried to destroy Brooksley Born's life and career, click through "The Essential Larry Summers: How He and Alan Greenspan Laid the Groundwork for the Financial Crisis and Larry Lost $1.8 Billion for Harvard" for the Frontline program "The Warning" on her efforts to alert markets and the powers that be to the risks of derivatives.

Here's the Sunday New York Times book review which describes the reviewer thusly: "Robert E. Rubin, a co-chairman of the Council on Foreign Relations, was Treasury secretary from 1995 to 1999".with no mention of his chairmanship of the executive committee of Citigroup during the time The Federal Reserve was rescuing the big C and also omits mention of his position on Harvard's governing body, The Harvard Corporation, at the time Summers was losing the 1.8 really large:

‘America’s Bank,’ by Roger Lowenstein
"The Signing of the Federal Reserve Act," a 1913 painting.
OCTOBER 19, 2015
Most Americans know the story of that hot Philadelphia summer in 1787 when prolonged debate led to the creation of the United States Constitution to overcome the inadequacies of the Articles of Confederation. Disagreements about the extent of federal power and the design of our democratic institutions were resolved through long arguments and, ultimately, principled compromises.

Few Americans, on the other hand, are familiar with the analogous history of periodic financial crises and economic duress throughout the 19th and early 20th centuries that gave rise to the creation of an effective American central banking system. Decades of fervent debate finally led to the enactment of the Federal Reserve Act in 1913. That is the story Roger Lowenstein tells, vividly and compellingly, in “America’s Bank.” It should be required reading for anyone who is engaged in, or interested in, the actions of the modern Fed, and the continuing debates about those actions and about its governance.

The remarkable tale of the politics, disagreements, decisions and crises that culminated in the Federal Reserve Act is the core of the book. But Lowenstein, the author of several works on economics and finance, builds off it to describe the history of the era, the rise of the Progressive movement, the compromises and machinations that were critical to Congressional passage and the key figures in the drama of creating the Federal Reserve System.

Lowenstein depicts the end of the 19th century and the early part of the 20th as a time of profound transformation. The transition from a predominantly agricultural nation toward an industrial economy parallels the transition we are undergoing today to an information economy. From new technologies and growing global integration, to the stark contrast between the ­wages and working conditions of many American workers and the vast wealth accrued by a few, the forces then driving change created policy ­challenges of great consequence, just as today’s changes do.

Lowenstein highlights the similarity between the arguments then and now over the structure of our financial system: the governance and powers of a central bank, its relationship with private financial institutions, the appropriate scope of Congressional oversight and much else. Then as now, these debates took place against a social and political backdrop that is particular to our country’s history — wariness of central government; antagonism toward banks; and the divergent interests of farmers, merchants, manufacturers and financiers in widely different regions. And Lowenstein’s account of financial crises before the establishment of the Fed powerfully demonstrates that it is imperative for the Federal Reserve System to maintain its effectiveness and independence from politics....MORE
For his efforts Mr. Rubin pocketed a couple hundred mil.

For hers, Ms. Born was hounded from Government.
In 2009 she received the John F. Kennedy Library's Profiles in Courage Award.