WEBVTT 00:00:00.000 --> 00:00:02.540 Welcome to the Deep Dive. We're the place that 00:00:02.540 --> 00:00:04.500 digs into the sources so you can get right to 00:00:04.500 --> 00:00:07.280 the insights. That's right. Today, we are looking 00:00:07.280 --> 00:00:09.839 at Robert Rubin. I mean, that name just brings 00:00:09.839 --> 00:00:13.119 up the whole 90s economic boom, doesn't it? It 00:00:13.119 --> 00:00:15.820 really does. The ultimate insider. You know, 00:00:15.839 --> 00:00:18.620 the guy who went from the absolute top of Wall 00:00:18.620 --> 00:00:21.019 Street right into the heart of Washington, D 00:00:21.019 --> 00:00:23.859 .C. power. And we're diving deep into his career 00:00:23.859 --> 00:00:26.399 arc today. It's quite something. Oh, absolutely. 00:00:26.579 --> 00:00:29.179 We're talking, what, 26 years? Climbing the ladder, 00:00:29.300 --> 00:00:31.780 Goldman Sachs. Then he becomes the key guy for 00:00:31.780 --> 00:00:33.780 Clinton's economic policy. Yeah. Serves as Treasury 00:00:33.780 --> 00:00:35.719 secretary. And then there's the whole Citigroup 00:00:35.719 --> 00:00:38.460 chapter right before the 2008 crash, which brought 00:00:38.460 --> 00:00:41.560 a ton of scrutiny. Exactly. That's the core of 00:00:41.560 --> 00:00:43.719 our mission today, laid out in the source material. 00:00:43.979 --> 00:00:46.679 We need to tackle this paradox. Yeah. How does 00:00:46.679 --> 00:00:49.579 the same person get called literally the greatest 00:00:49.579 --> 00:00:51.799 secretary of the Treasury since Alexander Hamilton 00:00:51.799 --> 00:00:54.820 by a sitting president? While also getting blamed. 00:00:55.289 --> 00:00:57.509 pretty heavily in some quarters, for pushing 00:00:57.509 --> 00:01:00.310 deregulation, policies that many argue paved 00:01:00.310 --> 00:01:02.969 the way for that massive 2008 meltdown. It's 00:01:02.969 --> 00:01:05.549 like the two faces of modern American finance 00:01:05.549 --> 00:01:08.230 and government all in one person. Totally. On 00:01:08.230 --> 00:01:10.849 one side, you've got the undeniable wins, right? 00:01:10.930 --> 00:01:13.129 Yeah. Turning the deficit around, the 93 Deficit 00:01:13.129 --> 00:01:15.329 Reduction Act, managing those international crises. 00:01:15.409 --> 00:01:18.189 He gets huge credit for the prosperity of the 00:01:18.189 --> 00:01:22.230 90s. Huge credit. But then the other side, his 00:01:22.230 --> 00:01:25.519 legacy is just... Tangled up with, well, two 00:01:25.519 --> 00:01:28.939 really big regulatory debates. The fight against 00:01:28.939 --> 00:01:31.959 regulating derivatives. And the push to get rid 00:01:31.959 --> 00:01:34.640 of Glass -Steagall. You really have to dig into 00:01:34.640 --> 00:01:36.680 the thinking behind both sides of his career 00:01:36.680 --> 00:01:39.340 to understand the full picture. Okay, let's build 00:01:39.340 --> 00:01:42.019 that foundation. Start at the beginning. How 00:01:42.019 --> 00:01:44.299 did Rubin even get the kind of credibility to 00:01:44.299 --> 00:01:46.200 bridge that gap between Wall Street and Washington? 00:01:46.400 --> 00:01:48.500 He wasn't born into pop sex. No, born in New 00:01:48.500 --> 00:01:50.840 York City in 1938, then moved to Miami Beach. 00:01:51.180 --> 00:01:54.209 But his academic record was, well... Stellar. 00:01:54.209 --> 00:01:56.689 Harvard College, summa cum laude in economics, 00:01:56.890 --> 00:01:59.629 1960. That's top tier. It really is. And his 00:01:59.629 --> 00:02:02.010 path after that shows this kind of intellectual 00:02:02.010 --> 00:02:05.010 searching. He actually started Harvard Law. Oh, 00:02:05.010 --> 00:02:07.010 yeah. And dropped out after three days. Wow. 00:02:07.170 --> 00:02:10.129 Kind of amazing, right? Shows he wasn't afraid 00:02:10.129 --> 00:02:13.370 to just change course. He traveled, studied at 00:02:13.370 --> 00:02:15.189 the London School of Economics for a bit. LSE, 00:02:15.349 --> 00:02:17.310 okay. Then eventually circled back to law, got 00:02:17.310 --> 00:02:21.400 his LLB from Yale in 64. So a top -notch legal 00:02:21.400 --> 00:02:24.000 education, too. He started out as a lawyer, though? 00:02:24.080 --> 00:02:26.240 Yep, at a really prestigious firm, Cleary Gottlieb. 00:02:26.919 --> 00:02:29.400 But that wasn't his final stop. The big move 00:02:29.400 --> 00:02:32.780 came in 66. That's when he joined Goldman Sachs. 00:02:32.780 --> 00:02:35.560 Right. And not just anywhere in Goldman, but 00:02:35.560 --> 00:02:38.539 in risk arbitrage. Explain that a bit. What exactly 00:02:38.539 --> 00:02:41.639 is risk arbitrage? Well, it's basically high 00:02:41.639 --> 00:02:44.120 stakes betting on whether mergers and acquisitions 00:02:44.120 --> 00:02:46.020 will actually go through. You're analyzing the 00:02:46.020 --> 00:02:48.560 deal, the regulations, the personalities. It 00:02:48.560 --> 00:02:50.919 takes incredible analytical skill. And a stomach 00:02:50.919 --> 00:02:53.520 for risk, I imagine. Definitely. And a deep understanding 00:02:53.520 --> 00:02:56.740 of, well, uncertainty, how to calculate odds 00:02:56.740 --> 00:02:59.460 when things aren't clear. That skill set became 00:02:59.460 --> 00:03:01.780 fundamental to everything he did later. And he 00:03:01.780 --> 00:03:03.520 wasn't just passing through Goldman. He stayed 00:03:03.520 --> 00:03:07.900 for... 26 years. 26 years. Climbed all the way 00:03:07.900 --> 00:03:11.180 up. By the early 90s, he was co -senior partner 00:03:11.180 --> 00:03:13.699 and co -chairman. That's the absolute peak. What 00:03:13.699 --> 00:03:15.960 did that mean at Goldman back then? You have 00:03:15.960 --> 00:03:18.699 to understand, Goldman in that era, it had this 00:03:18.699 --> 00:03:21.759 partnership culture. Very focused on... Long 00:03:21.759 --> 00:03:24.620 term client relationships, institutional reputation, 00:03:25.120 --> 00:03:29.139 sort of prudence. Right. So for Rubin to reach 00:03:29.139 --> 00:03:31.340 the top, it wasn't just about being a brilliant 00:03:31.340 --> 00:03:34.139 trader. It showed he could manage huge amounts 00:03:34.139 --> 00:03:36.900 of capital, huge amounts of talent under intense 00:03:36.900 --> 00:03:39.819 pressure. He was basically the leader of the 00:03:39.819 --> 00:03:41.960 firm that kind of defined Wall Street integrity 00:03:41.960 --> 00:03:44.560 at that point. So he carried that weight, that 00:03:44.560 --> 00:03:47.520 experience and that specific risk manager mindset 00:03:47.520 --> 00:03:49.539 with him when he went to Washington. Exactly. 00:03:49.699 --> 00:03:51.620 And it wasn't just the finance. He was politically 00:03:51.620 --> 00:03:54.340 active, too. A committed Democrat. Right. The 00:03:54.340 --> 00:03:56.460 sources mention he was New York finance chair 00:03:56.460 --> 00:03:59.080 for Mondale in 84. Yeah. And he chaired the host 00:03:59.080 --> 00:04:00.960 committee for the Democratic National Convention 00:04:00.960 --> 00:04:03.759 in 92. These weren't just, you know, writing 00:04:03.759 --> 00:04:06.439 checks. It showed he could organize, mobilize 00:04:06.439 --> 00:04:09.699 serious resources at a high level. Made him pretty 00:04:09.699 --> 00:04:11.819 indispensable when Clinton won. OK, so Clinton 00:04:11.819 --> 00:04:15.360 wins in 92. Rubin is perfectly positioned. And 00:04:15.360 --> 00:04:17.839 Clinton creates this new thing, the National 00:04:17.839 --> 00:04:20.199 Economic Council, the NEC. Brand new structure, 00:04:20.319 --> 00:04:24.259 yeah, 1993. And Rubin is its first ever director. 00:04:24.699 --> 00:04:27.560 He's there for two really crucial years. I was 00:04:27.560 --> 00:04:29.379 appointed the NEC. Wasn't that Treasury's job? 00:04:30.660 --> 00:04:33.939 Well, yeah, but economic policy was kind of scattered 00:04:33.939 --> 00:04:36.860 before then. Treasury, Commerce, OMB, Council 00:04:36.860 --> 00:04:39.819 of Economic Advisors, they didn't always pull 00:04:39.819 --> 00:04:42.899 in the same direction. The NEC was meant to be 00:04:42.899 --> 00:04:45.600 the central hub. Coordinate everything, budget, 00:04:45.819 --> 00:04:49.079 tax, trade, even stuff like poverty policy. Get 00:04:49.079 --> 00:04:50.860 the whole administration singing from the same 00:04:50.860 --> 00:04:52.939 economic hymn sheet. Sounds like a recipe for 00:04:52.939 --> 00:04:55.839 massive turf wars. Cabinet secretaries aren't 00:04:55.839 --> 00:04:57.980 known for giving up power easily. Oh, absolutely. 00:04:58.279 --> 00:05:00.860 It could have been a disaster. But the sources 00:05:00.860 --> 00:05:03.639 really credit Rubin's unique combination of skills, 00:05:03.779 --> 00:05:06.740 his intellect, his calm temperament. And his 00:05:06.740 --> 00:05:09.180 sheer credibility coming from Goldman. Exactly. 00:05:09.759 --> 00:05:12.019 Robert Strauss, the old Democratic hand, apparently 00:05:12.019 --> 00:05:13.660 said anyone else in that job would have been 00:05:13.660 --> 00:05:16.220 a disruptive force. Rubin wasn't just another 00:05:16.220 --> 00:05:18.459 political guy. He understood the finance, the 00:05:18.459 --> 00:05:20.740 markets, the global stuff. He could talk turkey 00:05:20.740 --> 00:05:22.740 with anyone and synthesize it for the president. 00:05:22.920 --> 00:05:25.819 And what was his first big push? What did he 00:05:25.819 --> 00:05:28.540 prioritize? Fiscal discipline. Right out of the 00:05:28.540 --> 00:05:31.459 gate, he strongly urged Clinton, look, we've 00:05:31.459 --> 00:05:33.930 got to tackle the deficit. even if it means politically 00:05:33.930 --> 00:05:36.529 tough choices like raising taxes. Which was not 00:05:36.529 --> 00:05:38.670 the traditional Democratic playbook at the time. 00:05:38.730 --> 00:05:41.850 Not at all. This led directly to the 1993 Deficit 00:05:41.850 --> 00:05:44.899 Reduction Act. Rubin was a chief architect. And 00:05:44.899 --> 00:05:48.199 his big push was for tax increases on the upper 00:05:48.199 --> 00:05:50.560 income folks. Which Republicans hated, obviously, 00:05:50.860 --> 00:05:53.759 the whole tax hikes kill growth argument. The 00:05:53.759 --> 00:05:56.139 classic supply side argument, yeah. They insisted 00:05:56.139 --> 00:05:58.439 it would stifle investment. So how did Rubin 00:05:58.439 --> 00:06:00.680 sell it? What was the logic for taking that political 00:06:00.680 --> 00:06:03.139 hit? It was all about the bond market. This is 00:06:03.139 --> 00:06:05.740 where his golden background was key. The argument 00:06:05.740 --> 00:06:08.740 was, if we pass this, even with the tax hikes, 00:06:08.759 --> 00:06:11.040 it sends a signal. A signal to who? To the bond 00:06:11.040 --> 00:06:13.379 traders, the markets. signals that the administration 00:06:13.379 --> 00:06:16.540 is serious, dead serious, about controlling debt 00:06:16.540 --> 00:06:19.220 and inflation. Ah, the bond market vigilantes. 00:06:19.300 --> 00:06:21.699 Exactly. The theory was, if you convince them, 00:06:21.779 --> 00:06:23.500 long -term interest rates will come down. And 00:06:23.500 --> 00:06:25.459 if rates come down... Then businesses invest 00:06:25.459 --> 00:06:28.740 more, people borrow and spend more, and the economy 00:06:28.740 --> 00:06:31.079 grows. Precisely. And that's pretty much what 00:06:31.079 --> 00:06:34.699 happened. Rates fell, growth picked up, and eventually 00:06:34.699 --> 00:06:37.459 that deficit vanished. They called it the confidence 00:06:37.459 --> 00:06:40.279 dividend. That success must have cemented his 00:06:40.279 --> 00:06:43.339 position. Absolutely. By late 94, he's nominated 00:06:43.339 --> 00:06:45.579 for treasury secretary, confirmed in January 00:06:45.579 --> 00:06:50.139 95. Wait for it. 99 to 0 in the Senate. 99 -0. 00:06:50.199 --> 00:06:52.220 That's basically unheard of. Tells you everything 00:06:52.220 --> 00:06:54.639 about the respect he commanded across the aisle 00:06:54.639 --> 00:06:56.879 at that point. His reputation for competence 00:06:56.879 --> 00:07:00.040 was just sky high. And his time as treasury secretary, 00:07:00.300 --> 00:07:03.680 95 to 99. Those are the boom years. Really the 00:07:03.680 --> 00:07:05.939 peak of that 90s expansion. The numbers are kind 00:07:05.939 --> 00:07:07.699 of staggering when you look back. Like what? 00:07:08.079 --> 00:07:10.120 OK. From when he joined the administration until 00:07:10.120 --> 00:07:14.000 he left, unemployment dropped from 6 .9 percent 00:07:14.000 --> 00:07:17.560 down to 4 .3 percent. Wow. The budget went from 00:07:17.560 --> 00:07:22.019 a $255 billion deficit to a $70 billion surplus. 00:07:22.399 --> 00:07:24.860 Incredible turnaround. And inflation stayed low 00:07:24.860 --> 00:07:26.579 the whole time. So you can see why Clinton would 00:07:26.579 --> 00:07:28.439 say he was the greatest Treasury secretary since 00:07:28.439 --> 00:07:30.839 Alexander Hamilton. He delivered. Prosperity 00:07:30.839 --> 00:07:33.439 and a balanced budget. The political holy grail. 00:07:33.899 --> 00:07:36.240 But his influence wasn't just domestic. He got 00:07:36.240 --> 00:07:39.100 deeply involved in global crises, too. That's 00:07:39.100 --> 00:07:40.839 where the Committee to Save the World nickname 00:07:40.839 --> 00:07:43.399 came from. Right. Time magazine cover. What was 00:07:43.399 --> 00:07:46.100 the first big test? Almost immediately after 00:07:46.100 --> 00:07:49.060 taking office in 95, the Mexican peso crisis, 00:07:49.379 --> 00:07:52.860 Mexico was right on the brink of defaulting. 00:07:53.160 --> 00:07:55.459 Could have destabilized emerging markets everywhere. 00:07:55.759 --> 00:07:58.220 How'd they handle it? Congress wasn't going to 00:07:58.220 --> 00:08:00.319 approve a bailout quickly. No time for Congress. 00:08:01.429 --> 00:08:03.589 Rubin, Greenspan at the Fed, and Clinton made 00:08:03.589 --> 00:08:06.170 a bold move. They used the Treasury's exchange 00:08:06.170 --> 00:08:08.529 stabilization fund, usually for propping up the 00:08:08.529 --> 00:08:11.110 dollar, to give Mexico $20 billion in U .S. loan 00:08:11.110 --> 00:08:13.970 guarantees. Risky move politically, right? People 00:08:13.970 --> 00:08:15.949 must have screamed about taxpayer money. Oh, 00:08:15.970 --> 00:08:18.980 big time. Huge gamble. But it worked. Mexico 00:08:18.980 --> 00:08:21.300 didn't default. Nope. They stabilized, recovered 00:08:21.300 --> 00:08:23.379 pretty quickly, and paid back every cent of the 00:08:23.379 --> 00:08:25.839 loans. And get this, the U .S. Treasury actually 00:08:25.839 --> 00:08:28.920 made a profit of about $580 million on the interest 00:08:28.920 --> 00:08:31.800 and fees. Wow. Okay, so that really burnished 00:08:31.800 --> 00:08:34.299 his reputation as a crisis manager. Absolutely. 00:08:34.580 --> 00:08:36.659 And that became the playbook, more or less, for 00:08:36.659 --> 00:08:38.740 the next wave of crises. The Asian financial 00:08:38.740 --> 00:08:41.960 crisis in 97, Russia, Latin America. Yep, 97, 00:08:42.120 --> 00:08:44.759 98. He worked closely with the IMF, his deputy 00:08:44.759 --> 00:08:47.600 Larry Summers. pushing U .S. policy responses, 00:08:47.899 --> 00:08:50.200 often demanding reforms in those countries in 00:08:50.200 --> 00:08:53.360 return for aid. It was that period juggling all 00:08:53.360 --> 00:08:55.639 those global fires that led to the time cover. 00:08:56.039 --> 00:08:59.399 Rubin, Greenspan, Summers, the Committee to Save 00:08:59.399 --> 00:09:01.639 the World. Seemed like they could do no wrong 00:09:01.639 --> 00:09:04.039 on the economic front back then. Domestically, 00:09:04.179 --> 00:09:06.220 the capstone was probably the Balanced Budget 00:09:06.220 --> 00:09:09.940 Act of 1997. Negotiated that deal with the Republican 00:09:09.940 --> 00:09:13.320 Congress. Again, shows his reach. But you mentioned 00:09:13.320 --> 00:09:15.659 something else often overlooked, his focus on 00:09:15.659 --> 00:09:17.539 urban policy. That doesn't sound like typical 00:09:17.539 --> 00:09:19.919 Treasury Secretary stuff. He's a really interesting 00:09:19.919 --> 00:09:22.000 part of his legacy, though. He wasn't just about 00:09:22.000 --> 00:09:24.860 deficits and exchange rates. He was a big advocate 00:09:24.860 --> 00:09:26.899 for getting investment into distressed communities, 00:09:27.039 --> 00:09:29.580 both urban and rural. How? What did he actually 00:09:29.580 --> 00:09:32.440 do? Well, he pushed to expand the Community Reinvestment 00:09:32.440 --> 00:09:36.059 Act. the CRA making banks invest locally. More 00:09:36.059 --> 00:09:38.399 specifically, he really championed community 00:09:38.399 --> 00:09:41.759 development financial institutions, CDFIs. They're 00:09:41.759 --> 00:09:44.860 specialized institutions designed to lend and 00:09:44.860 --> 00:09:47.860 invest in places traditional banks often ignore 00:09:47.860 --> 00:09:51.580 inner cities. poor rural areas. He pushed for 00:09:51.580 --> 00:09:53.820 more funding for them, more creation of them. 00:09:53.919 --> 00:09:56.320 Trying to connect Wall Street know -how to poverty 00:09:56.320 --> 00:09:59.559 fighting. Kind of, yeah. Using market mechanisms, 00:09:59.820 --> 00:10:02.539 he also helped expand empowerment zones, enterprise 00:10:02.539 --> 00:10:06.000 zones, basically tax breaks for businesses investing 00:10:06.000 --> 00:10:09.000 in those areas. Was this a long -term interest 00:10:09.000 --> 00:10:11.559 for him? Seems like it. It fits that pro -growth 00:10:11.559 --> 00:10:14.450 Democrat label. Believing markets could work 00:10:14.450 --> 00:10:17.169 for social good is structured right. And it wasn't 00:10:17.169 --> 00:10:19.049 just talk. When he left Treasury, one of the 00:10:19.049 --> 00:10:21.250 first things he did was join the board of LISC, 00:10:21.429 --> 00:10:23.990 the Local Initiative Support Corporation. What's 00:10:23.990 --> 00:10:26.649 LISC? Focuses specifically on coordinating investment 00:10:26.649 --> 00:10:28.909 in neglected communities. So that commitment 00:10:28.909 --> 00:10:30.690 seems pretty consistent throughout his career. 00:10:30.990 --> 00:10:33.269 OK, so we've painted the picture of the boom 00:10:33.269 --> 00:10:36.409 years, the successes, the Hamilton comparisons. 00:10:36.610 --> 00:10:38.850 Now we have to pivot to the other side of the 00:10:38.850 --> 00:10:41.850 legacy. The policies that drew heavy criticism 00:10:41.850 --> 00:10:44.690 later on. Right. And the sources point to two 00:10:44.690 --> 00:10:47.029 main areas during his Treasury tenure. First, 00:10:47.210 --> 00:10:50.649 that battle over derivatives regulation. Yeah, 00:10:50.690 --> 00:10:54.029 this kicks off in 1998. Brooksley Bourne, who 00:10:54.029 --> 00:10:56.649 is heading the CFTC, the Commodity Futures Trading 00:10:56.649 --> 00:10:59.870 Commission, she proposes bringing oversight to 00:10:59.870 --> 00:11:03.059 the market for over -the -counter, or OTC. Credit 00:11:03.059 --> 00:11:04.919 derivatives. These are the complex financial 00:11:04.919 --> 00:11:07.980 instruments that blew up in 2008. Largely, yes. 00:11:08.159 --> 00:11:10.399 Credit default swaps, things like that. They 00:11:10.399 --> 00:11:12.340 weren't traded on public exchanges. There were 00:11:12.340 --> 00:11:14.639 private deals between big institutions, often 00:11:14.639 --> 00:11:17.179 with huge amounts of leverage involved. And nobody 00:11:17.179 --> 00:11:19.559 really knew the total exposure. And Born wanted 00:11:19.559 --> 00:11:21.700 to regulate them. What was Rubin's reaction? 00:11:22.120 --> 00:11:24.779 He, along with Alan Greenspan at the Fed, strongly 00:11:24.779 --> 00:11:27.899 opposed her. Fiercely. The line usually quoted 00:11:27.899 --> 00:11:30.200 is they said it would cause chaos. But what was 00:11:30.200 --> 00:11:32.220 the actual reasoning? Why did they think less 00:11:32.220 --> 00:11:34.679 regulation was safer? It really came down to 00:11:34.679 --> 00:11:37.299 a belief in market sophistication. The argument 00:11:37.299 --> 00:11:39.340 was, look, these are big, smart institutions 00:11:39.340 --> 00:11:41.759 trading with each other. They don't need the 00:11:41.759 --> 00:11:44.840 same protections as like retail investors. OK. 00:11:44.919 --> 00:11:48.350 Their specific points were roughly one. regulation 00:11:48.350 --> 00:11:50.370 would kill financial innovation, which they thought 00:11:50.370 --> 00:11:53.149 is crucial. Two, it would just drive the trading 00:11:53.149 --> 00:11:55.570 offshore, making U .S. markets less central, 00:11:55.730 --> 00:11:58.909 less liquid. Three, and this is the ironic one, 00:11:59.230 --> 00:12:01.250 they argued it would mess up how institutions 00:12:01.250 --> 00:12:03.830 hedge their risks, potentially making the whole 00:12:03.830 --> 00:12:06.809 system less stable, not more. So they genuinely 00:12:06.809 --> 00:12:09.230 believe that trying to regulate these complex 00:12:09.230 --> 00:12:11.570 contracts would actually backfire and increase 00:12:11.570 --> 00:12:13.529 risk. That seems to have been the core belief, 00:12:13.629 --> 00:12:17.129 yes. They pushed back so hard. Rubin, Summers, 00:12:17.230 --> 00:12:19.929 Greenspan. They didn't just stop Boren's proposal. 00:12:20.230 --> 00:12:23.070 They actually recommended Congress specifically 00:12:23.070 --> 00:12:25.970 exempt the CFTC from having authority over these 00:12:25.970 --> 00:12:27.990 derivatives. And Congress listened. They did. 00:12:28.090 --> 00:12:30.110 That recommendation became part of the Commodity 00:12:30.110 --> 00:12:33.490 Futures Modernization Act of 2000. Explicitly 00:12:33.490 --> 00:12:36.159 carved out OTC derivatives from regulation. And 00:12:36.159 --> 00:12:39.320 why was that specific exemption so critical when 00:12:39.320 --> 00:12:42.320 we look back at 2008? Because that unregulated 00:12:42.320 --> 00:12:44.860 market just exploded in size and complexity. 00:12:45.580 --> 00:12:48.340 Credit default swaps especially created these 00:12:48.340 --> 00:12:51.139 hidden links between banks, insurance companies 00:12:51.139 --> 00:12:54.620 like AIG. Nobody knew who owed what to whom if 00:12:54.620 --> 00:12:57.340 things went bad. So when the housing market turned... 00:12:57.720 --> 00:13:00.139 The whole house of cards came down. The true 00:13:00.139 --> 00:13:02.659 scale of the risk, hidden in those unregulated 00:13:02.659 --> 00:13:05.840 contracts, suddenly became terrifyingly clear. 00:13:06.240 --> 00:13:08.600 A Frontline report later directly linked that 00:13:08.600 --> 00:13:11.259 failure to regulate to the severity of the 08 00:13:11.259 --> 00:13:13.480 crisis. It's a tough look in hindsight. How did 00:13:13.480 --> 00:13:16.299 Rubin explain it later? Well, his defense post 00:13:16.299 --> 00:13:19.039 -crisis acknowledged the risk. He said he'd been 00:13:19.039 --> 00:13:20.960 worried about systemic risk from derivatives 00:13:20.960 --> 00:13:24.480 even back in his Goldman days. But he claimed 00:13:24.480 --> 00:13:25.980 the politics would have made this impossible 00:13:25.980 --> 00:13:28.720 to regulate back then. Which points to that tension, 00:13:28.799 --> 00:13:31.080 right, between what a risk manager sees and what 00:13:31.080 --> 00:13:32.820 a political player thinks they can actually get 00:13:32.820 --> 00:13:35.059 done. Even Clinton later said the advice he got 00:13:35.059 --> 00:13:37.299 against regulation was wrong. He did say that 00:13:37.299 --> 00:13:40.259 in 2010, yeah. Though apparently advisors later 00:13:40.259 --> 00:13:42.700 tried to nuance that, saying Clinton might have 00:13:42.700 --> 00:13:44.899 been mixing up specific proposals with the general 00:13:44.899 --> 00:13:47.700 anti -regulation vibe from Greenspan and Rubin. 00:13:48.019 --> 00:13:50.299 Still, the bottom line is they didn't regulate. 00:13:50.679 --> 00:13:53.039 And that had massive consequences. OK, that's 00:13:53.039 --> 00:13:55.960 derivatives. The second major policy shift tied 00:13:55.960 --> 00:13:58.200 to his legacy is the end of Glass -Steagall. 00:13:58.279 --> 00:14:00.940 Right. The old Depression -era law separating 00:14:00.940 --> 00:14:03.580 commercial banking, taking deposits, making loans 00:14:03.580 --> 00:14:06.220 from investment banking, underwriting stocks, 00:14:06.460 --> 00:14:09.720 bonds. Rubin, as Treasury Secretary, was on record 00:14:09.720 --> 00:14:12.059 saying it was obsolete. Right. Outdated for the 00:14:12.059 --> 00:14:14.639 modern financial world. He was. But it's important 00:14:14.639 --> 00:14:17.019 to remember, Glass -Steagall had been weakening 00:14:17.019 --> 00:14:19.940 for years before the final repeal. Regulators 00:14:19.940 --> 00:14:22.440 like the Fed had already been granting exceptions, 00:14:22.679 --> 00:14:24.759 letting commercial banks do more and more investment 00:14:24.759 --> 00:14:27.340 banking stuff through the 80s and 90s. So the 00:14:27.340 --> 00:14:29.639 wall was already crumbling. Pretty porous by 00:14:29.639 --> 00:14:32.120 the late 90s, yeah. But the thing that really 00:14:32.120 --> 00:14:35.899 forced Congress's hand was a specific deal. The 00:14:35.899 --> 00:14:39.820 Citicorp Travelers merger in 1998. Exactly. Sandy 00:14:39.820 --> 00:14:42.860 Whale, the CEO of Travelers, which was insurance 00:14:42.860 --> 00:14:46.090 and investment banking. engineered this massive 00:14:46.090 --> 00:14:48.649 merger with Citicorp, a huge commercial bank. 00:14:48.769 --> 00:14:51.330 Creating Citigroup. Creating Citigroup. And this 00:14:51.330 --> 00:14:54.289 new behemoth was technically illegal under Glass 00:14:54.289 --> 00:14:57.110 -Steagall as it stood. They got a temporary waiver, 00:14:57.269 --> 00:15:00.169 but everyone knew the law had to change to accommodate 00:15:00.169 --> 00:15:03.230 this new reality. The lobbying pressure was intense. 00:15:03.450 --> 00:15:05.250 And this is where the timing gets awkward for 00:15:05.250 --> 00:15:07.389 Rubin. Very awkward. Rubin resigns as Treasury 00:15:07.389 --> 00:15:11.190 Secretary in July 1999. Okay. The Graham -Leach 00:15:11.190 --> 00:15:13.809 -Bliley Act. which officially repeals Glass -Steagall, 00:15:13.929 --> 00:15:16.669 is signed into law by Clinton in November 1999. 00:15:17.210 --> 00:15:19.350 Larry Summers is Treasury Secretary by then. 00:15:19.409 --> 00:15:21.950 Right, but... Robert Rubin joins the leadership 00:15:21.950 --> 00:15:24.470 of Citigroup, the direct beneficiary of the repeal, 00:15:24.470 --> 00:15:27.590 in October 1999, just weeks before the repeal 00:15:27.590 --> 00:15:30.269 becomes official law. Oof, that looks bad. It 00:15:30.269 --> 00:15:32.870 looks terrible to critics. The whole revolving 00:15:32.870 --> 00:15:35.789 door narrative. He always maintained the timing 00:15:35.789 --> 00:15:37.830 was coincidental, that he'd made his decision 00:15:37.830 --> 00:15:40.789 to join Citi earlier. But the perception was 00:15:40.789 --> 00:15:44.259 unavoidable. The guy overseeing the dismantling 00:15:44.259 --> 00:15:46.480 of the rules goes straight to the company that 00:15:46.480 --> 00:15:48.620 benefits most from the dismantling. OK, let's 00:15:48.620 --> 00:15:50.240 follow him to Citigroup then. He joins in late 00:15:50.240 --> 00:15:53.100 99 as chairman of the executive committee. What 00:15:53.100 --> 00:15:55.220 did that actually involve? What was his job? 00:15:55.440 --> 00:15:57.159 Well, according to The Wall Street Journal, his 00:15:57.159 --> 00:16:01.480 role was famously. Murky. Murky. Yeah. He was 00:16:01.480 --> 00:16:03.519 on the board, involved in high -level strategy, 00:16:03.799 --> 00:16:06.779 management discussions, operations, but apparently 00:16:06.779 --> 00:16:09.679 had no line responsibilities. Meaning he wasn't 00:16:09.679 --> 00:16:12.559 directly managing traders or loan officers. Exactly. 00:16:12.740 --> 00:16:15.340 He was more like a senior advisor, a statesman, 00:16:15.419 --> 00:16:17.919 meeting with government officials globally, bringing 00:16:17.919 --> 00:16:20.940 in big clients, advising the CEO, using his immense 00:16:20.940 --> 00:16:24.059 experience and, frankly, his contact list. That 00:16:24.059 --> 00:16:26.539 access must have been incredibly valuable to 00:16:26.539 --> 00:16:29.379 Citi. Hugely valuable. But it also led to problems 00:16:29.379 --> 00:16:32.240 almost immediately. The Enron situation in 2001. 00:16:32.679 --> 00:16:36.159 Right. Enron was a huge Citigroup client, and 00:16:36.159 --> 00:16:38.700 it was cratering, facing a credit downgrade that 00:16:38.700 --> 00:16:41.980 could be fatal. And Rubin got involved. He personally 00:16:41.980 --> 00:16:44.399 called a high -ranking Treasury official in the 00:16:44.399 --> 00:16:46.840 Bush administration, asking if they could somehow 00:16:46.840 --> 00:16:49.700 persuade the rating agencies to hold off on the 00:16:49.700 --> 00:16:53.120 downgrade. Wow. Using his old connections for 00:16:53.120 --> 00:16:55.720 his new employer. That's exactly how it looked. 00:16:55.799 --> 00:16:57.919 Yeah. His defense was interesting, though. He 00:16:57.919 --> 00:17:00.220 said, yes, he was acting as a city executive 00:17:00.220 --> 00:17:03.019 trying to help a client. But T, he was also acting 00:17:03.019 --> 00:17:05.240 as a former treasury secretary worried about 00:17:05.240 --> 00:17:08.220 the systemic chaos if a giant like Enron just 00:17:08.220 --> 00:17:10.960 collapsed suddenly. Did people buy that, the 00:17:10.960 --> 00:17:13.599 systemic risk argument? Well, a Senate investigation 00:17:13.599 --> 00:17:15.799 looked into it. They cleared him of doing anything 00:17:15.799 --> 00:17:17.980 illegal, but they definitely highlighted the 00:17:17.980 --> 00:17:20.640 massive conflict of interest. Rubin himself stood 00:17:20.640 --> 00:17:22.579 by it, said he was genuinely worried about the 00:17:22.579 --> 00:17:25.220 wider economy and would do it again. But it cemented 00:17:25.220 --> 00:17:27.700 that image for critics using public service connections 00:17:27.700 --> 00:17:30.660 for private gain. So his role was maybe murky 00:17:30.660 --> 00:17:33.059 day to day, but he was clearly influential. And 00:17:33.059 --> 00:17:35.799 then 2008 hits. And Citigroup is right at the 00:17:35.799 --> 00:17:39.099 epicenter of the crisis. Hugely exposed, needed 00:17:39.099 --> 00:17:41.700 a massive bailout. Rubin even had to step in 00:17:41.700 --> 00:17:44.059 as acting chairman for a short period in late 00:17:44.059 --> 00:17:47.079 2007 as things were unraveling. And the critics 00:17:47.079 --> 00:17:49.079 immediately drew the line back to his Treasury 00:17:49.079 --> 00:17:52.339 days. Absolutely. The argument was his policies 00:17:52.339 --> 00:17:54.880 letting derivatives run wild, killing Glass -Steagall, 00:17:54.960 --> 00:17:58.259 created the environment for excessive risk. And 00:17:58.259 --> 00:18:00.559 then his presence at Citigroup, even in an advisory 00:18:00.559 --> 00:18:03.660 role, encouraged or at least didn't stop the 00:18:03.660 --> 00:18:05.859 bank from taking on those massive risks that 00:18:05.859 --> 00:18:08.220 almost destroyed it. And the government had to 00:18:08.220 --> 00:18:11.480 step in with TARP funds. $45 billion injected 00:18:11.480 --> 00:18:13.500 into Citigroup to keep it afloat. Now, to be 00:18:13.500 --> 00:18:15.660 fair, the sources do note that the Treasury eventually 00:18:15.660 --> 00:18:18.220 sold its city stake and made a profit, right? 00:18:18.700 --> 00:18:21.240 Taxpayers got their money back, plus some. That's 00:18:21.240 --> 00:18:23.940 true. About a $12 billion profit for the Treasury 00:18:23.940 --> 00:18:26.440 in the end. But that detail often got drowned 00:18:26.440 --> 00:18:28.680 out by the outrage over something else. His compensation. 00:18:29.039 --> 00:18:31.619 His compensation. Between 99 when he joined and 00:18:31.619 --> 00:18:34.920 2009 when he left, his total pay from Citigroup's 00:18:34.920 --> 00:18:38.160 salary, bonuses, stock options, came to around 00:18:38.160 --> 00:18:44.140 $126 million. $126 million for a mostly advisory 00:18:44.140 --> 00:18:48.980 role at a bank that needed a $45 billion bailout. 00:18:49.039 --> 00:18:51.519 Precisely. That number became a lightning rod 00:18:51.519 --> 00:18:54.079 for public anger. You had critics like Nassim 00:18:54.079 --> 00:18:56.779 Nicholas Taleb just hammering him on this. Taleb, 00:18:56.880 --> 00:18:58.960 the Black Swan author, what was his specific 00:18:58.960 --> 00:19:01.279 criticism? Taleb's whole thing is about skin 00:19:01.279 --> 00:19:04.299 in the game, accountability. He argued Rubin 00:19:04.299 --> 00:19:06.720 made a fortune while Citi piled on risks that 00:19:06.720 --> 00:19:08.680 blew up the system, got bailed out by taxpayers, 00:19:08.960 --> 00:19:11.220 and then Rubin just walked away saying, oh, it 00:19:11.220 --> 00:19:14.380 was unpredictable uncertainty. Taleb saw it as 00:19:14.380 --> 00:19:17.660 a fundamental flaw. Massive rewards for taking 00:19:17.660 --> 00:19:20.519 risks, zero personal penalty for catastrophic 00:19:20.519 --> 00:19:22.890 failure. The criticism didn't stop there, did 00:19:22.890 --> 00:19:24.970 it? There were lawsuits. Yeah, investors sued 00:19:24.970 --> 00:19:27.990 in 2008. Said executives, including Rubin, sold 00:19:27.990 --> 00:19:29.769 stock when they knew the price was inflated because 00:19:29.769 --> 00:19:31.529 they were hiding the risks. How did that end? 00:19:31.730 --> 00:19:34.609 Citigroup settled it in 2012 for $590 million. 00:19:35.470 --> 00:19:37.549 Denied wrongdoing as part of the deal. Standard 00:19:37.549 --> 00:19:39.509 practice. But there was also an official government 00:19:39.509 --> 00:19:41.750 investigation. The Financial Crisis Inquiry Commission, 00:19:41.930 --> 00:19:45.390 the FCIC, set up by Congress to figure out what 00:19:45.390 --> 00:19:48.740 caused the crisis. They interviewed Rubin. And 00:19:48.740 --> 00:19:50.880 afterwards, the commission voted unanimously 00:19:50.880 --> 00:19:53.940 to refer him to the Department of Justice. For 00:19:53.940 --> 00:19:56.500 what? For potential violation of laws related 00:19:56.500 --> 00:19:59.619 to the crisis. Now, the DOJ didn't end up prosecuting 00:19:59.619 --> 00:20:02.059 him or taking any action. But that unanimous 00:20:02.059 --> 00:20:04.460 referral from the official inquiry, that's a 00:20:04.460 --> 00:20:07.500 permanent, very public black mark on his record. 00:20:07.680 --> 00:20:10.420 He resigned from Citigroup in 2009, right? Yes, 00:20:10.440 --> 00:20:13.619 amidst all that fallout. So despite that really 00:20:13.619 --> 00:20:16.680 intense period of criticism after 2008, Rubin 00:20:16.680 --> 00:20:19.059 didn't just vanish. He's remained a pretty influential 00:20:19.059 --> 00:20:21.680 voice, hasn't he? Oh, absolutely. Still very 00:20:21.680 --> 00:20:24.660 active in policy circles, academia. He co -founded 00:20:24.660 --> 00:20:27.319 the Hamilton Project back in 2006. Which is still 00:20:27.319 --> 00:20:30.039 a major centrist economic think tank. Exactly. 00:20:30.039 --> 00:20:32.039 He was co -chair of the Council on Foreign Relations 00:20:32.039 --> 00:20:34.619 for 10 years, served on the Harvard board. And 00:20:34.619 --> 00:20:36.740 today he's a senior counselor at Centerview Partners. 00:20:36.980 --> 00:20:39.119 Which is an investment bank advisory firm. A 00:20:39.119 --> 00:20:41.579 boutique one, yeah. So he's still very much connected 00:20:41.579 --> 00:20:44.440 to the worlds of finance, policy, and elite institutions. 00:20:44.880 --> 00:20:48.500 And his core economic views. Have they changed 00:20:48.500 --> 00:20:51.200 much? Or is it still basically the 90s Clinton 00:20:51.200 --> 00:20:53.839 era philosophy? It seems remarkably consistent, 00:20:54.039 --> 00:20:56.930 actually. Still described as that centrist. Pro 00:20:56.930 --> 00:21:00.430 -business, pro -growth Democrat. Still hammering 00:21:00.430 --> 00:21:03.430 on fiscal discipline, that original 1993 focus. 00:21:03.650 --> 00:21:06.289 Yeah. But always pairing it with a need for public 00:21:06.289 --> 00:21:08.230 investment. How does that play out on taxes, 00:21:08.329 --> 00:21:11.490 for example? He supports progressive taxes, likes 00:21:11.490 --> 00:21:13.630 things like the earned income tax credit to help 00:21:13.630 --> 00:21:16.230 lower and middle income folks. But he was strongly 00:21:16.230 --> 00:21:18.769 against the big tax cuts under Bush and Trump, 00:21:18.930 --> 00:21:21.109 arguing they just blew up the deficit and mainly 00:21:21.109 --> 00:21:23.720 helped the rich. Consistent with his 90s stance. 00:21:23.920 --> 00:21:25.640 Did he support recent Democratic initiatives? 00:21:26.160 --> 00:21:28.440 Yeah, he backed Biden's Inflation Reduction Act. 00:21:28.579 --> 00:21:30.539 And interestingly, he even joined that group 00:21:30.539 --> 00:21:32.680 of former Treasury secretaries urging the UK 00:21:32.680 --> 00:21:36.180 not to leave the EU back in 2016. So still very 00:21:36.180 --> 00:21:38.059 much engaged on big picture economic stability 00:21:38.059 --> 00:21:40.700 issues. But the sources suggest a major new focus 00:21:40.700 --> 00:21:43.819 for him now is climate change. Definitely. He 00:21:43.819 --> 00:21:46.759 calls it the existential threat of our age. This 00:21:46.759 --> 00:21:49.079 seems to be where he's applying that long career 00:21:49.079 --> 00:21:51.759 of thinking about risk to a totally different. 00:21:52.240 --> 00:21:54.720 massive problem. How so? What's he proposing? 00:21:55.079 --> 00:21:57.640 He was on a U .S. climate risk committee involved 00:21:57.640 --> 00:22:00.160 in the risky business project. He's trying to 00:22:00.160 --> 00:22:02.180 use the tools of finance and risk management 00:22:02.180 --> 00:22:05.200 to push for climate action rather than just relying 00:22:05.200 --> 00:22:09.059 on traditional environmental regulation. So treating 00:22:09.059 --> 00:22:11.740 climate change like a financial risk that isn't 00:22:11.740 --> 00:22:13.759 being properly priced by the market. Exactly. 00:22:13.880 --> 00:22:15.859 He's got these three really specific proposals 00:22:15.859 --> 00:22:18.579 that show that thinking. OK, what are they? First, 00:22:18.740 --> 00:22:21.900 kind of technical. Change how we calculate GDP. 00:22:22.440 --> 00:22:25.599 Right now, GDP measures output, but it doesn't 00:22:25.599 --> 00:22:28.400 subtract the costs of, say, pollution or climate 00:22:28.400 --> 00:22:31.980 damage. He says we need to revise GDP to reflect 00:22:31.980 --> 00:22:34.660 those environmental externalities. So the headline 00:22:34.660 --> 00:22:37.400 economic number itself would show the cost of 00:22:37.400 --> 00:22:40.079 inaction. Right. Makes the damage visible in 00:22:40.079 --> 00:22:42.700 the number everyone watches. Second, mandatory 00:22:42.700 --> 00:22:45.519 corporate disclosure. Disclosure of what? Require 00:22:45.519 --> 00:22:47.559 companies to tell their investors the potential 00:22:47.559 --> 00:22:49.640 financial cost of the carbon they're emitting. 00:22:49.930 --> 00:22:53.089 Ah, bringing climate risk onto the balance sheet. 00:22:53.210 --> 00:22:56.250 Precisely. If investors can see that future liability, 00:22:56.710 --> 00:22:58.829 they'll pressure companies to reduce emissions 00:22:58.829 --> 00:23:02.329 far faster than regulators might force them to. 00:23:02.450 --> 00:23:05.029 It's using market pressure. And the third proposal. 00:23:05.390 --> 00:23:08.029 Aimed at the government itself. Include the future 00:23:08.029 --> 00:23:10.109 costs of dealing with climate change, disaster 00:23:10.109 --> 00:23:13.410 relief, infrastructure adaptation, all of it. 00:23:13.599 --> 00:23:16.339 in the official long term U .S. fiscal projections. 00:23:16.559 --> 00:23:19.539 So treat climate costs like future Medicare or 00:23:19.539 --> 00:23:22.079 Social Security costs, making a core budget issue. 00:23:22.259 --> 00:23:25.140 Exactly. If the government's own forecasts show 00:23:25.140 --> 00:23:28.099 trillions in future climate liabilities, it forces 00:23:28.099 --> 00:23:30.500 politicians to take it seriously now, not just 00:23:30.500 --> 00:23:32.980 kick the can down the road. It connects the long 00:23:32.980 --> 00:23:36.380 term risk to today's budget reality. It's applying 00:23:36.380 --> 00:23:39.119 that financial risk management lens very directly. 00:23:39.359 --> 00:23:41.660 And all this thinking, this approach, is laid 00:23:41.660 --> 00:23:44.099 out in his 2023 book, The Yellow Pad. The Yellow 00:23:44.099 --> 00:23:46.319 Pad, making better decisions in an uncertain 00:23:46.319 --> 00:23:49.039 world. What's the core idea there? It basically 00:23:49.039 --> 00:23:51.579 formalizes his philosophy of probabilistic thinking. 00:23:51.940 --> 00:23:54.099 Probabilistic thinking. Yeah, it's the framework 00:23:54.099 --> 00:23:56.940 he says he developed over decades, from risk 00:23:56.940 --> 00:23:59.680 arbitrage at Goldman through those global crises 00:23:59.680 --> 00:24:03.660 in the 90s. The core idea is you can never be 00:24:03.660 --> 00:24:06.349 certain about the future. Every decision has 00:24:06.349 --> 00:24:08.930 multiple possible outcomes, each with a different 00:24:08.930 --> 00:24:11.470 probability. So it's not about being right 100 00:24:11.470 --> 00:24:13.990 % of the time. No, it's about rigorously thinking 00:24:13.990 --> 00:24:17.230 through all the possibilities, assigning likelihoods, 00:24:17.230 --> 00:24:19.430 maybe literally sketching it out on a yellow 00:24:19.430 --> 00:24:22.049 legal pad, and then making the best bet given 00:24:22.049 --> 00:24:23.750 that uncertainty. Excepting you'll sometimes 00:24:23.750 --> 00:24:26.369 be wrong, but aiming for the best process. Exactly. 00:24:27.230 --> 00:24:29.480 Maximize your odds over the long run. You can 00:24:29.480 --> 00:24:32.119 see his whole career, the successes and the criticisms 00:24:32.119 --> 00:24:34.980 through that lens. The Mexican bailout was a 00:24:34.980 --> 00:24:38.119 probabilistic bet that paid off. Arguably, the 00:24:38.119 --> 00:24:40.279 deregulation of derivatives was a probabilistic 00:24:40.279 --> 00:24:42.339 bet about market sophistication that, well, that 00:24:42.339 --> 00:24:45.059 went catastrophically wrong. The models couldn't 00:24:45.059 --> 00:24:47.500 handle the complexity that deregulation unleashed. 00:24:48.059 --> 00:24:50.359 So wrapping this all up for you, the listener, 00:24:50.599 --> 00:24:52.779 Robert Rubin's story is just this incredible 00:24:52.779 --> 00:24:55.680 case study, the power and maybe the danger of 00:24:55.680 --> 00:24:57.819 the financial expert in government. Yeah, he 00:24:57.819 --> 00:25:00.599 was the architect of hugely successful economic 00:25:00.599 --> 00:25:03.980 period. Got compared to Hamilton. Hard to argue 00:25:03.980 --> 00:25:06.319 with the results in the 90s. But then those policy 00:25:06.319 --> 00:25:08.759 choices, especially around derivatives and Glass 00:25:08.759 --> 00:25:11.380 -Steagall and that revolving door move to Citigroup, 00:25:11.420 --> 00:25:14.339 just cast this permanent shadow, especially after 00:25:14.339 --> 00:25:17.309 2008 blew up the system he helped shape. His 00:25:17.309 --> 00:25:19.910 career really forces you to grapple with the 00:25:19.910 --> 00:25:23.029 connection between wonky regulatory decisions 00:25:23.029 --> 00:25:27.309 and massive real world consequences. And it shows 00:25:27.309 --> 00:25:30.950 how immense success and, well, contributing to 00:25:30.950 --> 00:25:33.809 systemic failure can somehow exist in the same 00:25:33.809 --> 00:25:35.529 legacy. And we heard about his whole philosophy 00:25:35.529 --> 00:25:37.809 of probabilistic thinking, dealing with uncertainty. 00:25:37.910 --> 00:25:41.029 Right. Which makes you think, given the huge 00:25:41.029 --> 00:25:43.349 changes he saw from deficits to deregulation 00:25:43.349 --> 00:25:46.720 to financial crisis. What about now? What's the 00:25:46.720 --> 00:25:48.500 final question we should be asking? Well, remember 00:25:48.500 --> 00:25:51.099 Rubin's defense on derivatives. That regulating 00:25:51.099 --> 00:25:53.000 them might have been necessary, but the politics 00:25:53.000 --> 00:25:55.140 made it impossible at the time. Okay, so think 00:25:55.140 --> 00:25:59.119 about today. What are the huge, complex, systemic 00:25:59.119 --> 00:26:03.049 risks we face now? Maybe it's the financial impact 00:26:03.049 --> 00:26:05.190 of climate change like Rubin himself is focused 00:26:05.190 --> 00:26:07.990 on. Maybe it's AI in the financial system. Maybe 00:26:07.990 --> 00:26:09.930 it's something else entirely hidden. What risks 00:26:09.930 --> 00:26:13.109 are we currently ignoring or failing to regulate 00:26:13.109 --> 00:26:15.910 properly? Simply because, like derivatives back 00:26:15.910 --> 00:26:18.470 then, the politics would make it impossible right 00:26:18.470 --> 00:26:21.130 now. What's the potential cost down the road 00:26:21.130 --> 00:26:23.349 of that political paralysis today? That's something 00:26:23.349 --> 00:26:24.049 to really chew on.