Rubin and Greenspan to face crisis inquiry

Rubin and Greenspan to face crisis inquiry
By Francesco Guerrera in New York and Alan Rappeport in Washington
Copyright The Financial Times Limited 2010
Published: April 4 2010 22:07 | Last updated: April 4 2010 22:07
http://www.ft.com/cms/s/0/fad283d8-4019-11df-8d23-00144feabdc0.html


Robert Rubin, the former Treasury secretary who played a key role in financial deregulation during Bill Clinton’s presidency and who has kept a low profile since stepping down as a special adviser to Citigroup in January 2009, is to be questioned by the US financial crisis inquiry commission this week.

The committee, created by Congress and given sweeping powers in May 2009, is also to question Chuck Prince, the former chief executive of Citi, as well as Alan Greenspan, former chairman of the Federal Reserve Board.

The line-up suggests the committee is narrowing the scope of its investigation ahead of a final report to Congress in December.

Phil Angelides, the commission’s chairman, said he would ask Mr Greenspan, who led the Fed between 1987 and 2006, why the central bank did not curb subprime lending before the housing bubble burst.

Mr Angelides, a former California state treasurer, said: “The fact is that the Fed, as the main regulator, had the power to impose rules that would apply to everybody.

“We need to peel the veil from these events so that the American people find out what really happened.”

On Sunday, Mr Greenspan appeared to be clinging to his free market ideology, telling ABC News there remained “no alternative” to competitive markets in democratic societies and that regulators could not have foreseen the events that would follow the collapse of Lehman Brothers.

Bill Thomas, vice-chairman of the FCIC and the former Republican chairman of the House’s ways and means committee, said he would ask Mr Greenspan: “what did you know, when did you know it and if you didn’t know it, why didn’t you know it?”.

Mr Angelides and Mr Thomas said the questioning of Mr Prince and Mr Rubin, who have kept a low profile since leaving Citi, will focus on how a once-mighty financial giant lost more than $50bn and had to be bailed out by the US government.

Mr Angelides said Mr Prince would be confronted with his famous assertion - in an interview with the Financial Times in July 2007 - that Citi was “still dancing” to the tune of the cheap credit-fuelled boom.

None of Mr Rubin, Mr Prince nor Mr Greenspan could be reached for comment.