Rubin's Defense Suggests He was Overpaid

Bob Rubin appears to be a very thoughtful, reasonable guy. As a board member at Citi, I'm sure he's one of the better ones. But his defense of his role in this crisis seems to be that issues such as leverage, and investing billions subprime debt, was a detail outside the scope of his management:

"The board can't run the risk book of a company," he said. "The board as a whole is not going to have a granular knowledge" of operations.

Was investing in subprime in the bailiwick of Rubin, who was deferred to on these issues by the even less technical other board members?

I would say definitely. It appears that Citi, like the other investment banks, bought more and more residential mortgage backed CDOs during the housing bubble, about $54B worth of subprime-related securities on their balance sheet in September 2007, which is especially risky considering their core business has about $300B in residential loans.

Now, a $54B decision to purchase these securities is a conscious choice outside of a core business of the bank, which involves lending to home buyers via its branches. If this was outside of Rubin's scope, why did he pocket $115MM since 1999 from Citi, excluding stock options? Why does one have to pay such vast sums to figureheads who by their own admission don't affect the company's balance sheet? Can I apply for such a job? I'll promise to be supportive, yet look pensive, during board meetings, and I will follow the 10/20/30 rule in my PowerPoint presentations (10 slides, 20 minutes, 30 point font). Most importantly, you need only pay me less than half, $50MM, for for all my non-effectual services.

More realistically, I suppose management figured his value opening doors and influencing regulation was worth it.