More Double Standards for Dems vs. Republicans

TREASURY SECRETARY RUBIN MISLED THE PUBLIC ABOUT THE 1995 BUDGET CRISIS: IF WE COULDN’T TRUST HIM THEN, WHY SHOULD WE TRUST HIM NOW?


A Bipartisan Congressional Committee Found That Rubin Misled The American People About Whether The Government Would Be Forced To Default. A Joint Economic Committee investigation of the November 1995 debt-limit increase found that “there was a deliberate effort on the part of Treasury officials, including Secretary Rubin, to mislead the country relative to the November default.”

(Representative Saxton, House Banking and Financial Services Committee Hearing, February 8, 1996) (emphasis added)


Rubin Also Misled The Country About Whether The Government Could Function If A Budget Agreement Was Not Reached By November 1995. The Joint Economic Committee found that Rubin had a plan that would have let government operations continue without a November 1995 budget agreement; nonetheless, Rubin and other “high-ranking Clinton administration officials created the misleading impression” that nothing could be done to prevent a default if there was no budget in place.

(Representative Saxton, House Banking and Financial Services Committee Hearing, February 8, 1996) (emphasis added)


Rubin Tried To Hide Debt Limit Information From Congress. A leading member of the Joint Economic Committee complained that Rubin and other officials “went to great lengths to conceal information relative to the planning that preceded the default hoax.”

(Representative Saxton, House Banking and Financial Services Committee Hearing, February 8, 1996) (emphasis added)


In An Effort To Juggle The Government’s Books, Rubin Enronized Federal
Pensions. Rubin raided “the last cash at the federal retirement corral” by stopping routine reinvesting of federal employee contributions to the Civil Service Retirement and Disability Trust Fund.

(Representative Mica, House Banking and Financial Services Committee Hearing, February 8, 1996) (emphasis added)


Rubin’s Pension-Raiding Violated A Law Defended By Al Gore. As a Senator, Gore supported a bill that became law that aimed to “preserve . . . contributions that these [federal] employees have made towards their retirement.” Gore said the bill required that employee retirement contributions be “usable only for the payment of civil service retirement and disability benefits.”

(Representative Saxton, House Banking and Financial Services Committee Hearing, February 8, 1996) (emphasis added)


RUBIN LEFT GOVERNMENT AND JOINED CITIBANK, WHICH HELPED ENRON HIDE 40% OF ITS DEBT

Rubin Left The Treasury Department In July 1999, And Became A Director For Citigroup In October Of The Same Year. (“Citigroup’s Business Heads,”Citigroup Website, wwww.citigroup.com)

Partly While Rubin Was At Citibank, The Firm Effectively Loaned Enron Hundreds Of Millions Of Dollars, But It Did Not Show Up On Enron’s Books.

Citibank “prepaid” Enron hundreds of millions of dollars for “energy,” and the money was repaid, along with interest. “The effect of the transaction is like a loan, but it is not accounted as such in Enron’s financial statements.”

Robert Roach, Chief Investigator, Senate Permanent Subcommittee On Investigations Hearing, July 23, 2002


The Citibank Deals Helped Enron Hide Billions Of Dollars In Debt, And
Maintain Its Credit Rating And Share Prices. The Citibank prepayment deals allowed Enron “to understate debt and overstate cash flow from operations [which] made its financial statements look much stronger. That, in turn helped Enron maintain its investment grade credit rating and support, even boost, its share price.”

Robert Roach, Chief Investigator, Senate Permanent Subcommittee On Investigations Hearing, July 23, 2002


Without The Citibank Deals, Enron’s Debt Would Have Increased By 40% To About $14 Billion.

Robert Roach, Chief Investigator, Senate Permanent Subcommittee On Investigations Hearing, July 23, 2002


Citibank Knew That The “Prepays” Were Designed To Help Bolster Enron’s
Bottom Line. Evidence uncovered by the Senate shows that Citigroup not only understood Enron’s accounting goal — increasing operating cash flow without reporting debt — but designed and implemented the financial structures to help Enron achieve the objective.

Robert Roach, Chief Investigator, Senate Permanent Subcommittee On Investigations Hearing, July 23, 2002


A Selling Point Of The Prepay Arrangements Is That They Gave Enron Money That Was Not Showing Up On The Books As Debt. An internal Citibank email, sent one year after Rubin joined the firm, instructed bank workers to tell potential investors in the Enron prepayments that the deal “gives some oomph to revenues . . . [Enron] gets money that gives them cash flow but does not show up on the books as big D debt.”

Robert Roach, “Appendix B: Knowledge And Participation Of Financial Institutions In Enron Prepays,” Senate Permanent Subcommittee On Investigations Hearing, July 23, 2002


Citibank Suggested A Way To Restructure The Deals So They Looked “A Little More Like A True Trade.” In May 2001, an internal Citibank memo suggested adding a minimal charge of one penny to the price of the prepayment deals to make it seem a little more like a true rade.

Robert Roach, Appendix B: Knowledge And Participation Of Financial Institutions In Enron Prepays, Senate Permanent Subcommittee On Investigations Hearing, July 23, 2002


Citibank Stonewalled An Institutional Investor Who Asked Too Many Questions About An Enron Prepayment Deal. Internal emails show that, in November 2001, an investor tried to find out more information about one of the Enron deals. An Enron official told Citibank: “We need to shut this down.” Citigroup did just that, not providing any further information to the investor.

Robert Roach, Appendix B: Knowledge And Participation Of Financial Institutions In Enron Prepays, Senate permanent Subcommittee On Investigations Hearing, July 23, 2002


Under Rubin, Citibank Shopped The Idea Of Prepayment Arrangements Similar To The Enron Deals To 14 Other Companies, “Successfully Selling It To At Least Three.”

(Robert Roach, Chief Investigator, Senate Permanent Subcommittee On Investigations Hearing, July 23, 2002)


AS ENRON WENT BANKRUPT, RUBIN TWICE INTERVENED TO HELP

Rubin Telephoned A Senior Treasury Official In An Attempt To Stop Bond-Rating Agencies From Downgrading Enron Credit. On Nov. 8, 2001, Rubin called Peter Fisher, Undersecretary for Domestic Finance, to ask what Fisher “thought of the idea of calling bond-rating agencies to halt a reduction in Enron’s credit rating. Fisher said he did not think the idea was advisable and did not make the call. Rubin prefaced his call by saying, “This is probably not a good idea.”

Dana Milbank and Susan Schmidt, “Rubin Asked Treasury About Aid To Enron,” The Washington Post, January 12, 2002


After Trying To Influence The Treasury Department, Rubin Personally Called A Credit-Rating Agency On Enron’s Behalf. The same day he made the call to Fisher, Rubin called Moody’s and asked them to delay changing Enron’s credit-rating to below-investment-grade bond status.

Martha McNeil Hamilton, “Enron Hid Debt, Rating-Agency Officials Say,” The Washington Post, March 21, 2002


RUBIN WORKED WITH ENRON AND WAS OFFERED AN ENRON BOARD SEAT

Rubin And Enron CEO Ken Lay Hammered Out The U.S. Position On Global Warming. In August 1997, Rubin and other Clinton officials met with Ken Lay to discuss the U.S. position at the Kyoto global-warming summit. The company’s position was largely adopted by the Clinton Administration. Enron officials exalted at the Kyoto treaty, saying it would “do more to promote Enron’s business than almost any other regulatory initiative.”

Dan Morgan, “Enron Also Courted Democrats,” The Washington Post, January 13, 2002


After Rubin Resigned, Lay Offered Him A Seat On Enron’s Board, And Then
Successfully Lobbied Rubin’s Successor. Two days after Rubin announced that he would step down as Treasury Secretary, Rubin was offered an Enron board seat by Ken Lay. A few months later, Lay urged Larry Summers, Rubin’s successor, not to regulate derivatives. The Clinton Administration decided against oversight of derivatives traders.

Kathleen Day and James V. Grimaldi, Lay’s Lobbying Reached The Top Of Treasury,” The Washington Post, February 21, 2002