SYNOPSIS: Krugman shows how silly the right's smear of Rubin really is
If you want to see the smear machine at work, this latest - apparently abortive - attempt to implicate Robert Rubin in the Enron affair is a classic.
Here's what happened: we have learned that Citigroup helped Enron by structuring loans in a way that inflated reported revenue. This is not good, but also no surprise. For sure we will eventually learn that every major bank did something like that for some company. It was, alas, what was happening during the bubble years.
But it took about 30 seconds for the right-wing scandal machine to pounce. Robert Rubin works for Citigroup! And he was a Clinton-era icon! So he's guilty! Off with his head! Republican operatives began sending thousands of faxes; talk radio made Rubin's sins topic # 1; and Andrew Sullivan dutifully attacked Rubin in his blog. And with amazing gullibility, the likes of Tim Noah at Slate jumped on board, without bothering to check even the most basic facts.
The big joke is that the Enron deal took place months before Rubin joined Citigroup. Oh, well, maybe he had a time machine. (Reports suggest that Sullivan does - that rather than admit to a mistake he revised his post, a big no-no in the blogging world.)
But even without the nonsense over the date, would this have made any sense? Rubin doesn't run Citigroup; his actual duties are vague, but probably involve a little bit of big-think and a lot of door-opening. Clearly he is not in the operational chain of command; the people structuring financial deals are very unlikely to run them through his office. It's sort of like blaming me for the Princeton web-snooping fracas - hey, I wonder why Sullivan hasn't tried that?
To get a sense of what would justify a real presumption of guilt, consider the case of Thomas White. The Secretary of the Army was actually in charge of Enron Energy Services, which created $500 million in fictitious profits during his tenure - and that was all it accomplished, since it was actually bleeding cash. But he's still in his post, because, say his defenders, you can't prove that just because he was in operational charge of the division he had any idea what it was actually doing.
This kind of thing gives double standards a bad name.
Originally published on the Official Paul Krugman Site, 7.27.02