Robert Rubin, Traitor To His Class

As a top Citigroup executive, Rubin uses his unequaled Democratic contacts to resist reregulation. In a recent interview, I asked Rubin whether he saw any need for tighter regulation of hedge funds, the massive, nominally private investment funds that enjoy a wholesale exemption from the system of financial disclosure that has kept financial markets tolerably transparent since the New Deal. "I don't know why you would single out hedge funds," Rubin replied, in a sincere tone that suggested genuine puzzlement at the question. Why, indeed? Citigroup has hedge-fund and private-equity subsidiaries, lends to hedge funds, places trades for hedge funds through its brokerage affiliates, and works with hedge funds through its investment-banking arms.

Several unlikely members of the business community have also questioned the present tax advantages for private equity firms, among them Robert Rubin, chairman of the executive committee of Citigroup, whose clients include many private equity firms. Mr. Rubin, the former Treasury secretary, said he was speaking for himself rather than Citigroup. He suggested that the issue should be looked at "with great seriousness" by the appropriate tax committees in Congress.