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MELISSA BLOCK, host:

Now, the thoughts of former Treasury Secretary Robert Rubin. He is currently director and chairman of the executive committee at Citigroup. We spoke with him today as he left Washington after speaking to the U.S. Conference of Mayors.

MICHELE NORRIS, host:

Robert Rubin joins us now from Dallas Airport. Thanks so much for being with us.

Mr. ROBERT RUBIN (Former Treasury Secretary; Director and Chairman, Citigroup, Inc.): Happy to be with you, Michele.

NORRIS: In the Financial Times today, billionaire financier George Soros writes that a recession in the developed world is all but inevitable. Do you agree with that assessment?

Mr. RUBIN: Well, there are a lot of different views on that, and there are some who think that it is a high probability. Other people who think that it's more likely we'll have a relatively sharp slowdown but it will avoid recession. I really don't know, Michele. I've been around these things for a long, long time. And I think it's very hard to judge exactly what's going to happen. But what I do think is that the risks have gotten high enough. So that what our political system should be doing is acting very proactively to try to minimize the probability of recession. And if we have recession, to try to keep it as short and shallow as possible.

NORRIS: So if we are headed into a downturn - I mean, you hear the word recession batted about almost every day now - how severe might it actually be?

Mr. RUBIN: Yeah. But I think people need to be careful about the language they use. I think almost all economists agree that the economy is slowing down. Where people differ is whether that's going to remain a slowdown but something short of the kind of more serious slowdown as often characterized as a recession, or whether we really do get into a serious difficulty. And I think it's impossible to have a judgment that you can have a very high level of confidence in.

But I think what one can say with a fair measure of confidence is that the risk has increased and has gotten to the level, which calls for policymakers to very active in all the various ways they can be to try to address these risks and minimize the probability of serious difficulty. Or if we have it, minimize the severity in length of that difficulty. And that means that the Reserve Board and it also means the administration and Congress and the whole host of areas including but not limited to the stimulus that's now being discussed.

NORRIS: So if - you know, we are talking about what the government can do. I guess, it's a question about whether they're actually reaching for the right remedy. If we can turn to Washington and this movement toward economy stimulus packages, is it possible that a stimulus package, in this case, just won't get things done?

Mr. RUBIN: Oh, I think that as they put in place the stimulus that is well-constructed, and if they do it quickly, and if it's really focused on trying to have an effect now and getting the greatest effect that they can get for the dollar they spend, I think it will almost surely have a meaningful effect.

NORRIS: I just want to be clear, I understand you. If you were whispering into the president's ear as you have done in the past, what would you be telling him?

Mr. RUBIN: I would say to him that we should have a stimulus in the area that they're talking about, which is somewhere - they're talking about $140 billion, I believe, and it worth hundreds to hundred forty billion. I believe a good part of it should be tax rebates that are focused predominantly on lower and middle-income people. I think it should include those - the full rebates should go to the 50 million low-income workers who pay payroll taxes. But in some case who don't pay any income taxes. In other case, pay very small income taxes.

And I think you probably also should have some measures in there that would also have very immediate effect such as extending the unemployment insurance time, additional food stamps, measures of that kind, Michele, that will have an effect on the economy, on demand of the economy right away.

NORRIS: A difficult question to ask you in particular, but do you feel any personal responsibility for what we're seeing right now because of Citigroup's involvement in the mortgage market, or because of Wall Street's involvement or posture overall?

Mr. RUBIN: No, Michele. Look, I'm sorry I wasn't involved in this activity at Citigroup. But this is really sort of a current manifestation, if you will, of what has been the whole history of financial markets, which is one of excess leading disruption. And then, it seems to me the key once these things happen is to focus quickly both within each institution and also systemically in terms of our overall economic system and try to address the immediate problems.

NORRIS: I asked the question not necessarily because your hands were on the levers…

Mr. RUBIN: Yes.

NORRIS: …but you're seen as one of the wisest of the wise men on Wall Street. And I wonder if you ever - wished that you had perhaps spoken up or raise this issue?

Mr. RUBIN: I actually did raise them for years in my speeches, Michele.

(Soundbite of laughter)

Mr. RUBIN: Oh, if you go back over the speeches that I gave for the three, four years before this occurred, you'll see a lot of reference to the underweighting of risk and the developing of excesses. But if you're running trading rooms, you've got to run them every day and you've got to be in the business every day. And the kinds of views that others have around you of that kind may factor into what you're doing. But fundamentally, you can't go out of business. You can't stop doing business. And that's how the system just continues to move along that way.

Also, you know, you can be very wrong about those judgments. Alan Greenspan in 1996 very famously said the markets are experiencing irrational exuberance. I happened to agree with him at the time. I thought so, too, but the Dow went up 50 percent from that level and never came back down to that level again. So I think the answer to your question is there were quite a few people, and I was one of them, who had these concerns and expressed them. But if you're actually running businesses, which I did at one time, like it was back 20 years ago or more - you can listen to all that. But fundamentally, you got to be in there every day, engaging in what's going on. Otherwise, you're not in the business.

NORRIS: Robert Rubin, thank you so much for talking to us. Safe travels to you.

Mr. RUBIN: You are more than welcome. Thank you.

NORRIS: Former Treasury Secretary Robert Rubin is chairman of the executive committee at Citigroup.

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