Citigroup claims NY Times "misleading" on Rubin

By Jonathan Stempel and Robert MacMillan

NEW YORK (Reuters) - Citigroup Inc (C.N) on Wednesday labeled as "misleading and inaccurate" an article in The New York Times that suggested senior executive Robert Rubin bore significant responsibility for the banking giant's woes.

Citigroup is trying to shore up investor confidence as it sells assets and sheds 52,000 jobs after winning a government rescue that should limit potential losses on $306 billion in troubled assets.

Chief Executive Vikram Pandit has blamed Citigroup's problems on prior management's decision to expose the bank too heavily to U.S. real estate.

A November 23 front-page story in the Times called Rubin, a former U.S. treasury secretary in the Clinton administration, "an architect of the bank's strategy" to chase profit by expanding in collateralized debt obligations and other risky products.

The strategy backfired as credit markets tightened and housing prices fell, leading to $20.3 billion in losses in the last year. Many commentators, editorial pages, websites and blogs have taken Rubin to task for problems at Citigroup, the No. 2 U.S. bank by assets, where he is now a director and senior counselor.

In a letter to the newspaper, Citigroup Vice Chairman Lewis Kaden said that in meetings in 2004 and 2005, Rubin said Citigroup could commit more capital to "intelligent risk reward" activities if it employed the right people and technology, careful judgment and appropriate oversight.

At the time, Rubin chaired the bank's now-dissolved executive committee, which also included then-CEO Charles Prince, who resigned under pressure in November 2007.

"The article painted a misleading and inaccurate picture of Mr. Rubin's role," Kaden wrote. "While Mr. Rubin is a member of the Board and plays an advisory and client service role at Citigroup, he was never an 'architect' nor was he a drafter of Citigroup's risk-taking plans and had no operating role."

Kaden added: "Never did Mr. Rubin suggest in any way that those standards for intelligent and supervised risk-taking be relaxed or suspended in search of higher profits."

Rubin did not respond to an email request for comment, and Citigroup did not answer requests to interview Kaden and Rubin.

"Mr. Kaden's letter essentially says what our article says about Mr. Rubin's role," Times spokeswoman Abbe Serphos said. "We don't believe that his letter contradicts anything that was in the article."

In comments published in the Times on April 27, after credit problems began surfacing but before they mushroomed, Rubin downplayed his role at Citigroup, including whether he made mistakes.

"I've thought a lot about that," he told the paper. "I honestly don't know. In hindsight, there are a lot of things we'd do differently. But in the context of the facts as I knew them and my role, I'm inclined to think probably not."

In an interview on Tuesday on PBS's Charlie Rose show, Pandit said: "In the 11 months that I've been in this job as I worked with him, it's pretty clear that he doesn't drive the execution decisions."

Citigroup shares fell as low as $3.05 last week, but recovered after the government bailout, which included a $20 billion capital injection.