Image: Robert Rubin
JOHN GRESS  /  Reuters gilr
Robert Rubin, former Treasury Secretary, expressed "great regret" that he did not foresee the financial industry crisis.
msnbc.com news services
updated 1/9/2009 6:17:08 PM ET 2009-01-09T23:17:08

Citigroup said Friday that board member Robert Rubin, the former U.S. Treasury secretary, has resigned as a senior adviser to the big financial services company.

Rubin, 70, will continue to serve as a director until his term expires at the next annual meeting in the spring, Citigroup said.

The veteran of Wall Street and Washington has drawn criticism for his inability to prevent the bank's recent problems that sent shares plunging and drove it to seek federal assistance.

Citigroup has been one of the hardest hit banks by the housing market downturn due to its heavy investments in mortgages and other types of loans. Analysts believe Citigroup will report a fifth straight quarterly loss when it releases fourth-quarter results later this month.

Rubin was a senior counselor at Citigroup, and chairman of the bank for about a month after it ousted former chairman and CEO Charles Prince in November 2007. Win Bischoff became Citi's chairman in December 2007, and investment banking head Vikram Pandit became CEO.

"This is not a decision that I have come to lightly," Rubin said in a letter released by the bank. "But as I enter my 70s and with all that is now in place at Citi, I believe the time has come for me to make these changes."

He also wrote: "My great regret is that I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today."

In August 2008, Rubin gave up his title as head of the board's executive committee, and became a "senior counselor" instead.

Rubin was U.S. Treasury Secretary under President Bill Clinton. For several decades prior to that, he worked at the Wall Street firm Goldman Sachs.

Meanwhile, Citigroup is in talks to sell its Smith Barney brokerage unit, and is considering a joint venture with Morgan Stanley to merge their respective brokerage units, a source familiar with the matter told Reuters on Friday.

The discussions with Morgan Stanley are "serious" and "advanced," the source said.

Under the plan being discussed, Morgan Stanley would own 51 percent of the joint venture and Citigroup would own the rest. Citigroup would cede operational and strategic control of the retail brokerage business to Morgan Stanley.

Morgan Stanley would expect to buy the rest of Citigroup's Smith Barney business over the next three to five years, the source said.

The plan would allow Morgan Stanley to diversify its revenue stream, and would allow Citigroup to cut costs and gain capital, the source said.

Citigroup and Morgan Stanley declined to comment.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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