NEWSWEEK: Is it true that you and Mr. Greenspan had only one phone conversation on Monday as Wall Street tanked?
RUBIN: We spoke once or twice. [Deputy Treasury Secretary] Larry [Summers] spoke to him, too. The thing we were focused on on Monday was, ““Is the [financial] infrastructure working?’’ We couldn’t do anything about what the market was going to do . . . The critical thing was not to have what happened in 1987, when we were dealing with structural breakdowns which could threaten the system. I spoke to Greenspan–may have spoken to him more than once–[SEC Chairman] Arthur Levitt, Bill Johnston, [president and COO] of the stock exchange, and [National Association of Securities Dealers head] Frank Zarb.
What did you discuss? The differences between now and 1987?
It was a broad-ranging discussion: Do you see any capacity problems, in particular on payments issues? Have you heard of any problems with [Wall Street] member firms or anybody else?
Did you discover any?
In all cases there was a sense that no one knew of [anything serious] . . . It wasn’t until about 4:30 or 4:35 that we felt we could go out and make the statement I did [about the U.S. economy’s being sound]. The last thing that did happen–the vice chairman of the stock exchange called each time the [circuit breakers] went into effect . . . As you probably know, that is being re-evaluated.
Did you also talk with the president about the market this week? Can you tell us what you talked about?
I spoke to him on Friday, Monday and Tuesday. In general, I have a policy of not talking about my conversations with the president. But it’s fair to say it was a broad-ranging discussion about the economy and what was happening here and abroad . . . It’s fair to say he felt very comfortable about the fundamentals. He has a very good feel for this sort of thing. He has a good sense of how to react.
Have you been in touch with your counterparts in Tokyo, London and Bonn?
We have institutionally been in touch with them . . . There were a number of things discussed. One was to determine whether there were infrastructural problems over there, whether capital and payment systems were OK, whether there were major credit problems anyplace.
Any problems that came up?
Nothing that came to our attention that was very troubling. You don’t know in every case. In some cases I know countries have a very good handle on what is happening.
Some analysts are saying that the Asian crisis is worse in impact than the peso crash.
Even if that is correct, these are very different kinds of situations. You have to approach each the way it is, and not fight yesterday’s wars. First of all, there are now multiple countries [involved] with differing degrees of willingness to commit to the kinds of things that need to be done. And the countries themselves have different circumstances.
Is there anything new or different about this week’s events? You have seen plenty of market turmoil over the years, both on Wall Street and from your perch in Washington.
I’m not sure if it’s a perch or a hole.
