This extract from an interview with Robert Rubin in the WSJ really makes one wonder just how much some senior bankers have lost all touch with reality. These kind of abstract comments on the topic of risk and particularly following recommendations from a consultant who has zero stake in the matter, offer perfect examples of the loss of transparency in interbank investments. It also highlights precisely why banks will not lend to each other any more, and why there is such panic in the financial markets. [hat tip Ron]

CITI’S RUBIN: THE CONSULTANTS MADE US DO IT

Mr. Rubin said [Citi’s] decision to increase risk followed a presentation to the board by a consultant who said the bank had committed less of the capital on its balance sheet, on a risk-adjusted basis, than competitors. “It gave room to do more, assuming you’re doing intelligent risk-reward decisions,” Mr. Rubin said. He said success would have been based on having “the right people, the right oversight, the right technology.”