(Fortune) -- A lending catastrophe has consumed homeowners, mortgage companies, and the financial system, but Robert Rubin, Citigroup's director and executive committee chair, doesn't seem particularly alarmed.

He told a small crowd at Manhattan's Cooper Union for the Advancement of Science and Art Wednesday that the problems now roiling the markets and forcing the Federal Reserve into a defensive posture are "all part of a cycle of periodic excess leading to periodic disruption," and that we are not in fact on the verge of a financial meltdown.

And the economic problems that he did acknowledge were blamed on just about everyone but the major U.S. financial players.

Rubin said part of the problem is that we need a "more educated electorate" to hold politicians accountable. Without that, the U.S. won't be able to overcome long-term economic challenges, like the troubles surrounding social security and budget deficits, or the new problems created by globalization.

Rubin's remarks seemed glib given that the financial world looks very much ready to melt down. To wit: Standard & Poor's issued a report, also Wednesday, saying that financial institutions -including credit unions and some Asian banks - could lose more than $265 billion as a result of subprime mortgage contagion, up from an earlier estimated $130 billion.

And so far, Wall Street's premiere banks have only taken $90 billion in writedowns.

Additionally, bond insurer MBIA said write-downs in its credit derivatives portfolio rose to $3.5 billion in its most recent quarter. The news upped the chances that the insurer will be downgraded by the ratings agencies, which would set off another huge round of losses for banks and other holders of subprime laden bonds. It would also hurt prices of municipal bonds, which local governments issue to fund necessary items like infrastructure projects.

Rubin briefly walked the crowd though the journey from irresponsible subprime loan origination to the frozen credit markets, but didn't dwell on the problems at hand. Instead the former Treasury Secretary addressed the role of government in the economy.

"The key to our future is how well or badly politicians address the economic issues we face," he said. He added that politicians must face the "brutal politics around entitlement programs," cut spending and be willing to shrink the deficit using unpopular tools like higher corporate taxes.

While he did not endorse a candidate Wednesday, he has already thrown his support behind Hillary Clinton.

Rubin may be correct in his assessment of issues like entitlement programs, but this was hardly the speech one would expect from a man whose bank has written down more than $24 billion in losses due in large part to greed, cynicism, and bad judgment.

Rubin has been a director and chair of Citigroup's (C, Fortune 500) executive committee since 1999, overseeing a period during which the bank took on huge risks that it is paying dearly for now. He didn't talk about Citi, but when asked he defended both former chief executive Charles Prince and the decision to replace him with Vikram Pandit.

Also at the root of the country's larger economic problems and one of the most serious deterrents to growth, Rubin said, is the wealth gap. He added that this is a global problem.

"It's a paramount task for policy makers to understand why market economy and globalization are associated with severe income distribution issues in almost every country; and then they must create policy to address the problem."

He also chided American consumers for their spendthrift ways, pointing out that personal savings amounts to only 2% of the U.S. economy, vs. 40% in China. At the same time he acknowledged that our short-term economic fate rests with consumer spending.

He had lots of advice, but Rubin was stumped when asked where the U.S. fit into a world where China has become the global factory, Brazil the world's farmer, and India its back office. "We can do all of these things, but we have to invest in what we have to invest in, which is education," he said.

But his answer was uneasy. After all, globalization has made the U.S. the world's manager and financier, a job that his bank has just screwed up on a massive scale.

By the time he finished, Rubin, a thin, graying, distinguished man with a genial manner had charmed the academic crowd. He had catered to their sense of vanity by excoriating politics and elevating the role of higher education.

The elephant in the room, of course, was the fact that risky bets at leading financial institutions like Citi, Merrill Lynch (MER, Fortune 500), and Bear Stearns have damaged Wall Street's reputation as the world's leading financial hub.

Moreover, as sovereign wealth funds bail them out, it is plain that rampant greed, arrogance and cynicism at places like Citi threaten to handicap our country's welfare in this era of global economic transformation.

Indeed, at the very beginning of the evening, before Rubin had taken the podium, the event was marred by a pair of aging, scruffy protestors who shouted, "Bob Rubin has no answers except war, genocide, and hypocrisy!"

They may have been wrong about the war and the genocide, but as far as hypocrisy goes they were spot on.