Should We Trust Paulson and
Goldman Sachs Cronies
To Administer The $700 Billion Bailout
by William Schmidt,
(C) 2008 www.tigersoft.com
Right away, something stinks in the
of the bailout. We are told that all the biggest banks are to get
$25 billion, whether they need it or not, to conceal the identity
of the banks that need capital the most. Bank of America
insists it does not need the money. But it will get the $25 billion
This means that $80.00 will come out of the pocket of
every living American and will go to Bank of America alone,
no matter that the country is in recession and many ordinary
people would could really use the $80 much better, for food,
needed medicine, a doctor's visit, a new tire...
Paulson is crazy! If they don't even need the money,
don't give it to them. He is just being palsy-walsy with his buds
at our expense.
US Treasury faces, from
left: Steve Shafran (formerly of Goldman),
Kendrick Wilson III (ditto), Henry Paulson Jr. (you guessed it), Edward Forst (yep)
and Neel Kashkari (right again!)
Paulson Helped Create The Mess!
Why Should We Trust Him?
Paulson's lobbied repeatedly from 2000 to 2004 for
the allowable leverage that hedge funds could
He got a special exemption for Goldman Sachs in
allowed them and other investment bankers to give
significantly higher leverage. His victory
Street huge profits, but it lost the American people
when hedge funds went BUST in the Fall of 2008
rushed to "deleverage".
Paulson is man used to getting his
way. Arrogant men
quickly admit their shortcomings or the limits of
know. As US Treasury Secretary, repeatedly denied
could be a financial melt-down and a recession.
2008. No recession is in sight.
February 14, 2008 - "Rate cuts and rebates should
keep the economy out of recession."
knew better. (2) "Bull
16, 2008 "A recession is preventable"
"In Paulson's eyes there isn't much more that the U.S.
government can do to help the economy and stock market."
Not one to take responsibility for himself, Paulson said
on September 23rd
that Congress would be to blame for the
recession if they did
not pass the $700 billion bankers' bailout .
Look at what Paulson originally sought to get from Congress.
- Advisers from Wall Street to be retained to decide who gets what.
Let the architects of this mess figure out how to fix it?
Really, I think it just means they get to figure out how to best enrich themselves."
- No limits for executive compensation.
- No equity share for the government. "If
the government is going to bail these guys out, there
should be at least some sort of way for the government to recover something."
- Decisions not reviewable. Unbelievable! One guy gets the
He wants a dictatorship, not responsible government. Congress better wake up!
- Protections from lawsuits. "Everyone
involved cannot be held accountable for the results of the outcomes from whatever action
is taken. Sounds like what is happening now. Great risks taken, but accountability is
limited and the losses are socialized and spread amongst even the innocent."
Freedom for the Pike is Death for the Minnows.
He refused to urge tighter regulations of commodity hedge
seek a limit on the size of their positions in individual
commodities, to require that hedge funds' short positions
be a matter
of public record. He would not support an increase
requirements to curb dangerous speculation in
Silver, Platinum, Wheat, Corn, Rice, etc. - all the
that boomed and went bust recently.
solution for the collapse of banks' stocks is to
out with $700 billion. And his office will
administer the largesse to his cronies. But accountability
limited to what he chooses to tell the public.
has Paulson hired to give the $700 billion away?
did you know. Lots of Goldman Sachs cronies!
GOLDMAN SACHS CRONYISM
From the NY Times - 10/17/2008
this month, when Mr. Paulson needed someone to oversee the governments
proposed $700 billion bailout fund,
he again recruited someone with a Goldman pedigree,
giving the post to a
35-year-old former investment banker who, before coming to the Treasury
Department, had little
background in housing finance. Indeed, Goldmans presence in the
department and around the
federal response to the financial crisis is so ubiquitous that
bankers and competitors
have given the star-studded firm a new nickname: Government Sachs.
power and influence that Goldman wields at the nexus of politics and finance is no
accident. Long regarded
as the savviest and most admired firm among the ranks now
Wall Street investment banks, it has a history and culture of encouraging its
partners to take
leadership roles in public service.
a widely held view within the bank that no matter how much money you pile up,
you are not a true
Goldman star until you make your mark in the political sphere. While Goldman
sees this as little
more than giving back to the financial world, outside executives and analysts wonder
conflicts of interest presented by the firms unique perch. They note
that the decisions
that Mr. Paulson and
other Goldman alumni make at Treasury directly affect the firms own
fortunes. They also
question why Goldman, which with other firms may have helped fuel the
through the use of exotic securities, has such a strong hand in trying to resolve
the problem. The
very scale of the financial calamity and the historic government response to it have
spawned a host of other
questions about Goldmans role.
wonder why Mr. Paulson hasnt hired more individuals from other banks to limit the
appearance that the
Treasury Department has become a de facto Goldman division. Others ask
whose interests Mr.
Paulson and his coterie of former Goldman executives have in mind: those
financial services firms, or average homeowners squeezed by the crisis?
Still others question
whether Goldman alumni leading the federal bailout have the breadth and
depth of experience
needed to tackle financial problems of such complexity and whether Mr. "
Paulson has cast his
net widely enough to ensure that innovative responses are pursued.
brought on people who have the same life experiences and ideologies as he does, said
William K. Black,
an associate professor of law and economics at the University of Missouri and
counsel to the
Federal Home Loan Bank Board during the savings and loan crisis of
people were trained by Paulson, evaluated by Paulson so their mind-set is not just shaped
generalized group think its specific Paulson group think....
"MR. PAULSON himself landed atop Treasury because of a Goldman tie. Joshua B. Bolten,
former Goldman executive and President Bushs chief of staff, helped recruit him to
the post in 2006.
of this quote - NY Times 10/17/2008 )
Insiders Are Now Buying Goldman Sachs
Not surprisingly, its people now run
the country's finances from
Washington as well as from Wall Street
WHAT's GOOD FOR GOLDMAN IS NOT GOOD FOR THE US
I remember that Henry Ford, besides saying "history
was bunk", is famous saying that "what is good for Ford
is good for the US". Ford and GM are Main Street America.
So, as long as wages were good there, the statement
had appeal. But, I seriously doubt that what's good for
Goldman is good for America. We do NOT need more
Wall Street billionaires. WE do NOT need more exotic
derivatives. We do NOT need more leverage for hedge funds.
We do NOT need de-regulation and laissez-faire on Wall Street.
Just the opposite.
The bailout and its administration are the height of
arrogance, cronyism, elitism. Plutocracy runs the US.
We cannot be cynical enough. And the precedent is
horrendous. The foxes should not run the hen house.
And they certainly should be NOT be given a trillion dollars
when Main Street is hurting this much.
Paulson was not elected to any position, anywhere.
Yet he and the Federal Reserve will be giving away
the equivalent to 1/12th of the nation's entire annual
goods and services with only such accountability as
he chooses to offer. The Congresspersons who voted
for this abandonment of democracy and accountability
do not deserve re-election.
Not surprisingly, reactions are very negative in many
From Yahoo - 10/20/2008
issues about the rescue plan and the economy remain unanswered, but a more
fundamental question remains: Are the Fed chairman and Treasury secretary up to the job?
A resounding "no" is the answer from Christopher Whalen, managing director at Institutional Risk
Analytics, who is
particularly critical of Paulson. The Treasury secretary is "grotesquely
in his efforts to bail out his former employer, as detailed
here, and has found "common cause" with
an overly lenient Fed chairman. "They have a bias to preserve the
derivatives market" --
the riskiest part of Wall Street, Whalen says, noting the government let Lehman and Bear
out AIG and (according to Whalen) rescued Goldman Sachs and Morgan --
at least for the time being."
All this publicity of the political and financial power is surey helping
Goldman Sachs' stock.