Saturday, November 1, 2008

Government Sachs

"Analysts wonder why Mr. Paulson hasn't hired more individuals from other banks to limit the appearance that the Treasury Department has become a de facto Goldman Sachs [GSG] division. Others ask whose interests Mr. Paulson and his coterie of former [GSG] executives have in mind: those overseeing tottering financial services firms, or average homeowners squeezed by the crisis? ... William Black, an associate professor of law and economics at the University of Missouri ... [said] 'These people were trained by Paulson, evaluated by Paulson so their mind-set is not just shaped in generalized group think--it's specific Paulson group think.' ... 'The American people are fed up with Wall Street, and there are plenty of people around who could have been brought in here to offer broader judgment on these problems,' Mr. [Michael] Greenberger [University of Maryland law professor] said. 'All wisdom about financial matters does not reside on Wall Street'. While many Wall Streeters have made the trek to Washington, there is no question that the axis of power as the Treasury Department tilts toward [GSG]. That has led some to assume that the interests of the bank, and Wall Street more broadly, are the first priority. There is also the question of whether the department's actions benefit the personal finances of the former [GSG] executives and their friends. ... 'It's grotesque,' said Christopher Whalen, a managing partner at Institutional Risk Analytics and a critic of the Fed. 'And it's done without apology.' ... Mr. Whalen says ... 'The appearance of conflict of interest is everywhere, and that used to be enough. However, we've decided to dispense with the basic principles of checks and balances and our ethical standards in times of crisis'," my emphasis, Julie Criswell and Ben White at, 19 October 2008.

"Treasury Secretary Henry Paulson said Monday government purchases of stock in banks represent an investment that should eventually make money for taxpayers. ... 'This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything,' Paulson said at a Treasury briefing", Martin Crutsinger at the Houston Chronicle, 21 October 2008.

Former GSG executives? Hahahahaha! Are you serious?

It's an "investment" like the investments the US makes in sending 85-IQ kids to college, i.e., malinvestments.


Anonymous said...

Now can you really blame Secretary Paulson?

He is just following the Goldman method... remember that is his training...he is a cog in the GS machine.

Storm into a crisis situation before other parties (think LTCM), assess the assets and liabilities, pick off the cheap assets and exit quickly after plundering...

Now it's a little more sophisticated this go around... cause they got the taxpayers money. But we haven't seen any rules or principles concerning these "investments". Who determines need?

Secretary Paulson force feed JPM and WFC so he could save GS and MS.

He has announced transition plans and room for a "shadow Treasury"... seems like he is headed for the exit. At least he didn't spend the whole $700B!

reunionpi said...

Henry Paulson and Goldman Sachs:

Scattered from California to New York: The judgments from the Department of Labor, tax liens against 401-K plans, state tax liens, mechanics lien, judgments from other companies research reveals that:

Henry Paulson, 5 weeks before he became Treasury Secretary, got a FANNIE MAE/FREDDIE MAC 30 year fix mortgage/loan for his 82 year old mother in May 2005 for 5.37%, (below rate)

Anonymous said...

Speaking of government sachs, people had suggested Hank Paulson had a financial conflict in helping Goldman. However, there's been disclosure of the 2007 tax return for Hank Paulson's Bobolink Foundation.

In the foundation's tax year ended March 2007, the foundation sold its GS stock for $95.7 million, and since the foundation is tax exempt, it didn't have to pay tax on its $40.4 million of gain from the sale. Unlike if Paulson had sold the stock himself. The foundation invested the proceeds from the sale in $6 million of US government debt, $53 million of investment vehicles managed by Goldman (including a distressed debt fund), and $40 million of corporate debt a lot of which was issued by financial companies, like Wachovia, Wells Fargo, WaMu, MS, JPM, HSBC, and BAC.

Based on this 2007 Bobolink tax return, Paulson didn't have a financial conflict by helping Goldman Sachs avoid going bust in Fall of 2008 due to his relationship with Bobolink, although through the Foundation Paulson would benefit by helping issuers of its financial paper, like Fannie and Freddie.

Anonymous said...

The problem with our banking system is simple. They lower rates but they don't have a friggin' clue where the money goes. The outlet banks don't give a crap either, they only want to make a short term personal profit. The corporations don't care either. Capitalism is doomed because some day we will invest the entire world's resources into making widgets so that hank paulson can make another $700B.

Anonymous said...

$7B bonus, doin' a heckuva job!

Anonymous said...

gubbermint buys 10M shares of GS. edgar filing. Ain't fascism grand?

Anonymous said...

GS in trouble? (Let's hope so, as a taxpayer I love giving them big bailouts)

Independent Accountant said...

It's worse than you think. It's 7 billion pounds, or $11.3 billion at $1.61. You wouldn't want the GSG boys to go home without new Rolls Royces this year? Would you? Am I mistaken, or do I sense some hostility to GSG in your comments? Are you hostile to GSG?