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There was an article, The Great American Bubble Machine, in Rolling Stone last week on Goldman Sachs. In it Matt Taibbi wrote:
"[Goldman Sachs's] unprecedented reach and power have enabled it to turn all of America into a giant pumpanddump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumercredit rates, halfeaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going..."
"...at least $13 billion of the taxpayer money given to AIG in the bailout ultimately went to Goldman, meaning that the bank made out on the housing bubble twice: It fucked the investors who bought their horseshit CDOs by betting against its own crappy product [short selling the CDOs], then it turned around and fucked the taxpayer by making him pay off those same bets."
The author claims that the company has captured government, and used government to create rules that favor their ability to position themselves in the middle of a bubble - making money as it inflates, then loaning money to the losers after the bubbles burst. He point to five bubbles since 1920 that have Goldman Sachs fingerprints.
Here is a short video from the author, summarizing the story.
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Glenn Beck picked up the story and did a major segment on Goldman Sachs. This may well grow into a much bigger story - or be successfully pooh-poohed as conspiracy theory.
I've put together some bullet points and bits of triva taken from the article, the Glenn Beck segment and Wikipedia - enjoy.
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Robert Rubin was with Goldman Sachs for 26 years before becoming secretary of the treasury for both of Clinton's terms. He was also the mentor to Timothy Geithner before going into government. And he was chairman of Citigroup which pocketed $300 billion in Paulson bailout money.
Henry Paulson, former CEO and Chairman of Goldman Sachs, becomes Secretary of Treasury under Bush (He left with a $500 million dollar golden parachute - he has also been a Governor on the International Monetary Fund board. He was asst. secretary of defense under Nixon, then asst. to Ehrlichman during the watergate event - which sent Ehrlichman to prison. Paulson has said that he is a strong proponent of government intervention to prevent global warming.)
Paulson convinces Bush of need for emergency bailout
Goldman Sachs gets 10 Billion dollars in bailout funds. But in the same crisis, Paulson decides that Bear Sterns should fail (a major competitor for Goldman Sachs)
He decides that Freddie and Fannie can't fail and bails them out
He decides that Lehman Brothers should fail (the biggests competitor for Goldman Sachs)
Then the day after letting Lehman Brothers fail, he decides to bailout AIG - The only banker in that meeting who was a banker was Loyd Blankfein, CEO and Chairman of Goldman Sachs. AIG is bailed out for $85 Billion, $12.9 billion of which goes to Goldman Sachs as debt repayment.
Paulson decides he needs someone to manage all the TARP fund administration. He picks Neel Kashkari, from Goldman Sachs, and makes him a senior advisor in the Treasury Dept. Neel decides right away that Goldman Sachs need to register itself as a bank holding company. That way they can get money directly from the Fed at low rates at the discount window, apply for more TARP money, be covered by FIDC, and reduced SEC oversight, etc.
Next Goldman Sachs employee brought into the Treasury Dept by Paulson is Gary Gensler, a former partner at Goldman Sachs.
Stephen Friedman, former chairman at Goldman Sachs, but now at the Fed, is the regulatory oversight authority for Goldman Sachs now that they are a bank holding company. Stephen is also the Chairman of the US President's Foreign Intelligence Advisory Board. Stephen was also on the board of directors of Goldman Sachs and held a very large amount of Goldman Sachs stock - something of a conflict of interest as the person supposed to in charge of regulating them.
William Dudley has replaced Friedman who stepped down in May. Dudley, the New York Fed President, is now the man now in charge of supervising Goldman — but he too is another former Goldman Sachs employee.
Timothy Geitner grants Stephen Friedman a one year Conflict of Interest Waiver. Once he had the waiver, Stephen bought an additional 52,000 shares of Goldman Sachs and makes an additional $3,000,000
Goldman Sachs just purchased 10% of the Chicago Climate Exchange and invested 1 billon dollars of Carbon Assets. So they are now all set up to make big bucks if Cap and Trade passes.
Goldman Sachs hired a new top lobbiest, Michael Pease. They had to hire him to replace Mark Patterson, their former top lobbiest, who left to become chief of staff for Tim Geithner. Michael Pease used to work as Barney Frank's top staffer on the House Financial Services Committee chaired by Frank.
Lawrence Summers the current chief economic adviser to President Obama, received speaking fees (ranging from $45 thousand to $135 thousand per event) from banks including Goldman Sachs.
Tim Geithner, Alan Greenspan, Robert Rubin (Geithner's mentor), Gary Gensler and Larry Summers in the late 1990s were successful in blocking regulation of the financial derivatives market (think Credit Default Swaps).
Gary Gensler spent 18 years at Goldman Sachs, making partner when he was 30, becoming head of the company’s fixed income and currency trading operations in Tokyo by the mid-’90s, and eventually the company’s co-head of finance. He is was asst. secretary of Treasury under Bush, and chosen by Obama to head the Commodity Futures Trading Commission.
Joshua Bolten was the White House Chief of Staff serving U.S. President George W. Bush from 2006 through 2008. Before that he held different positions in the White House, and before that he was with Goldman Sachs. As Chief of Staff, he recruited Paulson for Secretary of the Treasury. Bolten will now be teaching at Princeton, under a Goldman Sachs grant.
George Herbert Walker IV was a partner and Managing Director at Goldman Sachs, and is a second cousin of former U.S. President George W. Bush. Nothing nefarious here, just evidence of how small the circles of the rich and powerful are.
Robert Bruce Zoellick the president of the World Bank. He was previously a managing director of Goldman Sachs, United States Deputy Secretary of State, Deputy Chief of Staff, U.S. Trade Representative, held various offices in the Treasury department, and served on a panel that briefed Enron executives on economic and political issues.
Reuben Jeffery III is the United States Under Secretary of State for Economic, Business, and Agricultural Affairs, before that he was a managing partner for Goldman Sachs.
John Thain was the notorious CEO and Chairman of Merrill Lynch at the time of its disolution. Negative publicity stopped his pursuit of $10 million as severence pay, when it was revealed that he had spent $1.22 million in corporate funds to renovate two conference rooms, a reception area, and his office - including $131,000 for area rugs, a $68,000 antique credenza, guest chairs costing $87,000, a $35,000 commode, and a $1,400 wastebasket. Thain accelerated approximately $4 billion in bonus payments to employees at Merrill just prior to the end of Merrill Lynch. Speculation mounted that TARP funds were used for the bonus payments. Before he came to Merrill, Thain was the CEO of the New York Stock Exchange. Before that he went from the head of the mortgage desk to the President and Co-chief Operating Officer at Goldman Sachs.
Robert King Steel served as Under Secretary for Domestic Finance of the United States Treasury from 2006-08. Before that he had worked for Goldman Sachs for about 30 years.
Ed Liddy, a former Goldman director that Paulson put in charge of AIG after the bail out. AIG then paid Goldman Sach over $12 Billion.
Neil Levin, a former Goldman vice president, was in charge of the New York State Insurance Department in 2000 and ruled on behalf of AIG that credit default swaps would not be regulated.
"The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman."
"Goldman Sachs employees donated $981,000 to the Obama campaign and $4,452,585 to the Democratic party."
"Goldman Sachs spent $3.5 million last year to lobby climate issues. (One of their lobbyists at the time was none other than Patterson, now Treasury chief of staff)"
"Al Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Harris. Their business? Investing in carbon offsets."
[from the Rolling Stone article]
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If America is circling the drain, Goldman Sachs has found a way to be that drain.
