Black People : After all the bailouts, the Fox will be watching the Hen House

Discussion in 'Black People Open Forum' started by Ankhur, Oct 18, 2009.

  1. Ankhur

    Ankhur Well-Known Member MEMBER

    Oct 4, 2009
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    owner of various real estate concerns
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    Published on Saturday, October 17, 2009 by
    Another Goldman Executive Named to Key Government Post as Its Profits Skyrocket
    by Glenn Greenwald

    Apparently, the U.S. government didn't have enough Goldman Sachs executives in key financial and regulatory positions, so the following happened this week [1]:

    A Goldman Sachs executive has been named the first chief operating officer of the Securities and Exchange Commission's enforcement division.

    The market watchdog says Adam Storch, vice president in Goldman Sachs' Business Intelligence Group, is assuming the new position of managing executive of the SEC division.

    The move comes as the SEC revamps its enforcement efforts following the agency's failure to uncover Bernard Madoff's massive fraud scheme for nearly two decades despite numerous red flags.

    A Goldman executive as COO of the SEC's enforcement division. This is all consistent with the observation of Desmond Lachman [2] -- previously chief emerging market strategist at Salomon Smith Barney and IMF deputy director -- regarding "Goldman Sachs's seeming lock on high-level U.S. Treasury jobs," which he cited as but one of the many "parallels between U.S. policymaking and what we see in emerging markets."

    In October of last year, a Goldman Sachs Vice President, Neel Kashkari, was named by former Goldman CEO [3] and then-Treasury Secretary Hank Pauslon to oversee the$700 billion TARP bailout. In January of this year, Tim Geithner hired [4] a former Goldman Sachs lobbyist, Mark Patterson, to be his top aide and Chief of Staff. In March, President Obama nominated [5] Goldman Sachs executive Gary Gensler to head the Commodity Futures Trading Commission, which regulates futures markets, even though (or "because") Gensler confessed to lax regulation during the Clinton administration over the very derivative instruments that caused the financial crisis. In April, Goldman hired [6] as its top lobbyist Michael Paese, the top aide to Rep. Barney Frank on the House Financial Services Committee which Frank chairs.

    According to ABC News in October, 2008 [7], Goldman "spent more than $43 million dollars on lobbying and campaign contributions to cultivate friends and buy influence in Washington, D.C. since 1989" and their "bankers have been the country's top political campaign contributors this year." "They are almost in a class by themselves," said Sheila Krumholz, the executive director for the Center for Responsive Politics. As Michael Moore has been pointing out [8], Goldman was the number one source of funding for the Obama 2008 presidential campaign. The bailout of AIG -- which resulted in massive federal government monies to Goldman -- was engineered [9] at a meeting between Paulson, Geithner and Goldman CEO Lloyd Blankfein. Last year, Goldman paid [10] top Obama economics adviser Larry Summers $135,000 for a one-day visit to Goldman.

    Recently obtained calenders from Geithner reveal that [11] "Goldman, Citi and JPMorgan can get Geithner on the phone several times a day if necessary, giving them an unmatched opportunity to influence policy" and "Geithner's contacts with Blankfein alone outnumber his contacts with Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee." Documents obtained by [12] The New York Times [12] relating to Geithner's work before becoming Treasury Secretary "show[] that he forged unusually close relationships with executives of Wall Street's giant financial institutions."

    Of course, only an irrational, raving conspiracy theorist would believe that any of those events have any connection at all to this, from today's Washington Post [13]:

    The nation's largest banks, preserved from failure by federal aid and romping in markets revived by federal aid, are racking up vast profits even as the broader economy struggles to emerge from recession . . .

    Goldman said it earned $3.19 billion between July and September, nearly the most it has ever made in three months, a record it set earlier this year.

    So the most profitable quarter Goldman Sachs ever had in its history was the second quarter of 2009 -- just a few months after massive amounts of taxpayer money were transferred to them and their counter-parties in order to prop up their business, while several of its key competitors were allowed to die. The second-most profitable quarter it ever had in its history was the third quarter of 2009. In his seminal article in The Atlantic [14] earlier this year, former IMF economist and current MIT Professor Simon Johnson warned (just like former IMF official Lachman did) that, for deeply corrupt oligarchies in which the unrestrained power and recklessness of the oligarchs spawn a financial crisis, this is what happens: "at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government . . . Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk -- at least until the riots grow too large."

    Just compare Johnson's description for what happens in corrupt oligarchies to the pictoral representation of Goldman's profits since the September, 2008 financial crisis, from today's Post:


    Goldman employees are set to receive [16] record bonuses this year as well. That occurred at the same time the unemployment rate went to 9.8% [17], the highest in 26 years. Is it possible to imagine a more vivid illustration of what Johnson described?

    It's true that the threat of worldwide economic collapse has abated, and that's a good thing. It's not particularly surprising that if the Government transfers trillions of dollars to an industry, then that industry will improve. But, as the Treasury Department's independent and tenacious watchdog, Neil Barofsky, has been trying to warn [18], the surviving banks are bigger and more powerful than ever, thus maximizing our dependence on them, and the primary stated goal of the bailout (increasing lending) has not been achieved. Rep. Frank's committee in the House yesterday passed a bill to regulate derivatives that is so filled with loopholes [19] it may end up exempting most industry players. That the administration continues, so brazenly, to place Goldman Sachs executives in the very government positions with the greatest power over the financial industry illustrates how little effort is devoted to hiding what is really taking place.

    UPDATE: Business Insider has more details on Storch [20], the new COO of SEC Enforcement: He's 29, and has worked at Goldman Sachs for the last 5 years -- since he was 24 years old. I'm sure there was nobody more qualified for that position and that he'll be an absolutely relentless and fearsome force in helping the SEC enforce applicable laws and regulations.

    UPDATE II: I owe Adam Storch an apology for unfairly questioning whether he's really the most qualified person for the position of COO in SEC enforcement. After all, in 2002, he was named as a Co-Winner by SUNY-Buffalo of the prestigious Intern of the Year Award [21], for his sterling summer work in sorting mail and fetching coffee at Deloitte & Touche (h/t thelastnamechosen [22]).

    UPDATE III: The New York Times this morning has a darkly amusing article [23] by Graham Bowley on all of this. I can't quite tell if the humor is intentional, but either way, it's glaring. The article begins with this observation: "Even as the economy continues to struggle, much of Wall Street is minting money -- and looking forward again to hefty bonuses." With an earnestly innocent tone, it then poses this question: "Many Americans wonder how this can possibly be. How can some banks be prospering so soon after a financial collapse, even as legions of people worry about losing their jobs and their homes?" Indeed, how could such a confounding thing have happened? This way:

    full article;