Can You Trust a Wall Street Veteran with a Wall Street Bailout?
September 23rd, 2008Via: McClatchy:
Paulson presided over one of the most profitable runs on Wall Street as chairman and chief executive officer of investment banking titan Goldman Sachs & Co. from 1999 until President Bush nominated him on May 30, 2006 to take over the Treasury Department.
Back then, Bush saw Paulson’s Wall Street experience as a plus. “Hank will follow in the footsteps of Alexander Hamilton and other distinguished Treasury secretaries who used their talents and wisdom to strengthen our financial markets and expand the reach of the American Dream,” Bush said at the time.
…
“Hank is the right guy,” New York Mayor Michael Bloomberg, who made his millions providing information to Wall Street traders, told NBC’s Meet the Press. “If I had to have one person at the helm today I would pick Hank Paulson.”
But the conflicts are also visible. Paulson has surrounded himself with former Goldman executives as he tries to navigate the domino-like collapse of several parts of the global financial market. And others have gone off to lead companies that could be among those that receive a bailout.
In late July, Paulson tapped Ken Wilson, one of Goldman’s most senior executives, to join him as an adviser on what to about problems in the U.S. and global banking sector.
Paulson’s former assistant secretary, Robert Steel, left in July to become head of Wachovia, the Charlotte-based bank that has hundreds of millions of troubled mortgage loans on its books.
The administration’s draft law also would preclude court review of steps Paulson might take, something Joshua Rosner, managing director of economic researcher Graham Fisher & Co. in New York, said could be used to mask previous illegal activity.
“The Treasury’s ability to, without oversight, determine (that) a financial institution (is) an agent of the government seems like it could be used to serve several purposes, including limiting the potential liabilities of an institution or its executives,” he wrote in a note to investors late Sunday.
The Treasury proposal sent to Congress also offers no process to hire asset managers in an open and competitive process. That’s particularly questionable given that Wall Street players are now hiring Wall Street players, Rosner said.
“This seems to invite a risk of collusion between sellers and buyers to the detriment of the taxpayer,” he wrote.
“Why did I get into this raft in the first place?”
That’s the punch line. Here’s the gag. You’re floating down a lazy river on a raft, soaking up rays, fish are literally jumping out of the water into your lap. Suddenly you’re in the rapids. The fish all bounce back into the water. The excursion leader suddenly bellows “Do exactly as I say, no questions asked!” You can see the look of abject fear on his face, but you realize that he knows more about it than you do, so you obey. “Some of you may have to abandon the raft for the good of the rest of us!” he screams. “But it can’t be me, because without me NONE of us will make it!” “Oh, great!” you think. “WHY DID I GET INTO THIS RAFT IN THE FIRST PLACE?”
I’m watching the hearings, and Paulson’s true intent is peeking thru, at least when he’s properly pressed.
Senator Reed (D-RI) made an excellent point, and Paulson’s replies were evasive and telling. Senator Reed was saying that the institutions that benefit (from the bailout) should be on the hook to share any future benefit with the taxpayers, and Paulson repeatedly maintained that this might keep said institutions from participating; as Senator Reed pointed out, this is tantamount to saying that these institutions, who by definition are “in need” of a bailout, would rather fail than be beholden to the taxpayers who are paying for their bailout.
In other words, they have a gun to our collective head, and the terms of our release are not negotiable. Oh, but it’s all for the taxpayers’ sake, Mr. Paulson has said repeatedly.
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” Joseph Goebbels
How’s it shake out for taxpayers? This:
Night of the Living Debt
http://www.conspiracypenpal.com/rants/night.htm
Oh, yeah. Here’s a visual for the kiddies to explain Paulson’s maneuverings in pretty colours:
Largest Five Investment Banks (by market cap, 9 months ago and now):
http://1.bp.blogspot.com/_8rpY5fQK-UQ/SNhMHX0B3qI/AAAAAAAAESg/xFVqsX1YeX8/s1600-h/Market-Cap.png