Paulson’s Calls to Goldman Tested Ethics

[DrDoom]

Well what a shock..Paulson was looken out for his cronies at Goldman while letting their competition Lehman Bros. eat crow....

Proof that Goldman wouldn't even exist today because a run on hedge funds during the peak of the crisis would have made them insolvent.....

But as Bush said “I've abandoned free market principles to save the free market system”

Mark Twain said it best however " A banker is a fellow who lends you his umbrella when the sun is shining but wants it back the minute it begins to rain."

Before he became President George W. Bush’s Treasury secretary in 2006, Henry M. Paulson Jr. agreed to hold himself to a higher ethical standard than his predecessors. He not only sold all his holdings in Goldman Sachs, the investment bank he had run, but also specifically said that he would avoid any substantive interaction with Goldman executives for his entire term unless he first obtained an ethics waiver from the government.

But today, seven months after Mr. Paulson left office, questions are still being asked about his part in decisions last fall to prop up the teetering financial system with tens of billions of taxpayer dollars, including aid that directly benefited his former firm. Testifying on Capitol Hill last month, he was grilled about his relationship with Goldman.

“Is it possible that there’s so much conflict of interest here that all you folks don’t even realize that you’re helping people that you’re associated with?” Representative Cliff Stearns, Republican of Florida, asked Mr. Paulson at the July 16 hearing.

“I operated very consistently within the ethic guidelines I had as secretary of the Treasury,” Mr. Paulson responded, adding that he asked for an ethics waiver for his interactions with his old firm “when it became clear that we had some very significant issues with Goldman Sachs.”

Mr. Paulson did not say when he received a waiver, but copies of two waivers he received — from the White House counsel’s office and the Treasury Department — show they were issued on the afternoon of Sept. 17, 2008.

That date was in the middle of the most perilous week of the financial crisis and a day after the government agreed to lend $85 billion to the American International Group, which used the money to pay off Goldman and other big banks that were financially threatened by A.I.G.’s potential collapse.

http://www.nytimes.com/2009/08/09/bu...2&ref=business

[Litter Box]

Here's a little more on the subject including Paulson's request for immunity. Why ask for immunity if you were about to do nothing wrong ?


Liar, Liar Pants On Fire… - Orlandini

[DrDoom]

Orlandini writes some good pieces.

Now the below borders on criminal....

Why not restart your gambling (securitization)and bonus payoffs since the taxpayers are subsidizing your addiction...

Then you have your rapid fire trading formula directly tied into the NYSE that was stolen and reveals how you make $100 million in trading revenue on a record 46 separate days in 1 qtr.....

Meanwhile. the MSM is continuing to INVESTIGATE how Michael Jackson died...

And this my friends is why we are sinking as nation....

An unserious people in serious times. Yet the Obama administration is staking his presidency in the hands of people like Geithner and Summers who are allowing the Banks to completely take over the state...but that's considered Socialism LOL!..

Banks such as Goldman Sachs are benefiting from lower borrowing costs after the Federal Deposit Insurance Corp. in October started guaranteeing bank debt issues that mature within three years. Goldman Sachs said in today's filing it had $25.1 billion of debt guaranteed by the FDIC under the agency's Temporary Liquidity Guarantee Program. The bank sold about $30 billion of the FDIC-backed securities between November and March, according to company filings.


Goldman Sachs $100 Million Trading Days Reach Record (Update3) - Bloomberg.com

[DrDoom]

Farrel sums up American capitalism's current transformative stage to a worthless T bill!

ARROYO GRANDE, Calif. (MarketWatch) -- Warning: Behavioral economics means one thing to Wall Street and Washington and something quite different to Main Street. It depends on whether you're the nudger or nudgee, the manipulator or the manipulated, the guys making lots of money or the folks being scammed.

Average folks erroneously believe behavioral economics helps them. But behavioral nudgers just want to help themselves.

And both political parties are guilty. Behavioral economics is all the rage since the new president hired some academic behaviorists. That also helped the GOP, made average folks forget the former president had his nudgers, too, like former Treasury Secretary Henry Paulson. Moreover, his party recently hired 350 lobbyists, many former Senators and Congressmen, to kill the new guy's health-care reform.

The truth is, folks, behavioral economics, nudging, manipulation and lobbying, whatever you call it, has been a part of American politics for a long time under many names, though neither party publicly admits their nudging strategies.

Puzzled? Ask yourself: Why is the GOP so aggressively demonizing Obama's health-care reform as "socialism?" Why? Yes, something smells fishy, especially since the GOP created the biggest "socialized medicine" program ever with Medicare drugs.

Then suddenly the "why" hit me. Here's why ... All the fear-mongering about health-care "socialism" is actually a strategic smoke screen, a brilliant counterattack, a sneaky political cover-up of the GOP's recent historic takeover of America using taxpayer-funded bailout money against us. Get it? The Right's making Left turns into "socialism."

You heard me. In "Bailout Nation," hedge fund manager Barry Ritholtz summarizes this clandestine takeover of the great American democracy, led by Paulson and the Goldman Conspiracy juggernaut. In less than a year America has become "Socialism for the Rich! Capitalism for the Rest," says Ritholtz.

It all began last October, just before the elections. Paulson, Goldman's Trojan Horse inside a GOP-controlled White House, moved with the lightning speed of a special-ops team attacking behind enemy lines. Paulson took command of the meltdown, before our clueless Congress knew what happened.

Back then, the Goldman Conspiracy was near bankruptcy as the stock bubble crashed. But Naomi Klein, author of "The Shock Doctrine: Rise of Disaster Capitalism," warned: "When those bubbles burst" Wall Street's "ideology becomes a hindrance and goes dormant while big government rides to the rescue." Klein then predicted: Free-market "ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis."

Rolling Stone's Matt Taibbi also warned of an attack brewing in "The Big Takeover, how Wall Street insiders are using the bailout to stage a revolution."

Yes, that "revolution" took less than a year. Except we did not return to the old Reganomics capitalism Klein warned of. Instead, the Goldman Conspiracy created a new American "Socialist-Capitalism." As Ritholtz aptly describes it, America now has "socialization of risk" [with trillions of toxic bailout debt dumped on taxpayers] versus "privatization of profits" [for Wall Street insiders like the Goldman Conspiracy].

THE 8 POINTS:

1. Always elect a figurehead president
Putin skirted term limits by getting Medvedev elected president. Then Putin was appointed party leader and prime minister, the real power behind the throne. That's one way power stays in power playing the game. Wall Street is a master at playing this game, as the single largest money donor to political campaigns. Donations assure continued control behind an illusion of democracy, where all politicians are mere pawns.

2. Greed is great in the new 'Socialist-Capitalism'
In his blog, Matt Taibbi asks "what's wrong" with Goldman's $3.44 billion second-quarter profits on top of setting aside $11.4 billion for insiders? "What's wrong is that this is not free-market earnings but an almost pure state subsidy" as Congress steals our tax dollars giving them "to the same guys who had just blown up the financial world."

3. Too-stupid-to-fail big banks will always get bailed out
In the New Yorker Joe Haggen described their arrogant culture: "The god is Goldman. You subjugate yourself to that god, and in return we will make you a gazillionaire." But as recently as last fall "not a single Wall Street executive" Haggen interviewed "believed Goldman would have survived an overall collapse of the financial system. A large loss would have been inevitable as lending evaporated, and Goldman Sachs would have struggled to shrink the company to a fraction of its size overnight."

Taibbi adds: "AIG owed Goldman about $20 billion at the time it went into a death spiral." Thanks to Paulson's $13 billion gift, tax dollars went through AIG straight into Goldman's pockets.

4. Pretend to be a commercial bank, risk like an investment bank
Wall Street still gambles as investment banks. Worse: Taibbi says when Goldman converted they became "eligible for a new program that gives commercial banks FDIC backing for unsecured debt ... a free AAA rating to the big banks and allows them access to mountains of cheap money." No wonder "Goldman took full advantage of this deal, issuing $28 billion in FDIC-backed debt after its conversion. Exactly how hard is it for a bank to make a profit when it has unlimited access to virtually free money?"

5. American taxpayers are Wall Street's personal piggy bank
Taibbi notes that Goldman got $10 billion TARP money, claims they're now paid off. But the Treasury still has warrants which Goldman wants to renegotiate below market prices, and the juicy low-interest loans help them increase their profit margin.

6. High-risk leveraging guarantees high-paid insider bonuses
After converting into a commercial bank Reuter's reported that Wall Street was "taking steps to reduce leverage." But since then "Goldman has been emboldened by all its state backing to borrow more and gamble more than ever," says Taibbi. "This is the equivalent of a regular casino gambler who hears that the house has doubled down on his credit line and decides to stay up at the tables all night, instead of going home and sobering up."

Meanwhile, "Goldman's VaR, or Value at Risk, which measures the amount of money the bank puts at risk on any given day" has "soared since last year."

7. Government-approved CIA-style silence hides 'The Game'
The TARP Inspector General estimates total new debt for all bailout programs will be a staggering $23.7 trillion. But the Fed Chairman refuses to disclose vital information, even to Congress. Bernanke learned that trick from the CIA, so they can't be audited.

Taibbi warns that taxpayers are stuck with piles of Wall Street's "worthless crap assets they acquired while they were playing roulette the past 10 years or so. We just have no idea how much crap they unloaded on the Fed, or how much they borrowed."

8. New laws secure perpetual power for new 'Socialist Conspiracy'
Wall Street, under the command of the Goldman Conspiracy, can further consolidate power over the American people forever by making sure Congress and the President (no matter which party wins elections) passes other new laws:

Kill the proposed Consumer Financial Protection Agency. Kill "public option" competition in the health-care reform. Kill all efforts to revive Glass-Steagall. Pass a "cap and trade" law so Wall Street can start gambling trillions in a new derivatives bubble. Pass laws to guarantee Wall Street's "too-stupid-to-fail" big banks unlimited access to taxpayer funds in the future, as they've enjoyed since October.

Final comment: More demands will naturally follow to empower this banana republic dictatorship disguised as the new "American Socialism."

The 8-point 'Goldman Socialist Manifesto' - MarketWatch