The secret history of TARP: How Goldman bailed out Goldman…
Published: August 8, 2009
Updated 4 days ago
Former Treasury Secretary Hank Paulson wasn’t on Goldman Sachs’ payroll when the US government bailed out his former employer, but he may as well have been.
That’s the implication in a New York Times article, published Saturday, that shows President George W. Bush’s last treasury secretary, a former CEO of investment bank Goldman Sachs, had frequent conversations with the current CEO of Goldman during the week of Sept. 16, when the US government handed over $85 billion to rescue the troubled insurance giant AIG.
AIG’s outstanding debts to Goldman Sachs meant that $13 billion of the money handed over to AIG went directly to Goldman Sachs.
“During the week of the AIG bailout alone, Mr. Paulson and [Goldman Sachs CEO Lloyd] Blankfein spoke two dozen times … far more frequently than Mr. Paulson did with other Wall Street executives,” the Times reports.
The revelation is sure to fuel further claims that the $700-billion Troubled Assets Relief Program, or TARP, passed by Congress last fall with the support of both major presidential candidates, Barack Obama and John McCain, was “gamed” by Paulson in order to help out his colleagues at Goldman — and preserve his own reputation, which he made as the bank’s CEO.
Paulson spoke with Goldman’s CEO in an official capacity a total of 26 times before the treasury secretary was granted an “ethics waiver” that allowed him to be in far closer contact with his former employer than would have otherwise been allowed, Reuters notes.
In the five days after Paulson received his “waiver,” on Sept. 16, 2008, he spoke with Goldman’s Blankfein another 24 times.
But Paulson may have done more than help his former employer get bailed out of bad debts — he may have helped orchestrate the demise of his former employer’s competitors.
“Indeed, Mr. Paulson helped decide the fates of a variety of financial companies, including two longtime Goldman rivals, Bear Stearns and Lehman Brothers, before his ethics waivers were granted,” the Times writes.
Bear Stearns and Lehman Brothers — both investment banks in direct competition with Goldman Sachs — were not bailed out when bad debt forced them to cease operating last year.
“Ad hoc actions taken by Mr. Paulson and officials at the Federal Reserve, like letting Lehman fail and compensating AIG’s trading partners, continue to confound some market participants and members of Congress,” the Times notes.
From the Times article:
Goldman not only received $13 billion in taxpayer money as a result of the A.I.G. bailout, but also was given permission at the height of the crisis to convert from an investment firm to a national bank, giving it easier access to federal financing in the event it came under greater financial pressure.
Goldman also won federal debt guarantees and received $10 billion under the Troubled Asset Relief Program. It benefited further when the Securities and Exchange Commission suddenly changed its rules governing stock trading, barring investors from being able to bet against Goldman’s shares by selling them short.
While spokespeople for the Treasury and for Paulson defend the former treasury secretary’s discussions with Goldman Sachs as necessary given the financial crisis, some scholars and observers say the circumstances are suspicious.
“We don’t know what they talked about,” Samuel L. Hayes, a Harvard Business School professor emeritus, told the Times. “Obviously there was an enormous amount at stake for Goldman in whether or not the A.I.G. contracts would be made whole. So I think the burden is now on Mr. Paulson to demonstrate that there was no exchange of information one way or the other that influenced the ultimate decision of the government to essentially provide a blank check for AIG’s contracts.”
Since the $700-billion TARP bailout, Goldman Sachs has been doing very well for itself. Since several of its competitors disappeared from the market, the Wall Street investment bank has cornered the program trading market; by some accounts, half of all the automatic, computer-based trades done on the New York Stock Exchange are now carried out by Goldman Sachs.
Last fiscal quarter, the company made $100 million from stock trading on each of 46 business days — an all-time record, shattering the previous record of 34 such days, set by Goldman the previous quarter. The company has also been able to re-pay $10 billion of the cash it was handed in the bailout.
The $700-billion TARP bailout has been operating for nearly 11 months, and still has no official ethics guidelines attached to it, the Washington Times reported Saturday.
“An audit released Thursday by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP), says the Treasury Department is in the final stages of drafting rules on lobbying for bailout money - more than 10 months into the program,” the paper reported.
According to the report cited by the Washington Times, at least three of the financial institutions that applied for TARP money were granted cash despite not meeting the criteria. This, the report said, was due to “qualitative mitigating circumstances.”
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Mises.org
LewRockwell.com
CampaignForLiberty.com
DailyPaul.com
InfoWars.com have been WARNING the public about this, for MONTHS.
Better late than never, NYT.
There was a time, back when we were the United States of America, that the FBI would be in there busting these bastards, and the Feds would be actively breaking up this cabal. No more: we are owned lock, stock, and barrel by Goldman Sachs.
Let the shunning begin! The way to change this is to make working for Goldman Sachs, Blackwater, Faux News, Carlyle Group, etc. hard on the people working there. No, not the CEOs, they won’t care. But every secretary, clerk, office boy will think twice about working there if they experience extremely slow service at their lunchtime deli; daily. If the UPS deliverer is delayed daily at the stop before he goes to one of these concerns. If people start pulling their kids off the swim team if they find out that one of the parents works for these companies. If other patrons get up and leave when these people enter an establishment. If you change seats on the bus or subway if you know that one of the riders works for one of these corporations.
Shunning seems to be the only tool I see available for the average person to make a difference; certainly our votes and desires seems to make no difference to our elected leaders, so shun them too, and their kids, and their wives. If you find out that one of the kids in your Lit 101 course is the son of someone working for these companies, change classes, or at least make it known that you refuse to seat near them or work on class projects with them. If you know that one of the women in your bridge group is married to someone who works for these corporations, force her out or quit and start a new group without her.
Shunning has been an effective tool in the past, and we can use it to shape our future.
We should also shun these corporate bastards by refusing to support them with our money! Yes, we can shun all of those and their children that work for the corporate powers, but wouldn’t that be a bit hypocritical for people that do the shunning to then continue to buy corporate products? And while we’re at it, if our tax dollars are only being paid to benefit corporate interests over the health and welfare of the American people, then why continue to pay them?
Take action. Stop feeding the beast.
rickpetes idea is a good one, but it cannot stop there.
as this story gets its legs there must be pressure on washington to prosecute. for the NYT to cover it methinks it may produce the outrage it deserves, but frankly there are still far too many people who are in the dark because even though they read about it, it has not touched them personally.
it touched me personally.
i’ve lost everything as a direct result of what happened on 9/11/2008.
after almost a year’s on harm from these criminals and their despicable action, i would like to see them electrocuted, hung, shot, or die by lethal injection.
paulson should be the first.
Can everyone say “Ponsi”
What possible hope is there?
TAX STRIKE! NOW! CUTOFF THE DRAGON’S HEAD AND THE BODY DIES! It might be semi-chaotic at first but eventually things will begin to heal and change for the better. Only problem? Getting humans to see that this is the only way short of a revolution to get the Machine’s attention. But getting unity for change in this country would be like herding turtles.
Hope? Hope alone, like wishful thinking, promises everything and produces nothing. Stop “hoping” for someone or something outside of yourself to create the desired change. Each individual one of us has the responsibility and more importantly, a DUTY, to start taking action to make the change we want a reality.
The principles upon which our country was founded cannot and will not survive without the participation of the people. This is why the corporate powers put so much money and effort into using every form of deception, trickery, fearmongering, etc., possible to keep us distracted and divided.
So I think the question should be, when are the majority of the people going to come together as one and TAKE ACTION to save our Republic from these corporate usurpers?
Even a giant sequoia eventually falls.
Wall Street Bailout Bill: Bush McCain Obama et al.
“Fascism should rightly be called Corporatism as it is a merge of state and corporate power.” — Benito Mussolini
I think we the people weren’t really included in this “thing” from the very beginning. We’ve elevated the founding fathers to the status of gods, yet they really put this thing together for themselves — rich white men. A cursory reading of U.S. history reveals that truth.
Sure, the age of enlightenment brought in a “new idea, conceived in liberty and dedicated to the proposition that all men are created equal. . . ” but it would seem we have a long way to go.
women, blacks, native americans, etc., and certainly the average American are victims of racism and classism. America has its own brand of a caste system.
Goldman Sachs is at the top and from there, all arrows point downward.
GE and Greedberg pay 50 mil and 15 mil fines respectively, for fraudulent accounting practices. I always thought fraud was a criminal offense. I am sure that if I committed fraud they would throw me in jail. These number are such a drop in the bucket to these two entities that I would not be surprised if the crime actually PAID for them.
Paulson should be in a rack. He is as crooked as they come.
Maybe as an offshoot of End The Fed, there should be a campaign to
End Goldman Sachs. The local offices in Dallas are located at
100 Crescent Court Suite 1000. Dallas, TX 75201 which is very close to the Federal Reserve Building. Maybe we could protest at the Fed and then move over to protest Goldman Sachs. I think this time we should do it on a work day. Maybe only those of us who are unemployed or underemployed should be there to share our feelings about Paulson and Goldman Sachs. We could do this all over the country. Let them see who they have been fucking. Let us see who has been fucking us.
Hank Paulson is supposedly a Christian Scientist. He’s a terrible ad for the sect.