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In order to see Timothy Geithner for the Goldman Sachs pawn he is, we must look back at Geithner's past to see his connection to Goldman and Paulson. Indeed Geithner will be seen for who he was, and his role of deceiving taxpayers and shareholders all to line the pockets of Hedge Funds and investment banks, especially Goldman Sachs.
The top aid of Tim Geithner's- the current Treasury Secretary under Obama Administration, is Mark Patterson- a Goldman Sachs lobbyist. He oversees the government's $700 billion financial bailout program. Patterson's appointment is a clear violation of Obama's promise to bar lobbyists from his government.
Right from the start, Geithner's top aid is from Goldman Sachs, Mark Patterson. As you'll see in a bit, Geithner was promoted to NY Fed by Goldman Sachs alumni Robert Rubin, an ex-Goldman co-chairman and a Treasury secretary in the Clinton administration, he promoted Timothy F. Geithner at Treasury. Mr. Geithner now leads the New York Fed until 2009, after Henry Paulsons departure. Obama Nominates Geithner to replace Paulson and the Senate confirms him into office.
Another Lobbyist Headed Into Obama Administration
January 27, 2009
By JUSTIN ROOD and EMMA SCHWARTZ
Despite President Barack Obama's pledge to limit the influence of lobbyists in his administration, a recent lobbyist for investment banking giant Goldman Sachs is in line to serve as chief of staff to Treasury Secretary Timothy Geithner.
Mark Patterson was a registered lobbyist for Goldman until April 11, 2008, according to public filings.
Patterson first began lobbying for Goldman Sachs in 2005, after working as policy director for then-Senate majority leader Tom Daschle. According to publicly filed lobbying disclosure records, he worked on issues related to the banking committee, climate change and carbon trading and immigration reform, among others.
Patterson's lobbying was first noted by the National Journal magazine.
Patterson is one of over a dozen recent lobbyists in line for important posts in the Obama administration, despite a presidential order severely restricting the role of lobbyists in his administration, the magazine reported.
The Obama administration's limitation on lobbyists isn't a direct ban. Lobbyists are still allowed to be a part of the administration working on areas that they have not lobbied on. But the potential appointment of Patterson and others raise questions about just how much the Obama administration will be able to move away from the revolving door model of business that has become so common inside the Beltway.
"Considering that Goldman was an early and large recipient of our TARP funding, being pulled out of that really does effect his ability to be an effective chief of staff for the treasury secretary," said Steve Ellis, president of the watchdog group Taxpayers for Common Sense.
Patterson has spent most of his career in Congress. He served as special assistant to Senator Daniel Patrick Moynihan from 1985-88. And following law school at Catholic University, he worked as an attorney in private pratice for several years before rejoined Moynihan's staff as legislative director. He then served as chief counsel to the Senate Finance Committee and later served as policy director for Daschle.
Chief of Staff Operates Behind Closed Doors, Hard for Outsiders to Monitor, Watchdog Says
But even if he recuses himself from matters related to Goldman, there is little outside oversight. The position of chief of staff is appointed by the secretary of treasury and does not require Senate approval. And with Geithner's confirmation by the Senate Monday, Patterson's appointment is all but completed. What's more is much of how the chief of staff operates is behind closed doors, Ellis noted, and it's difficult for outsiders to monitor.
As you can see, Geithners top aid was deep into Goldmans Pocket. Its not a big stretch to see Henry Paulson former CEO of Goldman and Geithner Treasury are both being run by GS still at this point in 2007-2009 before and after conservatorship.
Patterson, Mark A
2009-2014 Dept of the Treasury Chief of Staff
2003-2008 Goldman Sachs
Mark Paterson spent 5 years at Goldman Sachs while the FHFA claims were the times from 2005-2007 Goldman was Fleecing Fannie Mae and Freddie Mac. The FHFA won the settlement with Goldman Sachs for almost $3 billion dollars. That settlement was for Fraud committed by Goldman against Fannie and Freddie. The original suit settled for 10 cents on the dollar from main claims made by FHFA.
Washington, D.C. – The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, today announced it has reached a settlement with Goldman Sachs, related companies and certain named individuals. The settlement addresses claims alleging violations of federal and state securities laws in connection with private-label mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac between 2005 and 2007.
Under the terms of the settlement, Goldman Sachs will pay $3.15 billion in connection with releases and the purchase of securities that were the subject of statutory claims in the lawsuit FHFA v. Goldman Sachs & Co., et al., in the U.S. District Court of the Southern District of New York. Goldman Sachs will pay approximately $2.15 billion to Freddie Mac and approximately $1 billion to Fannie Mae. This settlement, worth approximately $1.2 billion, effectively makes Fannie Mae and Freddie Mac whole on their investments in the securities at issue. As part of the settlement, FHFA, Fannie Mae and Freddie Mac will release certain claims against Goldman Sachs & Co. related to the securities involved.
The settlement also resolves claims that involved a Goldman Sachs security in FHFA v. Ally Financial Inc., et al. FHFA previously settled claims against Ally Financial Inc.
This is the sixteenth settlement reached in the 18 PLS lawsuits FHFA filed in 2011. Three cases remain outstanding and FHFA is committed to satisfactory resolution of those actions.
As you can see, Goldman was deep into the Fraud by the Banks and Investment banks that was being committed onto Fannie and Freddie's books. If not for their $200 billion in Fraud, Fannie Mae and Freddie Mac would have never needed a single taxpayer dime! The problem with this is, like Geithner has said repeatedly, Every major bank and Goldman Sachs would all be bankrupt!
Does Goldman Sachs Run the Government?
Posted on April 30, 2009
Everyone agrees that Goldman Sachs pretty much runs the government's economic and financial agencies.
As the New York Times explained last October in a must-read 4 page article, the presence of Goldman Sachs alumni in virtually all of the top government financial posts is so great that their team is dubbed "Government Sachs":
Indeed, Goldman's presence in the [Treasury] department and around the federal response to the financial crisis is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs.
The Times points out that Goldman alums include:
Former treasury secretary Hank Paulson
Paulson's bailout chief Neel Kashkari
Interim Treasury investment officer Reuben Jeffrey
Key Treasury players Dan Jester, Steve Shafran, Edward C. Forst, and Robert K. Steel
Key New York Federal Reserve players Stephen Friedman (head of the New York Fed board of governors, who sat on Goldman's board and owned a substantial stake in Goldman while he was making official decisions – and see this), William C. Dudley (head of the New York Fed's unit that buys and sells government securities), and E. Gerald Corrigan (charged with convening a group to analyze risk on Wall Street)
And there are many more Goldman alums who have been – or are soon to be – appointed. For example, Obama has named Gary Gensler to head the Commodity Futures Trading Commission. And Geithner named Mark Patterson as his top aide last January
As Glenn Greenwald writes today:
Here is just one random item this week announcing a couple of standard personnel moves:
Goldman Sachs' new top lobbyist was recently the top staffer to Rep. Barney Frank, D-Mass., on the House Financial Services Committee chaired by Frank. Michael Paese, a registered lobbyist for the Securities Industries and Financial Markets Association since he left Frank's committee in September, will join Goldman as director of government affairs, a role held last year by former Tom Daschle intimate, Mark Patterson, now the chief of staff at the Treasury Department. This is not Paese's first swing through the Wall Street-Congress revolving door: he previously worked at JP Morgan and Mercantile Bankshares, and in between served as senior minority counsel at the Financial Services Committee.
So: Paese went from Chairman Frank's office to be the top lobbyist at Goldman, and shortly before that, Goldman dispatched Paese's predecessor, close Tom Daschle associate Mark Patterson, to be Chief of Staff to Treasury Secretary Tim Geithner, himself a protege of former Goldman CEO Robert Rubin and a virtually wholly owned subsidiary of the banking industry. That's all part of what Desmond Lachman — American Enterprise Institute fellow, former chief emerging market strategist at Salomon Smith Barney and top IMF official (no socialist he) — recently described as "Goldman Sachs's seeming lock on high-level U.S. Treasury jobs."
And the Independent wrote last July:
The New York Times columnist David Brooks noted that Goldman Sachs employees have given more money to Barack Obama's campaign for president than workers of any other employer in the US. "Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government," Brooks noted grimly. "Over the next few they might just take over the whole darn thing."
In March, Geithner was questioned by Congresswoman Maxine Waters about the appearance of conflict of interest by Goldman Sachs insiders:
"I am just asking the questions," Waters said, "because the talk is…that this small group of decision makers at the center of it is Goldman Sachs and that's what's causing a lot of the distrust, because people are thinking or believing that Goldman Sachs, because of the connections, have had a lot to do with the decisions that are being made."
Geithner responded: "I think it's deeply unfair to the people who are part of these decisions to suggest that they were making judgments that in their view were not in the best interest of the American people."
What is interesting is that Geithner did not deny that Goldman players were at the center of the government's financial decisions, only that their decisions were not bad ones.
So has Government Sachs made selfless decisions for the benefit of the American people? Or has it engaged in some self-dealing?
Well, as Time magazine notes:
Among the biggest beneficiaries of the AIG pass-through, at $12.9 billion, was Goldman Sachs, the investment-banking house that has been the single largest supplier of financial talent to the government. Critics have been quick to note — and not favorably — the almost uncanny influence of former Goldman executives. Initial phases of the rescue were orchestrated by ex–Goldman chairman Hank Paulson, who was recruited as Treasury Secretary in part by former White House chief of staff and Goldman senior exec Josh Bolten. Goldman's current boss, Lloyd Blankfein, was invited to participate in meetings with the Fed. AIG's Liddy is a former Goldman director and an ex-CEO of Allstate. Another alum, Mark Patterson, once a Goldman lobbyist, serves as chief of staff at the Treasury, while Neel Kashkari, who runs TARP, was a Goldman vice president.
Goldman has repeatedly declared that its exposure to AIG was "immaterial" and fully hedged. But some rivals point to the fact that Goldman had uncharacteristically piled into contracts with a single counterparty. "I am shocked that Goldman had this much exposure [with AIG]," says an analyst at a competing bank. "This was a major failing, but they got bailed."
Goldman got bailed twice: first on its CDS exposure and a second time, to the tune of $4.8 billion, for another AIG fiasco, losses on its securities-lending business.
Indeed, Goldman's current CEO, Lloyd C. Blankfein, apparently participated in several of the important meetings determining which companies the government would save and which would fail.
And Marketwatch columnist Paul Farrell literally says that Goldman "rules the world":
"Obama's victory and Geithner's appointment are the completion of Goldman's meticulously crafted plan to become a superpower. The firm now has the clout to impose its will on the financial markets, and the world."
GOP or Dems? Conservatives or liberals? It doesn't matter. We'll all controlled by "The [Goldman] Conspiracy." So why not surrender, let them have the power? The truth is, through their lobbyists and surrogates in Washington, they already rule America.
(and he said it again here).
Indeed, Goldman's influence reaches abroad, as well. For example, the head of the World Bank, Robert Zoellick, was formerly Goldman's managing director. See also this.
The New York post also claims that Goldman is gaming the stock market.
Here they are in their roles as Regulators For the US Government:
Treasury secretary Hank Paulson, CEO Goldman Sachs
Neel Kashkari Secretary Hank Paulson's bailout chief
Interim Treasury investment officer Reuben Jeffrey
Key Treasury players Dan Jester, Steve Shafran, Edward C. Forst, and Robert K. Steel
Key New York Federal Reserve players Stephen Friedman (head of the New York Fed board of governors, who sat on Goldman's board and owned a substantial stake in Goldman while he was making official decisions – and see this),
William C. Dudley (head of the New York Fed's unit that buys and sells government securities),
E. Gerald Corrigan (charged with convening a group to analyze risk on Wall Street).
We should all ask "How does Timothy Geithner Relate?" He is completely 100% owed to Goldman Sachs for his movement towards the US Treasury Secretary and almost every promotion he has ever received.
Geithner, Member and Overseer of Finance Club
Published: April 26, 2009
Timothy F. Geithner, who as president of the New York Federal Reserve Bank oversaw many of the nation's most powerful financial institutions, stunned the group with the audacity of his answer. He proposed asking Congress to give the president broad power to guarantee all the debt in the banking system, according to two participants, including Michele Davis, then an assistant Treasury secretary.
The proposal quickly died amid protests that it was politically untenable because it could put taxpayers on the hook for trillions of dollars.
"People thought, 'Wow, that's kind of out there,' " said John C. Dugan, the comptroller of the currency, who heard about the idea afterward. Mr. Geithner says, "I don't remember a serious discussion on that proposal then."
But in the 10 months since then, the government has in many ways embraced his blue-sky prescription. Step by step, through an array of new programs, the Federal Reserve and Treasury have assumed an unprecedented role in the banking system, using unprecedented amounts of taxpayer money, to try to save the nation's financiers from their own mistakes.
And more often than not, Mr. Geithner has been a leading architect of those bailouts, the activist at the head of the pack. He was the federal regulator most willing to "push the envelope," said H. Rodgin Cohen, a prominent Wall Street lawyer who spoke frequently with Mr. Geithner.
Today, Mr. Geithner is Treasury secretary, and as he seeks to rebuild the nation's fractured financial system with more taxpayer assistance and a regulatory overhaul, he finds himself a locus of discontent.
Even as banks complain that the government has attached too many intrusive strings to its financial assistance, a range of critics — lawmakers, economists and even former Federal Reserve colleagues — say that the bailout Mr. Geithner has played such a central role in fashioning is overly generous to the financial industry at taxpayer expense.
An examination of Mr. Geithner's five years as president of the New York Fed, an era of unbridled and ultimately disastrous risk-taking by the financial industry, shows that he forged unusually close relationships with executives of Wall Street's giant financial institutions.
Yet Geithner did nothing to prevent the collapse in 2008! Neither did Henry Paulson as he was on the job since 2006 and still by 2008 complete economic shambles. Now why would we trust these two Goldman Sachs men to save us while we are falling, but neither saved us while we were climbing up! Who did we need saved from? Investment Banks like Goldman Sachs and TBTF banks. Anyone issuing PLS-RMBS "bonds" were taking money on the way up while betting the downfall on the way down. This would be a direct problem the fed and treasury and regulators should have been looking to stop before the collapse. Instead, they were chumming it up with the same ones they will give 50% of America's wealth to after the Fraud they commit.
His actions, as a regulator and later a bailout king, often aligned with the industry's interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records.
In a pair of recent interviews and an exchange of e-mail messages, Mr. Geithner defended his record, saying that from very early on, he was "a consistently dark voice about the potential risks ahead, and a principal source of initiatives designed to make the system stronger" before the markets started to collapse.
Mr. Geithner said his actions in the bailout were motivated solely by a desire to help businesses and consumers. But in a financial crisis, he added, "the government has to take risk, and we are going to be doing things which ultimately — in order to get the credit flowing again — are going to benefit the institutions that are at the core of the problem."
The New York Fed is, by custom and design, clubby and opaque. It is charged with curbing banks' risky impulses, yet its president is selected by and reports to a board dominated by the chief executives of some of those same banks. Traditionally, the New York Fed president's intelligence-gathering role has involved routine consultation with financiers, though Mr. Geithner's recent predecessors generally did not meet with them unless senior aides were also present, according to the bank's former general counsel.
By those standards, Mr. Geithner's reliance on bankers, hedge fund managers and others to assess the market's health — and provide guidance once it faltered — stood out.
His calendars from 2007 and 2008 show that those interactions were a mix of the professional and the private.
He ate lunch with senior executives from Citigroup, Goldman Sachs and Morgan Stanley at the Four Seasons restaurant or in their corporate dining rooms. He attended casual dinners at the homes of executives like Jamie Dimon, a member of the New York Fed board and the chief of JPMorgan Chase.
Did he enjoy his lunch? While taxpayers are losing their homes and jobs?
Mr. Geithner was particularly close to executives of Citigroup, the largest bank under his supervision. Robert E. Rubin, a senior Citi executive and a former Treasury secretary, was Mr. Geithner's mentor from his years in the Clinton administration, and the two kept in close touch in New York.
Mr. Geithner met frequently with Sanford I. Weill, one of Citi's largest individual shareholders and its former chairman, serving on the board of a charity Mr. Weill led. As the bank was entering a financial tailspin, Mr. Weill approached Mr. Geithner about taking over as Citi's chief executive.
But for all his ties to Citi, Mr. Geithner repeatedly missed or overlooked signs that the bank — along with the rest of the financial system — was falling apart. When he did spot trouble, analysts say, his responses were too measured, or too late.
A revolving door has long connected Wall Street and the New York Fed. Mr. Geithner's predecessors, E. Gerald Corrigan and William J. McDonough, wound up as investment-bank executives. The current president, William C. Dudley, came from Goldman Sachs.
Mr. Geithner followed a different route. An expert in international finance, he served under both Clinton-era Treasury secretaries, Mr. Rubin and Lawrence H. Summers. He impressed them with his handling of foreign financial crises in the late 1990s before landing a top job at the International Monetary Fund.
When the New York Fed was looking for a new president, both former secretaries were advisers to the bank's search committee and supported Mr. Geithner's candidacy. Mr. Rubin's seal of approval carried particular weight because he was by then a senior official at Citigroup.
Mr. Weill, Citigroup's architect, was a member of the New York Fed board when Mr. Geithner arrived. "He had a baby face," Mr. Weill recalled. "He didn't have a lot of experience in dealing with the industry."
But, he added, "He quickly earned the respect of just about everyone I know. His knowledge, his willingness to listen to people."
At the age of 42, Mr. Geithner took charge of a bank with enormous influence over the American economy.
Sitting like a fortress in the heart of Manhattan's financial district, the New York Fed is, by dint of the city's position as a world financial center, the most powerful of the 12 regional banks that make up the Federal Reserve system.
The NewYork Fed is the top of the food chain for the Federal Reserve. Geithner is running the NewYork Fed and making bailout deals while holding hands with Henry Paulson and Ben Bernanke, his boss Fed chairman who also did not do a thing to stop the drop of 2008. How can I say with certainty that not one of these men did anything to save the USA economy? Because the past does not lie. Politicians will blow smoke and tell half truths but the facts are under these three's watch, $300 billion dollars worth of Fraud was committed by the Banks and Investment Banks they watch over. Add the Billions in bailouts and the Trillions added to the National Debt, and you and I can see these men are not our saviors. 50% of American wealth was lost, by Taxpayers, due to Giethner, Paulson, and Bernanke's incompetence while on the job. They Fleeced the Taxpayer by not performing their jobs in 2006-2008.
The Federal Reserve was created after a banking crisis nearly a century ago to manage the money supply through interest-rate policy, oversee the safety and soundness of the banking system and act as lender of last resort in times of trouble. The Fed relies on its regional banks, like the New York Fed, to carry out its policies and monitor certain banks in their areas.
The regional reserve banks are unusual entities. They are private and their shares are owned by financial institutions the bank oversees. Their net income is paid to the Treasury.
At the New York Fed, top executives of global financial giants fill many seats on the board. In recent years, board members have included the chief executives of Citigroup and JPMorgan Chase, as well as top officials of Lehman Brothers and industrial companies like General Electric.
Mr. Geithner took office during one of the headiest bull markets ever. Yet his most important task, he said in an interview, was to prepare banks for "the storm that we thought was going to come."
In his first speech as president in March 2004, he advised bankers to "build a sufficient cushion against adversity." Early on, he also spoke frequently about the risk posed by the explosion of derivatives, unregulated insurancelike products that many companies use to hedge their bets.
But Mr. Geithner acknowledges that "even with all the things that we took the initiative to do, I didn't think we achieved enough."
Derivatives were not an altogether new issue for him, since the Clinton Treasury Department had battled efforts to regulate the multitrillion-dollar market. As Mr. Geithner shaped his own approach, records and interviews show, he consulted veterans of that fight at Treasury, including Lewis A. Sachs, a close friend and tennis partner who managed a hedge fund.
Mr. Geithner pushed the industry to keep better records of derivative deals, a measure that experts credit with mitigating the chaos once firms began to topple. But he stopped short of pressing for comprehensive regulation and disclosure of derivatives trading and even publicly endorsed their potential to damp risk.
Nouriel Roubini, a professor of economics at the Stern School of Business at New York University, who made early predictions of the crisis, said Mr. Geithner deserved credit for trying, especially given that the Fed chairman at the time, Alan Greenspan, was singing the praises of derivatives.
Even as Mr. Geithner was counseling banks to take precautions against adversity, some economists were arguing that easy credit was feeding a more obvious problem: a housing bubble.
Despite those warnings, a report released by the New York Fed in 2004 called predictions of gloom "flawed" and "unpersuasive." And as lending standards evaporated and the housing boom reached full throttle, banks plunged ever deeper into risky mortgage-backed securities and derivatives.
The nitty-gritty task of monitoring such risk-taking is done by 25 examiners at each large bank. Mr. Geithner reviewed his examiners' reports, but since they are not public, it is hard to fully assess the New York Fed's actions during that period.
Mr. Geithner said many of the New York Fed's supervisory actions could not be disclosed because of confidentiality issues. As a result, he added, "I realize I am vulnerable to a different narrative in that context."
The ultimate tool at Mr. Geithner's disposal for reining in unsafe practices was to recommend that the Board of Governors of the Fed publicly rebuke a bank with penalties or cease and desist orders. Under his watch, only three such actions were taken against big domestic banks; none came after 2006, when banks' lending practices were at their worst.
Three actions taken from 2003 to 2006, then nothing from 2006 to 2009. This is the best the NY Fed could do, yet in 2009 Obama promotes Geithner to Treasury Secretary.
In a May 15, 2007, speech to the Federal Reserve Bank of Atlanta, Mr. Geithner praised the strength of the nation's top financial institutions, saying that innovations like derivatives had "improved the capacity to measure and manage risk" and declaring that "the larger global financial institutions are generally stronger in terms of capital relative to risk."
While in the thick of the Heist, Geithner states financial istitutions had stronger capital, 18 months later they are all being bailed out because they had Zero capital and were all bankrupt bound.
Two days later, interviews and records show, he lobbied behind the scenes for a plan that a government study said could lead banks to reduce the amount of capital they kept on hand.
While waiting for a breakfast meeting with Mr. Weill at the Four Seasons Hotel in Manhattan, Mr. Geithner phoned Mr. Dugan, the comptroller of the currency, according to both men's calendars. Both Citigroup and JPMorgan Chase were pushing for the new standards, which they said would make them more competitive. Records show that earlier that week, Mr. Geithner had discussed the issue with JPMorgan's chief, Mr. Dimon.
At the Federal Deposit Insurance Corporation, which insures bank deposits, the chairwoman, Sheila C. Bair, argued that the new standards were tantamount to letting the banks set their own capital levels. Taxpayers, she warned, could be left "holding the bag" in a downturn. But Mr. Geithner believed that the standards would make the banks more sensitive to risk, Mr. Dugan recalled. The standards were adopted but have yet to go into effect.
Callum McCarthy, a former top British financial regulator, said regulators worldwide should have focused instead on how undercapitalized banks already were. "The problem is that people in banks overestimated their ability to manage risk, and we believed them."
By the fall of 2007, that was becoming clear. Citigroup alone would eventually require $45 billion in direct taxpayer assistance to stay afloat.
On Nov. 5, 2007, Mr. Prince stepped down as Citigroup's chief in the wake of multibillion-dollar mortgage write-downs. Mr. Rubin was named chairman, and the search for a new chief executive began. Mr. Weill had a perfect candidate: Mr. Geithner.
The two men had remained close. That past January, Mr. Geithner had joined the board of the National Academy Foundation, a nonprofit organization founded by Mr. Weill to help inner-city high school students prepare for the work force.
"I was a little worried about the implications," Mr. Geithner said, but added that he had accepted the unpaid post only after Mr. Weill had stepped down as Citigroup's chairman, and because it was a good cause that the Fed already supported.
Although Mr. Geithner was a headliner with Mr. Prince at a 2004 fundraiser that generated $1.1 million for the foundation, he said he did not raise money for the group once on the board. He attended regular foundation meetings at Mr. Weill's Midtown Manhattan office.
In addition to charity business, Mr. Weill said, the two men often spoke about what was happening at Citigroup. "It would be logical," he said.
On Nov. 6 and 7, 2007, as Mr. Geithner's bank examiners scrambled to assess Citigroup's problems, the two men spoke twice, records show, once for a half-hour on the phone and once for an hourlong meeting in Mr. Weill's office, followed by a National Academy Foundation cocktail reception.
Mr. Geithner also went to Citigroup headquarters for a lunch with Mr. Rubin on Nov. 16 and met with Mr. Prince on Dec. 4, records show.
Mr. Geithner acknowledged in an interview that Mr. Weill had spoken with him about the Citigroup job. But he immediately rejected the idea, he said, because he did not think he was right for the job.
"I told him I was not the right choice," Mr. Geithner said, adding that he then spoke to "one other board member to confirm after the fact that it did not make sense."
Mr. Geithner played a pivotal role in the next bailout, which was even bigger — that of the American International Group, the insurance giant whose derivatives business had brought it to the brink of collapse in September. He also went to bat for Goldman Sachs, one of the insurer's biggest trading partners.
Here Geithner was going to bat for Goldman Sacks at the expense of AIG. AIG was in trouble for insuring the RMBS that Goldman was selling all around the world. The problem is Goldman knew it was junk grade and AIG thought it was AAA grade. This is easy to see, AIG if it could have held on would of sued Goldman for falsely insuring the Junk securities as "AAA" securities and in that process bankrupted Goldman. If AIG went bankrupt itself, it would have never paid on those policies to GS and again Goldman goes bankrupt too along with AIG. Remember AIG was basically the Fannie Mae of PLS-RMBS for the public sector with NO oversight, since Fed reserve and Treasury were busy having lunches.
A.I.G.'s chief executive at the time, Robert B. Willumstad, said he had hired bankers at JPMorgan to help it raise capital. Goldman Sachs had jockeyed for the job as well, but because the investment bank was one of A.I.G.'s biggest trading partners, Mr. Willumstad rejected the idea. The potential conflicts of interest, he believed, were too great.
Nevertheless, on Monday, Sept. 15, Mr. Geithner pushed A.I.G. to bring Goldman onto its team to raise capital, Mr. Willumstad said.
Geithner pushes to have Goldman raise capital for AIG, since Goldman was going to suffer greatly.
Mr. Geithner and Mr. Corrigan, a Goldman managing director, were close, speaking frequently and sometimes lunching together at Goldman headquarters. On that day, the company's chief executive, Lloyd C. Blankfein, was at the New York Fed.
A Goldman spokesman said, "We don't believe anyone at Goldman Sachs asked Mr. Geithner to include the firm in the assignment." Mr. Geithner said he had suggested Goldman get involved because the situation was chaotic and "time was running out."
But A.I.G.'s search for capital was fruitless. By late Tuesday afternoon, the government would step in with an $85 billion loan, the first installment of a bailout that now stands at $182 billion. As part of the bailout, A.I.G.'s trading partners, including Goldman, were compensated fully for money owed to them by A.I.G.
Analysts say the New York Fed should have pressed A.I.G.'s trading partners to take a deep discount on what they were owed. But Mr. Geithner said he had no bargaining power because he was unwilling to threaten A.I.G.'s trading partners with a bankruptcy by the insurer for fear of further destabilizing the system.
Here Geithner says it all, AIG will be the scapegoat and everyone else will get paid in full. This is the bad bank scenario. Someone has to take the fall, so the others can go on. The tragedy of the 2008 crisis is the firms that followed the laws had the finger pointed at it by the Fed because of one reason and one reason only, Failure of 3 companies is better than failure of all. The second very close reason is there can be no public run on the banks at Fannie, Freddie, or AIG since they did not deal with taxpayer or customer deposits. Its ok the Fed did this, its not ok the Goldman Sachs of the world have not gone bankrupt for their fraudulent roles in the crisis. The Fed perpetrating the lie well into 2015 is shameful.
A recent report on the A.I.G. bailout by the Government Accountability Office found that taxpayers may never get their money back.
The Debt Guarantee
Over Columbus Day weekend last fall, with the market gripped by fear and banks refusing to lend to one another, a somber group gathered in an ornate conference room across from Mr. Paulson's office at the Treasury.
Mr. Paulson, Mr. Bernanke, Ms. Bair and others listened as Mr. Geithner made his pitch, according to four participants. Mr. Geithner, in the words of one participant, was "hell bent" on a plan to use the Federal Deposit Insurance Corporation to guarantee debt issued by bank holding companies.
It was a variation on Mr. Geithner's once-unthinkable plan to have the government guarantee all bank debt.
Giethner was hell bent on saving his buddies first, taxpayer second. Banks were going down. He had to save them for the good of the economy as a whole, so he claims.
The idea of putting the government behind debt issued by banking and investment companies was a momentous shift, an assistant Treasury secretary, David G. Nason, argued. Mr. Geithner wanted to give the banks the guarantee free, saying in a recent interview that he felt that charging them would be "counterproductive." But Ms. Bair worried that her agency — and ultimately taxpayers — would be left vulnerable in the event of a default.
Mr. Geithner's program was enacted and to date has guaranteed $340 billion in loans to banks. But Ms. Bair prevailed on taking fees for the guarantees, and the government so far has collected $7 billion.
Thats right $340 billion to BANKS and Goldman Sachs and other investment banks, Morgan Stanley is another Investment Bank. This was only the beginning, Trillions more coming down the pipe.
Mr. Geithner has also faced scrutiny over how well taxpayers were served by his handling of another aspect of the bailout: three no-bid contracts the New York Fed awarded to BlackRock, a money management firm, to oversee troubled assets acquired by the bank.
BlackRock was well known to the Fed. Mr. Geithner socialized with Ralph L. Schlosstein, who founded the company and remains a large shareholder, and has dined at his Manhattan home. Peter R. Fisher, who was a senior official at the New York Fed until 2001, is a managing director at BlackRock.
Mr. Schlosstein said that while he and Mr. Geithner spoke frequently, BlackRock's work for the Fed never came up.
"Conversations with Tim were appropriately a one-way street. He'd call you and pepper you with a bunch of questions and say thank you very much and hang up," he said. "My experience with Tim is that he makes those kinds of decisions 100 percent based on capability and zero about relationships."
For months, New York Fed officials declined to make public details of the contract, which has become a flash point with some lawmakers who say the Fed's handling of the bailout is too secretive. New York Fed officials initially said in interviews that they could not disclose the fees because they had agreed with BlackRock to keep them confidential in exchange for a discount.
The top echelon of the Treasury Department is a common destination for financiers, and Mr. Geithner has also recruited aides from Wall Street, some from firms that were at the heart of the crisis. For instance, his chief of staff, Mark A. Patterson, is a former lobbyist for Goldman Sachs, and one of his top counselors is Lewis S. Alexander, a former chief economist at Citigroup.
A bill sent recently by the Treasury to Capitol Hill would give the Obama administration extensive new powers to inject money into or seize systemically important firms in danger of failure. It was drafted in large measure by Davis Polk & Wardwell, a law firm that represents many banks and the financial industry's lobbying group. Mr. Geithner also hired Davis Polk to represent the New York Fed during the A.I.G. bailout.
Treasury officials say they inadvertently used a copy of Davis Polk's draft sent to them by the Federal Reserve as a template for their own bill, with the result that the proposed legislation Treasury sent to Capitol Hill bore the law firm's computer footprints. And they point to several significant changes to that draft that "better protect the taxpayer," in the words of Andrew Williams, a Treasury spokesman.
But others say important provisions in the original industry bill remain. Most significant, the bill does not require that any government rescue of a troubled firm be done at the lowest possible cost, as is required by the F.D.I.C. when it takes over a failed bank. Treasury officials said that is because they would use the rescue powers only in rare and extreme cases that might require flexibility. Karen Shaw Petrou, managing director of the Washington research firm Federal Financial Analytics, said it essentially gives Treasury "a blank check."
One year and two administrations into the bailout, Mr. Geithner is perhaps the single person most identified with the enormous checks the government has written. At every turn, he is being second-guessed about the rescues' costs and results. But he remains firm in his belief that failure to act would have been much more costly.
"All financial crises are a fight over how much losses the government ultimately takes on," he said. And every decision "requires we balance how to achieve the most benefits in terms of improving confidence and the flow of credit at the least risk to taxpayers."
This was his goal, and just because the perpetrators got paid for crimes, doesn't mean it didn't work. Except through the eye of the taxpayer who lost their homes and jobs. It is 2015 now, time to send people to jail. Start with Ceo of Goldman Sachs durring the fraud of 2005-2006? No way says our government, Henry Paulson saved us from himself.?!?!?!?!?!?!?!?
Obama and Goldman Sachs
April 2010
As the president harangues Wall Street to clean up its house, all the president's Goldman Sachs men have their feet on the coffee table at his.
While President Obama assails the culture of greed and recklessness practiced by the men of Goldman Sachs, his administration is infested with them. The White House can no more disown Government Sachs than Da Boss–in–chief can disown Chicago politics. Obama is headed to Wall Street on Thursday to demand "financial regulatory reform" — just as the U.S. Securities and Exchange Commission has filed civil suit against Goldman Sachs for mortgage-related fraud. Question the timing? Darn tootin'. There are no coincidences in the perpetually orchestrated Age of O. Everyone from disgraced former New York attorney general Eliot Spitzer to analysts at the Brookings Institution and Barclays Capital to the GOP leadership and Rush Limbaugh has noted the reeking political opportunism in the air. As the New York Post reported Tuesday, the Democratic National Committee immediately bought ads on Google that direct web surfers who type in "Goldman Sachs SEC" to Obama's fundraising site. "It's time to hold the big banks accountable," the money-grubbing DNC message bellows. But just like his crony-capitalist predecessor, George W. Bush, Obama has relied on Goldman Sachs and Wall Street power brokers to engineer massive government interventions to "rescue" failing businesses with the tax dollars of ordinary Americans. While irony-challenged Democratic candidates such as mob-linked banker Alexi Giannoulias in Illinois (who hopes to fill Obama's old Senate seat) call on Republicans to return their fat-cat Goldman Sachs donations, the Democrats are silent on the $994,795 in Goldman Sachs campaign cash that Obama bagged. The class-warfare Dems are also mum on all the president's Goldman Sachs men sitting in the catbird seat: Goldman Sachs partner Gary Gensler is Obama's Commodity Futures Trading Commission head. He was confirmed despite heated congressional grilling over his role, as Reuters described it, "as a high-level Treasury official in a 2000 law that exempted the $58 trillion credit default swap market from oversight. The financial instruments have been blamed for amplifying global financial turmoil." Gensler said he was sorry — hey, it worked for tax cheat Treasury Secretary Tim Geithner — and was quickly installed to guard the henhouse. Goldman Sachs kept White House Chief of Staff Rahm Emanuel on a $3,000 monthly retainer while he worked as Clinton's chief fundraiser, as first reported by Washington Examiner columnist Tim Carney. The financial titans threw in another $50,000 to become the Clinton primary campaign's top funder. Emanuel received nearly $80,000 in cash from Goldman Sachs during his four terms in Congress — investments that have reaped untold rewards, as Emanuel assumed a leading role championing the trillion-dollar TARP banking-bailout law. Former Goldman Sachs lobbyist Mark Patterson serves under Geithner as his top deputy and overseer of TARP bailout — $10 billion of which went to Goldman Sachs. Left-leaning government watchdog Melanie Sloan of Citizens for Responsibility and Ethics in Washington responded: "It makes it appear that they are saying one thing and doing another." Paul Blumenthal of the Sunlight Foundation noted that, while at Goldman Sachs, Patterson lobbied against the executive-pay limits that Obama had crusaded for as senator (this was, of course, before his administration carved out exemptions for AIG). While Patterson agreed to recuse himself on any Goldman Sachs–related issues or policy concerns, Blumenthal wrote, it "still creates a serious conflict for Geithner, as Treasury is being partly managed by a former Goldman lobbyist. Geithner is also placed in a tough position considering that his chief of staff is limited in the areas in which he can work (supposedly)." Obama's close hometown crony, campaign-finance chief and senior adviser Penny Pritzker, was head of Superior Bank of Chicago, a subprime specialist that went bust in 2001, leaving more than 1,400 people stripped of their savings after bank officials falsified profit reports. Pritzker's lawyer at O'Melveny and Myers, Tom Donilon, is now Obama's deputy national-security adviser. He earned just shy of $4 million representing her and other high-profile meltdown clients including Goldman Sachs. White House National Economic Council head Larry Summers reaped nearly $2.8 million in speaking fees from many of the major financial institutions and government-bailout recipients he now polices, including JP Morgan Chase, Citigroup, Lehman Brothers, and Goldman Sachs. A single speech to Goldman Sachs in April 2008 brought in $135,000. Summers had prior experience negotiating government-sponsored bailouts that benefit private concerns. In 1995, he spearheaded a $40 billion bailout of the Mexican peso that bypassed Congress. Summers personally leaned on the International Monetary Fund to provide nearly $18 billion for the package. Summers's boss, then–secretary of the Treasury Robert Rubin, was former co-chairman of Wall Street giant Goldman Sachs — the Mexican government's investment banking firm of choice. Rubin continues to mentor another former employee of his with regular visits and chats — Treasury Secretary Geithner, who as head of the New York Federal Reserve pushed bailed-out insurance conglomerate AIG to cover up sweetheart deals for investment banks that benefited, you guessed it, Goldman Sachs. As Obama harangues Wall Street to clean up its house, all the president's Goldman Sachs men have their feet on the coffee table at his.
Obama loves that Goldman Sachs money! Who appointed Timothy Geithner again? Obama, 2009!
Hedge Fund's Collapse Met With a Shrug
September 2006
Goldman Sachs Dynamic Opportunities Ltd., another fund of hedge funds, said yesterday that "significant" losses on an energy-related investment would shave as much as 3 percentage points off its return this month.
Amaranth's fall is almost certainly going to come under scrutiny from members of Congress who advocate federal oversight of the essentially unregulated hedge funds, especially as the $1 trillion sector opens its doors to more investors.
Just last week, New York Fed Governor Timothy F. Geithner expressed concern about the ability of hedge funds to take on a lot of leverage without disclosing it. And he warned that hedge fund failures could hurt market participants other than those investors and lenders who have chosen to do business directly with those funds. In a speech delivered in Hong Kong, Geithner said the growth in hedge funds "will force us to consider how to adapt the design and scope of the supervisory framework to achieve the protection against systemic risk that is so important to economic growth and stability."
Good job Tim? In 2006 he could not contain the problems that were growing to a crisis by 2008, yet we think he was capable of fixing his own failures as NY Fed when the time came? That is crazy wind bag talk of politicians. The man did a horrible job for the American taxpayer by not removing the risk over a two year period. Instead he fixed it all in a few short weeks in September of 2008 when the crap hit the fan, by injecting Trillions of US Taxpayer money in failed institutions like Goldman Sachs and TBTF banks.
What Power Looks Like
April 2008
To get a sense of how the world's elite acts in a moment of global crisis, a moment like the one we are in now, it's instructive to watch a player like Timothy Geithner at work. The New York Federal Reserve Bank president has been at the center of frantic behind-the-scenes efforts to stem the spread of the U.S. credit collapse, to manage the bank run that brought down Bear Stearns, and many crises before it. Slim and youthful Geithner can seem out of place working the phones within the monumental offices of the Fed, done in a style that might be characterized as late-middle mausoleum. Yet it is his very will-o'-the-wisp quality, his deftness, that makes him suited to the modern job of one of the most powerful men in the financial world. Because interest-rate changes and cash infusions have less lasting impact on markets than in the past, the power of central banks is effectively more limited. In today's world, no one institution, not even the U.S. Fed, has the power to contain a crisis. Being a successful central banker now depends on what Geithner calls "a convening power … that is separate from the formal authority of our institution and which can be a very powerful tool."
Speaking to Geithner while I was doing the research for my recently published book "Superclass," he sketched in fascinating detail how the world's power elite rallies when the markets quake. Recalling an earlier crisis in global securities markets that he helped to manage, Geithner said the Fed brought together the leaders of the world's 14 major financial firms, from five countries, representing 95 percent of all the activity in global markets. The Swiss were there, the Germans were there, the British were there. Interestingly, no Asians were there, not even the Japanese. Goldman Sachs chairman and CEO Lloyd Blankfein "jokingly called them 'the 14 families,' like in 'The Godfather'," says Geithner. "And we said to them, "You guys have got to fix this problem.
And then they fixed it, they fleeced every single taxpayer from every single country. Just like the true mob.
Tell us how you are going to fix it and we will work out some basic regime to make sure there are no free riders to give you comfort; you know that if you move individually everybody else will move with you."
There was nothing in writing, no rules, no formal process, and while no one asked the Fed to act, the Fed let everyone in the markets know it was acting. The beauty of the process was its absolute efficiency, seeing what a tight circle of large firms with "some global reach" could get done, fast—with an executive committee of only four running the weekly conference call until the crisis was past. "There is no formal mechanism we could have used to force this on anybody, so we had to invent it. I think the premise going forward is that you have to have a borderless, collaborative process. It does not mean it has to be universal, every jurisdiction or every institution," said Geithner. "You just need a critical mass of the right players. It is a much more concentrated world."
Geithner basically says, We are all going down, you guys the 95% need to save the 5%. The way they came up with was take from the masses and give to the rich, for the good of the world. Reverse Robin Hoods!
Geithner's description of the financial elite in crisis mode came many months before the recent meltdown of Bear Stearns, yet foreshadowed in an uncanny way how Treasury boss Henry Paulson, Fed boss Ben Bernanke, JPMorgan boss James Dimon and other bank heads powwowed over the course of a weekend to make a deal Bear Stearns could not refuse and to shore up markets. By necessity, the conversations were limited to the central players, the big decision makers whose clout would make the most difference on Wall Street and worldwide. Fast action was needed, and it was taken.
Now it is plain to see that Timothy Geithner was attached to the hip of Goldman Sachs ex Ceo Henry Paulson and their negligence as regulators and Fed officials have brought us all to the collapse of our economy. Yet the plan, set up bad banks (AIG, Fannie Mae, Freddie Mac) and have them pay out to the TBTF banks and Goldman Sachs and other investment banks 100% on the Fraudulent securities that they sold or had insured by the three victims. How can it be said Fannie brought us to the brink? Fannies MBS was and is still flawless AAA rated securities. During the housing collapse PLS-RMBS securities lost 26% to foreclosure, Fannie and Freddie MBS lost 4% to foreclosure. If you remember the reason that number matters so much is PLS mortgages at the time of the collapse were 56% of the entire market. Fannie and Freddie were 44% of the entire market. These are HUGE losses by PLS-RMBS originated by To Big To Fail Banks and investment Banks, such as Goldman Sacks. Immediately after TAKING Fannie and Freddie over the FHFA directed them to buy up PLS securities worth $200 billion dollars. Thats right, $200 billion dollars of TRASH. Who did they buy it from? The FHFA has a list of all the banks it sued, one in particular is Goldman Sachs.
See the attached fro Huge insight into the mindset of Government Fraud to cover up Bank Fraud:
The Fed's evolving crisis-management playbook underscores not only the move toward more public-private collaboration on big global issues, but also the concentration of power among a very select and insular group of players—in this case, the heads of the world's biggest financial institutions, as well as gatekeepers like Bernanke and Paulsen.
So now we got Ben Bernanke and Paulson tied together in their crimes to make the rich, richer.
Here is a link to how Bernanke is feeding inside information to Goldman Sachs!
Is Bernanke Leaking Inside Information to Goldman Sachs?
WSJ has reported that Fed officials have leaked market sensitive information before. This is a damn outrage. Bernanke justifies all this by holding the position that he doesn't announce the exact amount of buying. It could actually be $550 billion or maybe $551 billion
The people on the recent calls like those described by Geithner, plus a few thousand more like them, not only in business and finance, but also politics, the arts, the nonprofit world and other realms, are part of a new global elite that has emerged over the past several decades. I call it the "superclass." They have vastly more power than any other group on the planet. Each of the members is set apart by his ability to regularly influence the lives of millions of people in multiple countries worldwide. Each actively exercises this power, and often amplifies it through the development of relationships with other superclass members. This new class of elites is both more permeable, and more transient, than elites of the past. The age of inherent lifelong power is largely behind us—to be a member of this superclass one has to hold on to power just long enough to make an impact, be it by leading a revolution or launching a revolutionary Web site.
So how does one become a member? As ever, being rich certainly helps. Many superclass members are wealthy, wealthier in relative terms than any elite ever has been. The top 10 percent of all people, for example, now control 85 percent of all wealth on the planet. But wealth is only part of the equation. Power is the other currency of any true elite, and if we want to understand the superclass, we need to look at those who have influence that crosses borders—one of the factors that differentiates them from most of the elites of history, whose influence was predominantly national or even more local in nature. ExxonMobil CEO Rex Tillerson runs operations in 180 countries worldwide, a far cry from the Pennsylvania oil field and U.S. kerosene market roots of the man who founded his company—and set the ball rolling toward the modern multinational—John D. Rockefeller.
That such a group exists is indisputable. It includes the heads of the biggest financial institutions, the 14 families Blankfein joked about, and then some; the top 50 control almost $50 trillion in assets. The heads of the world's biggest corporations are also members; the top 2,000 support perhaps 500 million people, generate almost $30 trillion in sales and have well over $100 trillion in assets. The list also includes top government officials with real cross-border influence: heads of state, of course, leading diplomats and military chiefs, but also central bankers like Geithner and Bernanke, and their counterparts like Chinese Central Bank Gov. Zhou Xiaochuan, reappointed this week, and the other top economic officials responsible for the world's fastest-growing economy and its nearly $1.5 trillion in reserves.
There it is guys, these 2000 elite, support 500 million people and generate $30 trillion in sales. Goldman Sachs is surely one of these places and they push these regulators in the direction they want them to go. No options, just do. Obama picked Timothy Geithner for the Treasury. Geithner was not aligned with Obama on personal views, or political views, but surely on financial views. Goldman contributed to Obama 2008 election $1 million dollars. Number 2 top donor for 2008!
This table lists the top donors to this candidate in the 2008 election cycle. The organizations themselves did not donate , rather the money came from the organizations' PACs, their individual members or employees or owners, and those individuals' immediate families. Organization totals include subsidiaries and affiliates.
University of California $1,799,460
Goldman Sachs $1,034,615
Harvard University $900,909
Microsoft Corp $854,717
JPMorgan Chase & Co $847,895
Google Inc $817,855
Citigroup Inc $755,057
US Government $638,335
Time Warner $617,844
Sidley Austin LLP $606,260
Stanford University $603,866
National Amusements Inc $579,098
Columbia University $570,839
Skadden, Arps et al $554,439
WilmerHale Llp $554,373
US Dept of Justice $540,636
IBM Corp $534,470
General Electric $532,031
Morgan Stanley $528,182
They are joined by media barons like Rupert Murdoch, whose global network of newspapers, Web products, movie studios and TV stations reach hundreds of millions of people every day,
Rupert Murdoch seems to hate Fannie and Freddie too?
His News Corporation acquired Twentieth Century Fox (1985), HarperCollins (1989)[14] and The Wall Street Journal (2007). WSJ pays John Carney to slam Fannie and Freddie every third day since the beginning of the conservatorship it seems. WSJ loves a good slam on Fannie Mae, even though, if not for Fannie Mae since 2008 not one single mortgage would have been made. Cash or go away for a home in america would be the motto. TBTF Banks RAN at full speed away from mortgages. Not one single loan would be made, refinanced! Hamp and Harp, would be DOA. Not a single bank would do what Fannie did since 2008-2015 and yet these politicians want us to believe Fannie is Evil? How does that register with common sense? It does not. The FHFA fired all Ceo's and directors of both Fannie and Freddie on day one of the conservatorship and put itself in their place. The government was in charge of the employees and the buildings and the MONEY from day one. So why in 2015 are we still hearing of the Evil of these two
duo-opolies? Because the lie must go on to cover the past. Are the employees evil Mr Watt? Your answer along with Senator Warner is NO. So is the Money they generate Evil? No again, you love the money. It must be the buildings? No thats just silly. So where is the Evil at Fannie and Freddie? In the Past, In the government saying that they are taking on all the risk? The risk of what? These are conforming loans bought up and sold as AAA securities. They are not on the books of Fannie or Freddie. The $5 trillion that these two securitize are not being backed up with a measly $200 billion in backing! This is the same as backing up $5000 with $200, This is not even 5%. PLS went belly up with 26% of its loans, how can this 5% back up $5 trillion? It does not have to is the answer, those securities are AAA investment grade and are exchangeable just like cash or US Treasuries. They have huge value because they are conforming loans that have a default rate of 4% in a crisis. These risk sharing offers everyone is seeing today is simply to rid the books of Fannie and Freddie of the $200 billion dollars of PLS garbage that Fannie was forced to buy from Goldman and othe TBTF banks. They can only be sold in a risk share model, because they are NON conforming mortgages that need cleared off the books. Where is the risk sharing needed in a 20% down, high FICO score, Working person? Not much risk there. What about the 3% down, now there is some risk there, PMI and risk share bonds help this also.
As their power grows, so does the possibility of a backlash for the superclass; 2008 has been a year of challenges for the ideas and institutions they represent—markets are melting down, energy reserves are being renationalized, protectionism is growing. On the stump, U.S. presidential candidates like Barack Obama and Hillary Clinton and Mike Huckabee and John Edwards have all assailed growing inequality in the United States. But the statistics in other superclass hot spots like China are far worse. With the salaries of major multinational CEOs now averaging more than 350 times that of the average employee— a tenfold increase over the disparities of the 1970s—there is a growing anger that those with the power are using it to unfairly feather their own nests.
The current financial crisis is another such example, producing serious questions about the influence of the superclass. Of the world's elites, none has strutted the world stage for the past decade like global investment bankers. Masters of money, they created something new: global markets and a constantly evolving array of securities that were both beyond the reach and the comprehension of regulators. Now, the value of some of the complex investment vehicles they created is proving to be illusory.
As a consequence, the world economy was set for the crisis that is currently unfolding. There was no effective global regulator to keep the system in check, and there was no real voice for the average Joe. The Federal Reserve stepped in to stabilize the burnout of one of these major market makers—even though they have no jurisdiction over investment banks, even though many of those supporting the bailout/buyout were the same who have long clamored for "self-regulation," even though many were the ones who had cited the moral hazard of helping to bail out homeowners and encouraging their bad borrowing behavior. And so you have a financial leadership structure that bails out investment bankers worldwide, but not homeowners.
Im just going to repeat this again:
Even though they have no jurisdiction over investment banks, even though many of those supporting the bailout/buyout were the same who have long clamored for "self-regulation," even though many were the ones who had cited the moral hazard of helping to bail out homeowners and encouraging their bad borrowing behavior. And so you have a financial leadership structure that bails out investment bankers worldwide, but not homeowners. Good job Tim, Hank and Ben. You pointed the finger and the American people believed you. But all lies need cover ups! Because the truth wants out. So you needed the POTUS to go along with it so he could and does use HIS executive privileged to hide the truth behind lock and key! We are not all fools, and we can see the web of lies that you three have spun. Goldman Sachs and TBTF banks are your allies, They are not the allies of the American Taxpayer!
Some in that leadership are embracing new regulatory proposals mainly because they believe it is the price they must pay to maintain the safety net that was quickly woven together by chairman Bernanke and U.S. Treasury Secretary Paulson (the former CEO of Goldman Sachs, the investment bank that has produced in recent years what is perhaps the most extraordinary list of superclass members).
Many critics assert that this financial crisis is a classic example of elite overreach. Historically, elites from the tyrants of ancient Greece to those of post Civil War America have always been undone by their own greed and ambition. Many today wonder if this might be the beginning of the end for the current superclass, as it was in those instances when the rise of political reformers like Solon and Cleisthenes or trustbusters like Teddy Roosevelt led to major changes in efforts to rein in elite power.
At first glance, anger and frustration aside, it seems unlikely, because national institutions are ineffective beyond their borders and international institutions have not evolved as quickly as global markets, many retaining ownership and management structures dating to the late 1940s with resources inadequate to many global challenges (though recent proposals from Paulson and the U.K. government aim to change that). In fact, the explosion of private money in international markets is marginalizing these institutions, while it makes the global elite more powerful. Thus it is becoming increasingly less likely that any international mechanism can rein in the global elite.
And the more members of the superclass adopt a business-as-usual attitude toward countries that ignore political or social conditions, the less likely the superclass will be to reform itself. In short, while we may have a somewhat different superclass in the future, until the people of the world are more comfortable with creating the kind of strong global governance mechanisms that can contain and regulate many of their activities, the 6,000 will continue to play the greatest role of any group on the planet in defining our times.
Group of 30: members:
Tim Geithner Treasury Secretary
Member (May 31 '13→)
Whats he doing here with these guys? seems out of place? or is he!
Zhou Xiaochuan Governor, People's Bank of China
Yutaka Yamaguchi Japanese banker
David Walker Senior banker, Chair of Barclays Bank group
Member ('93→)
Lord Adair Turner Member of the House of Lords, Chair of Financial Services...
Masaaki Shirakawa
Tharman Shanmugaratnam Singapore banker
Raghuram G Rajan Governor of the Reserve Bank of India; former Professor of...
Guillermo Ortiz Mexican banker
Philipp Hildebrand
Arminio Fraga Neto Brazilian banker
Mervyn Allister King Governor of the Bank of England and is Chairman of the...
Stanley Fischer former Governor, Bank of Israel; former Vice Chairman of Citigroup
Mario Draghi President, European Central Bank
Member ('06→)
Guillermo de L A Dehesa Romero Spanish banker
William C Dudley President of Federal Reserve Bank of New York
E Gerald Corrigan Goldman Sachs executive and former NY Fed president
Senior member
Domingo Cavallo Former Minister of Economy, Argentina
Jaime Caruana Former Governor, Banco de Espana
Mark Carney International banker, Governor of the Bank of England
NBC news
Years of sky-high profits and billions of dollars in bonuses may finally be catching up to Goldman Sachs. The Securities and Exchange Commission today is filing suit against Goldman Sachs and one of its vice presidents, 31-year-old Fabrice Tourre. It's alleging that the Goldman executive secretly created loans in coordination with hedge fund John Paulson & Co., all the while knowing that the true value and quality of those loans were not nearly as good as Goldman was claiming to their customers.
Goldman then sold those bad loans and shortly thereafter made bets, with AIG, that those loans would fail and cashed in when they did. The taxpayer, of course, made good on all of AIG's obligations.
Enter Timothy Geithner, he facilitates the Takeover of AIG becuase they should have known Goldman was lying about the securities, and never insured based on Goldmans assertions of Goldmans Products!.
Put simply, here's how the SEC claims it all went down: Imagine you are the biggest car company in the country. Goldman in this example, and a client, Paulson, comes to you and asks you to design a car that will crash.
So you make that bad car "CDO," then sell it to people without telling them you cut the brake lines! Then when the car "CDO" hits a wall, you rake in the dough from the insurance you bought on the bad car before the crash. And you get paid twice! Once when you sell the car, and then again when it crashes and cash in your insurance policy!
Of course in Goldman's case, they bought the insurance from AIG, which didn't have the cash to back up its bets. Hence, thanks to the $180 billion taxpayer rescue, those bets paid Goldman Sachs back at 100-cents on the dollar.
Thank you Geithner, Now Goldman can continue to make $billions instead of going bankrupt! AIG can keep paying out $billions, because if they dont pay back they can go down in a blaze of glory. Just like the BAD BANK they need to be for Geithner's Plan take over of taxpayer money and funnel it to his lunch buddies.
Goldman is the poster child for a practice they were very good at — selling bonds. But the case here is that they may have been deliberately creating and then selling bad bonds, and sticking the consequences to customers like teacher and police pension funds.
Take note its April 2008 when this story is written, in 2008 everyone was pointing the finger at Goldman Sachs. They were perpetrators and they were Failing due to BUYBACKS on their own written securities. Not until September 2008, after HERA was enacted did the Narrative turn to Fannie and Freddie. Henry Paulson himself said Fannie was not in need of capital just 6 weeks before he dropped their heads to the floor so they could hear them. Geithner set the stage with AIG, the american people bought it, AIG was bad. Lets make Fannie and Freddie bad too. Americans dont all understand this type of finance. Our government says they did it, God damn they did it! Even if the "they" is a lie. Someone did it, It sure was not the insurance firms that were sold these junk securities, It was Goldman Sachs and TBTF institutions.
And that will be the legacy of the bubble that burst — a cascade of underwater mortgages and broken pensions, a bankrupt nation and a massive wealth transfer to bank scammers. Reaction is pouring in from people who have been calling this scam from the start.
Former New York Gov. Eliot Spitzer, the so-called sheriff of Wall Street, says this is a perfect example of why the big banks need to be broken up because when you have banks playing so many sides and betting against their own clients, this is bound to happen.
The suit against Goldman may just be the tip of the iceberg in what will hopefully become a wide-ranging probe that stretches beyond failure to disclose to include the corruption that helped to build the bad cars in the first place.
This boils down to some simple questions.
Are we a country that is okay with deliberately designing faulty cars and betting that they will crash?
Are we a country that is okay with deliberately creating and selling faulty loans and then betting that they will collapse, leaving taxpayers, pensioners and homeowners on the hook and the banksters with all the money?
Will either political party be willing to give up the money train of bank political donations and do the right thing?
So far, we have seen only half-measures and excuses.
Taxpayer was fleeced by Obama, Geithner, Paulson, Bernanke! Not Fannie or Freddie.
New York Fed Names Timothy F. Geithner President
October 15, 2003
NEW YORK - Timothy F. Geithner was named today to serve as President and CEO of the Federal Reserve Bank of New York. His appointment by the New York Fed's Board of Directors was approved by the Federal Reserve Board of Governors and announced by Mr. Peter Peterson, chair of the New York Fed's Board of Directors and of the search committee that selected Mr. Geithner.
Peter Peterson appoints Geithner to NY FED, who is Peter Peterson?
Peter Peterson made his fortune on Wall Street, co-founding what has become the world's largest private equity shop, Blackstone Group, in 1985. He met co-founder and fellow billionaire Stephen Schwarzman while working at Lehman Brothers, where he served as chairman from 1973 to 1984. Worth $1.82 billion.
Mr. Geithner is expected to assume his duties in mid-November.
Mr. Geithner, 42, currently is the director of the Policy Development and Review Department in the International Monetary Fund of Washington DC. His department plays a central role in the design and implementation of Fund policies and in the review of its financial programs and assessments of member economies. He joined the IMF in September, 2001.
Mr. Geithner served as Under Secretary of the Treasury for International Affairs from 1998 to 2001 under Secretaries Robert Rubin and Lawrence Summers, where he was a principal adviser and member of the executive branch's senior team.
"I'm honored to be selected for this post and to work with an institution that is central to domestic and global financial stability," said Mr. Geithner.
"I'm pleased Tim Geithner will be at the helm; he'll do a great job," Mr. Peterson said. "He has done an outstanding job at Treasury and the IMF and is admirably equipped to confront the unique domestic and international challenges that will face our financial system over the coming years."
Mr. Geithner will succeed William J. McDonough, who served as the bank's president from July 1993 until he stepped down in June of this year to assume the post of chairman of the Public Company Accounting Oversight Board in Washington, DC. Jamie B. Stewart, the New York Fed's first vice president, has assumed on an interim basis the duties of president since Mr. McDonough's departure.
Mr. Peterson was assisted in the search by an outside advisory committee with ties to the New York Fed: Ann Fudge, Ellen Futter, Maurice R. Greenberg, Walter Shipley, Paul Volcker, John Whitehead and Robert Wilmers. Search committee members, all current members of the New York Fed's Board, are: Jill Considine, Loretta Lynch, John Sexton, Jerry Speyer and Charles Wait.
Mr. Peterson also was advised by Robert Rubin, E. Gerald Corrigan, Lawrence Summers, and Fred Bergsten. He also was assisted by Tom Neff, Chairman US of Spencer Stuart.
Timothy F. Geithner became the ninth president and chief executive officer of the Federal Reserve Bank of New York on November 17, 2003. In that capacity, he serves as the vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. President Obama nominated Mr. Geithner to be the 75th Secretary of the Treasury and the U.S. Senate confirmed him to the position on January 26, 2009.
Mr. Geithner joined the Department of Treasury in 1988 and worked in three administrations for five Secretaries of the Treasury in a variety of positions. He served as Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Secretaries Robert Rubin and Lawrence Summers.
Lawrence Summers was Geithners boss:
On October 19, 2006, Summers was hired as a part-time managing director of the New York-based hedge fund D. E. Shaw & Co. for which he received $5 million in salary and other compensation over a 16-month period.[45] At the same time Summers earned $2.8 million in speaking fees from major financial institutions,[46][47] including Goldman Sachs, JPMorgan Chase, Citigroup, Merrill Lynch and Lehman Brothers.[48] Upon being nominated Treasury Secretary by the President Clinton in 1999, Summers listed assets of about $900,000 and debts, including a mortgage, of $500,000.[47] By the time he returned in 2009 to serve in the Obama administration, he reported a net worth between $17 million and $39 million.[47]
Lawrence made $900 thousand turn into $17 million in a decade! Interesting!
On May 7, 1998, the Commodity Futures Trading Commission (CFTC) issued a Concept Release soliciting input from regulators, academics, and practitioners to determine "how best to maintain adequate regulatory safeguards without impairing the ability of the OTC (Over-the-counter) derivatives market to grow and the ability of U.S. entities to remain competitive in the global financial marketplace."[20] On July 30, 1998, then-Deputy Secretary of the Treasury Summers testified before the U.S. Congress that "the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies." At the time Summers stated that "to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need."[21] In 1999 Summers endorsed the Gramm-Leach-Bliley Act which removed the separation between investment and commercial banks, saying "With this bill, the American financial system takes a major step forward towards the 21st Century."[22]
He makes it possible for GS and MS to sell and invest in PLS-RMBS is 1998! With the banks regulating themselves! He was a fool.
When George Stephanopoulos asked Summers about the financial crisis in an ABC interview on March 15, 2009, Summers replied that "there are a lot of terrible things that have happened in the last eighteen months, but what's happened at A.I.G. ... the way it was not regulated, the way no one was watching ... is outrageous."
In 2009, Summers thinks its outrageous there was no regulation anymore. LMAO, really WTF. You cannot write this stuff and not laugh! He is blaming AIG for it also, follow the leaders Summers. Again it was not the insurance(PMI if you will) but the security ( written by Goldman on large portions of it). He proves he was a fool, and a dedicated liar possibly, or he missed the fact he voted for NO regulation!
Another Lobbyist Headed Into Obama Administration
Despite President Barack Obama's pledge to limit the influence of lobbyists in his administration, a recent lobbyist for investment banking giant Goldman Sachs is in line to serve as chief of staff to Treasury Secretary Timothy Geithner.
Mark Patterson was a registered lobbyist for Goldman until April 11, 2008, according to public filings.
Patterson first began lobbying for Goldman Sachs in 2005, after working as policy director for then-Senate majority leader Tom Daschle. According to publicly filed lobbying disclosure records, he worked on issues related to the banking committee, climate change and carbon trading and immigration reform, among others.
Patterson's lobbying was first noted by the National Journal magazine.
Patterson is one of over a dozen recent lobbyists in line for important posts in the Obama administration, despite a presidential order severely restricting the role of lobbyists in his administration, the magazine reported.
The Obama administration's limitation on lobbyists isn't a direct ban. Lobbyists are still allowed to be a part of the administration working on areas that they have not lobbied on. But the potential appointment of Patterson and others raise questions about just how much the Obama administration will be able to move away from the revolving door model of business that has become so common inside the Beltway.
Patterson worked directly for Goldman Sachs and is now about to work for Geithner, "Lobbyists are still allowed to be a part of the administration working on areas that they have not lobbied on". Hey, He is going to work for Treasury! Treasury certainly has been lobbied by Patterson for Goldman Sachs weekly handouts! These are not the droids your looking for. Move along.
"Considering that Goldman was an early and large recipient of our TARP funding, being pulled out of that really does effect his ability to be an effective chief of staff for the treasury secretary," said Steve Ellis, president of the watchdog group Taxpayers for Common Sense.
Patterson has spent most of his career in Congress. He served as special assistant to Senator Daniel Patrick Moynihan from 1985-88. And following law school at Catholic University, he worked as an attorney in private pratice for several years before rejoined Moynihan's staff as legislative director. He then served as chief counsel to the Senate Finance Committee and later served as policy director for Daschle.
Chief of Staff Operates Behind Closed Doors, Hard for Outsiders to Monitor, Watchdog Says
But even if he recuses himself from matters related to Goldman, there is little outside oversight. The position of chief of staff is appointed by the secretary of treasury and does not require Senate approval. And with Geithner's confirmation by the Senate Monday, Patterson's appointment is all but completed. What's more is much of how the chief of staff operates is behind closed doors, Ellis noted, and it's difficult for outsiders to monitor.
The Guys From 'Government Sachs'
October 2008
THIS summer, when the Treasury secretary, Henry M. Paulson Jr., sought help navigating the Wall Street meltdown, he turned to his old firm, Goldman Sachs, snagging a handful of former bankers and other experts in corporate restructurings.
Robert Rubin, right, an ex-Goldman co-chairman and a Treasury secretary in the Clinton administration, promoted Timothy F. Geithner at Treasury. Mr. Geithner now leads the New York Fed
Robert Rubin promotes Geithner to NY-FED. Every Job of Geithner comes from Goldman Sachs one way or another.
Win McNamee/Getty Images; Dennis Brack/Bloomberg News; Jay Mallin/Bloomberg News
Joshua B. Bolten former Goldman executive, is President Bush's chief of staff
Bush hires Joshua B. Bolten former Goldman executive, is President Bush's chief of staff October 2008.
one more time
Joshua B. Bolten former Goldman executive, is President Bush's chief of staff October 2008.
Isnn't that perfect, and inside guy, on the inside of Bush at time of conservatorship, and Paulson at treasury. CEO of Goldman, just 2 years earlier.
Stephen Friedman, a former chairman of Goldman, is chairman of the New York Fed. This fall, as part of its bailout, the government put Edward M. Liddy, then a Goldman director, in charge of A.I.G.
Whos gonna run AIG you say? A Goldman Sachs Director! Thats who.
In September, after the government bailed out the American International Group, the faltering insurance giant, for $85 billion, Mr. Paulson helped select a director from Goldman's own board to lead A.I.G.
But of course Henry Paulson pick his Goldman buddy, He needed someone on the inside to do his bidding and get rid of the evidence. Start the shredders boys!
And earlier this month, when Mr. Paulson needed someone to oversee the government's proposed $700 billion bailout fund, he again recruited someone with a Goldman pedigree, giving the post to a 35-year-old former investment banker who, before coming to the Treasury Department, had little background in housing finance.
Indeed, Goldman's presence in the department and around the federal response to the financial crisis is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs.
The power and influence that Goldman wields at the nexus of politics and finance is no accident. Long regarded as the savviest and most admired firm among the ranks — now decimated — of Wall Street investment banks, it has a history and culture of encouraging its partners to take leadership roles in public service.
It is a widely held view within the bank that no matter how much money you pile up, you are not a true Goldman star until you make your mark in the political sphere. While Goldman sees this as little more than giving back to the financial world, outside executives and analysts wonder about potential conflicts of interest presented by the firm's unique perch.
They note that decisions that Mr. Paulson and other Goldman alumni make at Treasury directly affect the firm's own fortunes. They also question why Goldman, which with other firms may have helped fuel the financial crisis through the use of exotic securities, has such a strong hand in trying to resolve the problem.
The very scale of the financial calamity and the historic government response to it have spawned a host of other questions about Goldman's role.
Analysts wonder why Mr. Paulson hasn't hired more individuals from other banks to limit the appearance that the Treasury Department has become a de facto Goldman division. Others ask whose interests Mr. Paulson and his coterie of former Goldman executives have in mind: those overseeing tottering financial services firms, or average homeowners squeezed by the crisis?
Still others question whether Goldman alumni leading the federal bailout have the breadth and depth of experience needed to tackle financial problems of such complexity — and whether Mr. Paulson has cast his net widely enough to ensure that innovative responses are pursued.
"He's brought on people who have the same life experiences and ideologies as he does," said William K. Black, an associate professor of law and economics at the University of Missouri and counsel to the Federal Home Loan Bank Board during the savings and loan crisis of the 1980s. "These people were trained by Paulson, evaluated by Paulson so their mind-set is not just shaped in generalized group think — it's specific Paulson group think."
Not so fast, say Goldman's supporters. They vehemently dismiss suggestions that Mr. Paulson's team would elevate Goldman's interests above those of other banks, homeowners and taxpayers. Such chatter, they say, is a paranoid theory peddled, almost always anonymously, by less successful rivals. Just add black helicopters, they joke.
"There is no conspiracy," said Donald C. Langevoort, a law professor at Georgetown University. "Clearly if time were not a problem, you would have a committee of independent people vetting all of the potential conflicts, responding to questions whether someone ought to be involved with a particular aspect or project or not because of relationships with a former firm — but those things do take time and can't be imposed in an emergency situation."
In fact, Goldman's admirers say, the firm's ranks should be praised, not criticized, for taking a leadership role in the crisis.
"There are people at Goldman Sachs making no money, living at hotels, trying to save the financial world," said Jes Staley, the head of JPMorgan Chase's asset management division. "To indict Goldman Sachs for the people helping out Washington is wrong."
Really? Goldman deserved bankruptcy and Jail time for Fraud! They can make "no money" forever.
Goldman concurs. "We're proud of our alumni, but frankly, when they work in the public sector, their presence is more of a negative than a positive for us in terms of winning business," said Lucas Van Praag, a spokesman for Goldman. "There is no mileage for them in giving Goldman Sachs the corporate equivalent of most-favored-nation status."
MR. PAULSON himself landed atop Treasury because of a Goldman tie. Joshua B. Bolten, a former Goldman executive and President Bush's chief of staff, helped recruit him to the post in 2006.
Enter Paulson, Bush needed a Treasury Secretary, Bolten suggests then CEO of Goldman Sacks. Again Current Ceo of Goldman Sachs that spearheaded during the time the Fraud was the worst! It just wasn't known to the Taxpayers yet.
Some analysts say that given the pressures Mr. Paulson faced creating a SWAT team to address the financial crisis, it was only natural for him to turn to his former firm for a capable battery.
Why would a swat team be needed if Paulson and Geithner were doing their jobs, be at your station. Be there at the right time too! 2006 would of been a good time to start fixing the problems Henry Paulson would have known were there. He created them before he became the DECIDER!
And if there is one thing Goldman has, it is an imposing army of top-of-their-class, up-before-dawn über-achievers. The most prominent former Goldman banker now working for Mr. Paulson at Treasury is also perhaps the most unlikely.
Neel T. Kashkari arrived in Washington in 2006 after spending two years as a low-level technology investment banker for Goldman in San Francisco, where he advised start-up computer security companies. Before joining Goldman, Mr. Kashkari, who has two engineering degrees in addition to an M.B.A. from the Wharton School of the University of Pennsylvania, worked on satellite projects for TRW, the space company that now belongs to Northrop Grumman.
He was originally appointed to oversee a $700 billion fund that Mr. Paulson orchestrated to buy toxic and complex bank assets, but the role evolved as his boss decided to invest taxpayer money directly in troubled financial institutions.
Ex CEO Paulson knew he was going to just give the money to his buddy bankers! Kashkari was a fall guy for the Asset relief! How can you put an IT guy in charge of handing out $700 billion dollars? Henry did! This is why we got fleeced as taxpayers and stockholders of the world, This man may have been the best Pirate we have ever seen.
Mr. Kashkari, who met Mr. Paulson only briefly before going to the Treasury Department, is also in charge of selecting the staff to run the bailout program. One of his early picks was Reuben Jeffrey, a former Goldman executive, to serve as interim chief investment officer.
Mr. Kashkari is considered highly intelligent and talented. He has also been Mr. Paulson's right-hand man — and constant public shadow — during the financial crisis.
Kashkari was a pawn, and would have been the fall guy if things didnt work out. Henry had a book to write, he personally did not have time for jail. Bring out the pawn, enter Kashkari.
He played a main role in the emergency sale of Bear Stearns to JPMorgan Chase in March, sitting in a Park Avenue conference room as details of the acquisition were hammered out. He often exited the room to funnel information to Mr. Paulson about the progress.
Despite Mr. Kashkari's talents in deal-making, there are widespread questions about whether he has the experience or expertise to manage such a project.
"Mr. Kashkari may be the most brilliant, talented person in the United States, but the optics of putting a 35-year-old Paulson protégé in charge of what, at least at one point, was supposed to be the most important part of the recovery effort are just very damaging," said Michael Greenberger, a University of Maryland law professor and a former senior official with the Commodity Futures Trading Commission.
"The American people are fed up with Wall Street, and there are plenty of people around who could have been brought in here to offer broader judgment on these problems," Mr. Greenberger added. "All wisdom about financial matters does not reside on Wall Street."
Mr. Kashkari won't directly manage the bailout fund. More than 200 firms submitted bids to oversee pieces of the program, and Treasury has winnowed the list to fewer than 10 and could announce the results as early as this week. Goldman submitted a bid but offered to provide its services gratis.
While Mr. Kashkari is playing a prominent public role, other Goldman alumni dominate Mr. Paulson's inner sanctum.
The A-team includes Dan Jester, a former strategic officer for Goldman who has been involved in most of Treasury's recent initiatives, especially the government takeover of the mortgage giants Fannie Mae and Freddie Mac. Mr. Jester has also been central to the effort to inject capital into banks, a list that includes Goldman.
Another central player is Steve Shafran, who grew close to Mr. Paulson in the 1990s while working in Goldman's private equity business in Asia. Initially focused on student loan problems, Mr. Shafran quickly became involved in Treasury's initiative to guarantee money market funds, among other things.
Mr. Shafran, who retired from Goldman in 2000, had settled with his family in Ketchum, Idaho, where he joined the city council. Baird Gourlay, the council president, said he had spoken a couple of times with Mr. Shafran since he returned to Washington last year.
"He was initially working on the student loan part of the problem," Mr. Gourlay said. "But as things started falling apart, he said Paulson was relying on him more and more."
The Treasury Department said Mr. Shafran and the other former Goldman executives were unavailable for comment.
Other prominent former Goldman executives now at Treasury include Kendrick R. Wilson III, a seasoned adviser to chief executives of the nation's biggest banks. Mr. Wilson, an unpaid adviser, mainly spends his time working his ample contact list of bank chiefs to apprise them of possible Treasury plans and gauge reaction.
Another Goldman veteran, Edward C. Forst, served briefly as an adviser to Mr. Paulson on setting up the bailout fund but has since left to return to his post as executive vice president of Harvard. Robert K. Steel, a former vice chairman at Goldman, was tapped to look at ways to shore up Fannie Mae and Freddie Mac. Mr. Steel left Treasury to become chief executive of Wachovia this summer before the government took over the entities.
Treasury officials acknowledge that former Goldman executives have played an enormous role in responding to the current crisis. But they also note that many other top Treasury Department officials with no ties to Goldman are doing significant work, often without notice. This group includes David G. Nason, a senior adviser to Mr. Paulson and a former Securities and Exchange Commission official.
This one is a good one, SEC official is there because Paulson needs to break a lot of laws! Damn it, find a loophole. If you cant find one, We will make one and look the other way. Its called unlawful.
Robert F. Hoyt, general counsel at Treasury, has also worked around the clock in recent weeks to make sure the department's unprecedented moves pass legal muster. Michele Davis is a Capitol Hill veteran and Treasury policy director. None of them are Goldmanites.
"Secretary Paulson has a deep bench of seasoned financial policy experts with varied experience," said Jennifer Zuccarelli, a spokeswoman for the Treasury. "Bringing additional expertise to bear at times like these is clearly in the taxpayers' and the U.S. economy's best interests."
While many Wall Streeters have made the trek to Washington, there is no question that the axis of power at the Treasury Department tilts toward Goldman. That has led some to assume that the interests of the bank, and Wall Street more broadly, are the first priority. There is also the question of whether the department's actions benefit the personal finances of the former Goldman executives and their friends.
"To the extent that they have a portfolio or blind trust that holds Goldman Sachs stock, they have conflicts," said James K. Galbraith, a professor of government and business relations at the University of Texas. "To the extent that they have ties and alumni loyalty or friendships with people that are still there, they have potential conflicts."
To the extent they will be sued by the FHFA for defrauding Fannie Mae and Freddie Mac, they have conflicts. To the extent they are bankrupt without a bailout, they have conflicts. To the effect Goldman Sachs settled for $3 billion dollars on that FRAUD, they have a conflict.
Mr. Paulson, Mr. Kashkari and Mr. Shafran no longer own any Goldman shares. It is unclear whether Mr. Jester or Mr. Wilson does because, according to the Treasury Department, they were hired as contractors and are not required to disclose their financial holdings.
Contractors paid by US treasury taxpayer dollars while possibly on the payroll still, would be a huge conflict. Especially after we all know the result of the FHFA lawsuit against them for their role in the Fraud they committed.
For every naysayer, meanwhile, there is also a Goldman defender who says the bank's alumni are doing what they have done since the days when Sidney Weinberg ran the bank in the 1930s and urged his bankers to give generously to charities and volunteer for public service.
"I give Hank credit for attracting so many talented people. None of these guys need to do this," said Barry Volpert, a managing director at Crestview Partners and a former co-chief operating officer of Goldman's private equity business. "They're not getting paid. They're killing themselves. They haven't seen their families for months. The idea that there's some sort of cabal or conflict here is nonsense."
FHFA lawsuit for $13 billion dollars! hmmm....
In fact, say some Goldman executives, the perception of a conflict of interest has actually cost them opportunities in the crisis. For instance, Goldman wasn't allowed to examine the books of Bear Stearns when regulators were orchestrating an emergency sale of the faltering investment bank.
THIS summer, as he fought for the survival of Lehman Brothers, Richard S. Fuld Jr., its chief executive, made a final plea to regulators to turn his investment bank into a bank holding company, which would allow it to receive constant access to federal funding.
Timothy F. Geithner, the president of the Federal Reserve Bank of New York, told him no, according to a former Lehman executive who requested anonymity because of continuing investigations of the firm's demise. Its options exhausted, Lehman filed for bankruptcy in mid-September.
Geithner says you are not Goldman Sachs, we will do it for them. Not you!
One week later, Goldman and Morgan Stanley were designated bank holding companies.
See, Geithner to the rescue of his team!
"That was our idea three months ago, and they wouldn't let us do it," said a former senior Lehman executive who requested anonymity because he was not authorized to comment publicly. "But when Goldman got in trouble, they did it right away. No one could believe it."
The New York Fed, which declined to comment, has become, after Treasury, the favorite target for Goldman conspiracy theorists. As the most powerful regional member of the Federal Reserve system, and based in the nation's financial capital, it has been a driving force in efforts to shore up the flailing financial system.
Mr. Geithner, 47, played a pivotal role in the decision to let Lehman die and to bail out A.I.G. A 20-year public servant, he has never worked in the financial sector. Some analysts say that has left him reliant on Wall Street chiefs to guide his thinking and that Goldman alumni have figured prominently in his ascent.
After working at the New York consulting firm Kissinger Associates, Mr. Geithner landed at the Treasury Department in 1988, eventually catching the eye of Robert E. Rubin, Goldman's former co-chairman. Mr. Rubin, who became Treasury secretary in 1995, kept Mr. Geithner at his side through several international meltdowns, including the Russian credit crisis in the late 1990s.
Mr. Rubin, now senior counselor at Citigroup, declined to comment.
A few years later, in 2003, Mr. Geithner was named president of the New York Fed.
By a Goldman Sachs Executive!
Leading the search committee was Pete G. Peterson, the former head of Lehman Brothers and the senior chairman of the private equity firm Blackstone. Among those on an outside advisory committee were the former Fed chairman Paul A. Volcker; the former A.I.G. chief executive Maurice R. Greenberg; and John C. Whitehead, a former co-chairman of Goldman.
The board of the New York Fed is led by Stephen Friedman, a former chairman of Goldman. He is a "Class C" director, meaning that he was appointed by the board to represent the public.
Mr. Friedman, who wears many hats, including that of chairman of the President's Foreign Intelligence Advisory Board, did not return calls for comment.
During his tenure, Mr. Geithner has turned to Goldman in filling important positions or to handle special projects. He hired a former Goldman economist, William C. Dudley, to oversee the New York Fed unit that buys and sells government securities. He also tapped E. Gerald Corrigan, a well-regarded Goldman managing director and former New York Fed president, to reconvene a group to analyze risk on Wall Street.
Some people say that all of these Goldman ties to the New York Fed are simply too close for comfort. "It's grotesque," said Christopher Whalen, a managing partner at Institutional Risk Analytics and a critic of the Fed. "And it's done without apology."
A person familiar with Mr. Geithner's thinking who was not authorized to speak publicly said that there was "no secret handshake" between the New York Fed and Goldman, describing such speculation as a conspiracy theory.
Furthermore, others say, it makes sense that Goldman would have a presence in organizations like the New York Fed.
"This is a very small, close-knit world. The fact that all of the major financial services firms, investment banking firms are in New York City means that when work is to be done, you're going to be dealing with one of these guys," said Mr. Langevoort at Georgetown. "The work of selecting the head of the New York Fed or a blue-ribbon commission — any of that sort of work — is going to involve a standard cast of characters."
Being inside may not curry special favor anyway, some people note. Even though Mr. Fuld served on the board of the New York Fed, his proximity to federal power didn't spare Lehman from bankruptcy.
But when bankruptcy loomed for A.I.G. — a collapse regulators feared would take down the entire financial system — federal officials found themselves once again turning to someone who had a Goldman connection. Once the government decided to grant A.I.G., the largest insurance company, an $85 billion lifeline (which has since grown to about $122 billion) to prevent a collapse, regulators, including Mr. Paulson and Mr. Geithner, wanted new executive blood at the top.
Prevent a collapse of Goldman Sachs and TBTF banks! Bring down the entire system. AIG was losing money fast to the collapse of their stock and Fraudulent AAA ratings on bonds it insured! No conspiracy anymore. In 2015 we know Judge Wheeler found the Fed guilty of breaking the law when it took over AIG and paid out 100% to Goldman Sachs. Tim Geithners deal making, Mob 101.
They picked Edward M. Liddy, the former C.E.O. of the insurer Allstate. Mr. Liddy had been a Goldman director since 2003 — he resigned after taking the A.I.G. job — and was chairman of the audit committee. (Another former Goldman executive, Suzanne Nora Johnson, was named to the A.I.G. board this summer.)
Like many Wall Street firms, Goldman also had financial ties to A.I.G. It was the insurer's largest trading partner, with exposure to $20 billion in credit derivatives, and could have faced losses had A.I.G. collapsed. Goldman has said repeatedly that its exposure to A.I.G. was "immaterial" and that the $20 billion was hedged so completely that it would have insulated the firm from significant losses.
Goldman admits to the Fraud by saying we knew so much ahead of time, we bet the house on AIG Failure!
As the financial crisis has taken on a more global cast in recent weeks, Mr. Paulson has sat across the table from former Goldman colleagues, including Robert B. Zoellick, now president of the World Bank; Mario Draghi, president of the international group of regulators called the Financial Stability Forum; and Mark J. Carney, the governor of the Bank of Canada.
BUT Mr. Paulson's home team is still what draws the most scrutiny.
"Paulson put Goldman people into these positions at Treasury because these are the people he knows and there are no constraints on him not to do so," Mr. Whalen says. "The appearance of conflict of interest is everywhere, and that used to be enough. However, we've decided to dispense with the basic principles of checks and balances and our ethical standards in times of crisis."
All the sudden these guys have morals? Henry Paulson was CEO when the Fraud was at its highest, and now Goldman is full of saints? FHFA lawsuit says this is not true.
Ultimately, analysts say, the actions of Mr. Paulson and his alumni club may come under more study.
"I suspect the conduct of Goldman Sachs and other bankers in the rescue will be a background theme, if not a highlighted theme, as Congress decides how much regulation, how much control and frankly, how punitive to be with respect to the financial services industry," said Mr. Langevoort at Georgetown. "The settling up is going to come in Congress next spring."
We know that there is no settling up for any of them, Geithner as NY Fed was the deal maker for AIG who broke the law. And Geithner was the man signing the sweep of Fannie and Freddie profits! A Taking, and unlawful action under the HERA law. Congress has no backbone, because they allowed it on their watch.
Geithner names ex-lobbyist as Treasury chief of staff
January 2009
WASHINGTON — Treasury Secretary Timothy Geithner picked a former Goldman Sachs lobbyist as a top aide Tuesday, the same day he announced rules aimed at reducing the role of lobbyists in agency decisions.
Mark Patterson will serve as Geithner's chief of staff at Treasury, which oversees the government's $700 billion financial bailout program. Goldman Sachs received $10 billion of that money.
Treasury spokeswoman Stephanie Cutter said Patterson "brings significant expertise to the job." Patterson, who left the investment bank in April, signed the administration's ethics pledge, which requires him to recuse himself from issues "directly and substantially related to my former employer."
Again these guys are saints now that we are in crisis mode. Before that, what were they?
They seem to have not been very good at their jobs from 2006-2008.
Yet in 2008 they are ALL KNOWING! Laws are being written based on these guys and their demands. Enter HERA, and new regulator(FHFA) for Fannie and Freddie.
The Man Who Saved (or Got Suckered by) Wall Street
May 2008
Still, misgivings about the deal are hard to ignore, no matter how catastrophic the consequences of not intervening might have been. It doesn't help that the deal is teeming with connections that are sure to raise questions. Dimon is one of the three class-A directors of the board of the New York Fed, and its head is Stephen Friedman, a former Goldman Sachs chairman, who still sits on the investment bank's board. The New York Fed's board also includes Richard Fuld of Lehman Brothers, a firm that is another oft-rumored potential candidate for a bailout. Fuld is a class-B director, meaning that he is elected by member banks, astoundingly, to represent the public. (Friedman is also supposed to be looking out for you: He was "appointed by the board of governors to represent the public.") Thus Geithner reports to a board that is composed of people who are not only under his purview but would also benefit from any potential bailouts.
And they all did benefit! There is just too much information here to be able to say the Geithner was acting on behalf of Taxpayer, but there can be NO DOUBT he was acting on behalf of his board at the Fed and his Goldman Sachs friends. Goldman without bank status could not get a bailout and would have failed just like Lehaman Brothers did. In saving Goldman, Geithner had to clean out there books of bad bets. He did this by the Federal takeover of AIG and Fannie Mae and Freddie Mac. Since these three companies could bailout any bank and the setup was to be that the three would not be able to recoup any of the pass through money. The good money went on the banks balance sheets, the bad money went on the balance sheets of Fannie and Freddie and AIG. The world has been saved, according to the actions of the NewYork Fed.
The structure of the New York Fed's board bears more than a passing resemblance to that of the New York Stock Exchange in the bad old days, when member firms, regulated by the N.Y.S.E., were heavily represented on its board.
Even more intriguing is Geithner's informal brain trust, loaded with Wall Street luminaries. Since coming to the Fed in November 2003—recruited by then-New York Fed chairman Pete Peterson, co-founder of the Blackstone Group—Geithner has learned the ways of the financial industry at the feet of some of its biggest legends. He was almost immediately taken under the wing of Gerald Corrigan, a gregarious former New York Fed chief who is now a managing director of Goldman Sachs. Corrigan describes his relationship with Geithner as close, and it has flourished since Geithner's first days at the Fed. Another frequent adviser—"you don't want those things to get too formal," Corrigan notes—is also a preeminent banker, Merrill Lynch C.E.O. John Thain, a Goldman alumnus and former head of the N.Y.S.E. Over the years, Thain has often talked to Geithner—"sometimes I talk to him multiple times a day," Thain says. Geithner's network also includes former Fed chairman Alan Greenspan, an old acquaintance, as well as the heads of the European central banks, hedge fund managers, academics, and his immediate predecessor, William McDonough, architect of the 1998 Long-Term Capital Management bailout and now a vice chairman of Merrill.
One way of looking at these relationships is that they put Geithner in the loop with people he must know if he is to get a handle on the maddeningly complex financial markets. Corrigan has decades of experience at the Fed and on the Street, and Thain, recently brought to Merrill after the firm wrote down billions in subprime losses, is one of the leading experts on mortgage-backed securities and other intricate financial instruments. You could even make a case that Geithner would be falling down on the job if he didn't keep in touch with the Thains and Corrigans of the world. "People don't understand how important those relationships are, especially when you've got to deal with complex and difficult situations," Corrigan says. "Relationships are critical, and Tim has done a terrific job of developing those relationships."
Corrigan says that they "talk about everything under the sun," except for monetary policy. "He brings in groups of people. That includes, at times, some of his old Treasury buddies," like former secretaries Larry Summers and Robert Rubin. "As I said, he has really worked at this networking thing I keep talking about."
Former Treasury secretaries That were Geithners mentors, both with connections and working relations with Goldman Sachs! Robert Rubin was former Goldman CEO before Paulson!
Of course, these aren't exactly chitchats among people who meet casually at some South Street Seaport bar after work. This is networking between a central banker and the heads of the capital-hungry investment firms over which he holds sway. You might argue that Geithner's relationship to his charges is even closer than the typical regulator's. No other regulatory agency is in a position to loan crucial billions to the entities it monitors.
If you were Goldman Sachs and you wanted to know where to make money based on regulatory action before markets know, where would a better place be than the horses mouth?
Certainly, Geithner's friendship with Thain and Corrigan can't do Merrill and Goldman any harm. One intriguing aspect of the Bear bailout—Geithner's selection of BlackRock to help the Fed value Bear and then manage the $30 billion in collateral—draws attention to these relationships. Merrill owns 49 percent of BlackRock, which was spun off years ago from Peterson's Blackstone Group. California Democratic representative Henry Waxman, chairman of the House Committee on Oversight and Government Reform, has asked Geithner to explain how BlackRock got the job, noting that such contracts are usually secured by a competitive bidding process. Geithner told the Senate Banking Committee on April 3 that the selection of BlackRock, which he described as a "world-class adviser" of exceptional expertise, took place amid helter-skelter decisionmaking at the time the deal was being worked out. He said that the compensation of BlackRock, whose board of directors includes Thain, had yet to be determined.
More broadly, the value of the bailout to taxpayers was a theme of the grueling four-hour interrogation of Geithner and other officials by the Senate Banking Committee. Again and again, the senators questioned whether the interests of Bear or the public were being served, and the adequacy of investment bank oversight was the subject of unusually close questioning. While the hearing seemed very civilized—the witnesses were not even sworn in—it rated a solid 6 on the congressional tension-meter, with 1 being an opening prayer and 10 being the Army-McCarthy hearings. Fed chairman Ben Bernanke, Treasury undersecretary Robert Steel (Paulson was conveniently in China), and Securities and Exchange Commission chairman Christopher Cox also testified.
But it was Geithner who had the chore of providing the nitty-gritty, and he bore more than his share of the most pointed questioning. He was scolded, lectured, and interrupted, much like a doctoral candidate who had just presented a weak defense of his dissertation. "Should I try—can I just go through a few important things for the record," he pleaded at one point in the midst of a barrage of hectoring by Republican senator Jim Bunning, of Kentucky. The New York Times splashed his beleaguered likeness at the top of the front page the next day, with Geithner staring down at the witness table, hand on head, lips pursed, as if saying to himself, "Why the hell did I take this job?"
It's a fair question, and so is this: How did a career technocrat become the king of Wall Street, capable of blessing mergers, starving unworthy firms of cash, and, if one believes the not-unpersuasive official narrative, saving the markets from ruin? The Fed is arguably the least transparent of the financial regulators, and although the Fed itself was created by an act of Congress in 1913 and the chairman of the Fed is a presidential appointee, pretty much everyone else wielding any power is a product of a kind of old-boy network. The presidents of the regional Fed banks are appointed by their nine-member boards of directors, with six seats on each board selected by member banks and the other three by the Federal Reserve's board of governors.
Since college, he has gone pretty much straight up the ladder—no detours, no backpacking around Europe, no internship fetching coffee. And every step of the way, his accomplishments and mastery of the details of international finance have been recognized. He has always had what used to be known in the New York Police Department as a rabbi—a high-level official who promotes a person's career. In his first job, with Kissinger Associates, he worked directly for Henry Kissinger, researching a book. "He did such good work that I still have some of the papers, for another book I may write," Kissinger says. Then, when Geithner went to the Treasury Department, he held a variety of lower-level positions, including assistant attaché at the U.S. embassy in Tokyo, before being plucked from the great amorphous mass of aspiring civil servants by Larry Summers, then Treasury undersecretary for international affairs, and named his special assistant. With Summers as his backer, he was moved to positions of increasing responsibility, beginning with deputy assistant secretary for international monetary affairs. "He stood out as being in an entirely different league," Summers recalls. By Summers' account, Geithner avoided a certain occupational hazard for some young strivers—brownnosing—and spoke his mind. "The ego is disengaged, but he's very comfortable with himself and very direct—not promoting himself, but just concerned with doing the right thing," Summers says.
Evidently that was something of a magic formula, as Geithner climbed through the bureaucracy, holding jobs with titles like senior deputy assistant secretary of the Treasury. In the department's complex hierarchy, the simpler the title, the greater the power. Geithner soon emerged as assistant secretary, then in 1999, undersecretary for international affairs, Summers' old job. In the interim, Geithner acquired a reputation as a man to be trusted with tough jobs. He negotiated the 1995 U.S.-Japan financial services agreement and served as U.S. negotiator for a 1997 World Trade Organization financial services agreement. Every step of the way, Geithner proved his precociousness. "He was smarter, and he saw problems in much more holistic ways" than his peers did, Summers says. "He was able to see the problem from the perspective of the secretary or the president, who had to decide from the point of view of a wide variety of considerations."
Geithner truly earned his international-finance stripes during the emerging-markets troubles of the late 1990s—the tumult that led directly to the meltdown of L.T.C.M., which established a template for the Bear Stearns fiasco. "That whole period was one long crisis," Greenspan recalls, and that was when Geithner proved his mettle in the eyes of the Fed chairman. Geithner showed a "general understanding of the nature of what the problems were and what was required to right the system," Greenspan says, echoing Summers' praise.
One of the most discussed topics during the crisis was why Geithner was involved in the first place. The Fed, despite its broad financial oversight, does not have authority over investment banks—either to audit their books or lend them money. When Bear finally got its loan, via J.P. Morgan, it was through emergency authority that had rarely been invoked since the Depression. The day-to-day task of overseeing investment banks falls mainly to the S.E.C., but the agency's primary job is not to ensure that banks operate in a way that won't cause a meltdown but to enforce its mandate to protect investors.
At the end of the day, Congress will have to increase the Fed's powers if it is to get a handle on risk-taking among investment banks. "I'm not clear how the Fed becomes a regulator of risk without regulating the institutions that take the risk," says Seidman, the former F.D.I.C. chairman.
Note: Fed will need powers to regulate Investment Banks like Goldman and Morgan Stanley. When it came time to bail them out though, they just used the backdoor. According to Judge Wheeler in the AIG case, the government acted illegally. I guess the backdoor is also unlawful!
Group of Thirty Members
Timothy F. Geithner
President and Chief Executive Officer, Federal Reserve Bank of New York
Former U.S. Undersecretary of Treasury for International Affairs
William McDonough
Vice Chairman and Special Advisor to the Chairman, Merrill Lynch
Former Chairman, Public Company Accounting
Oversight Board
Former President, Federal Reserve Bank of New York
April 2009
Larry Summers, Tim Geithner and Wall Street's ownership of government
White House officials yesterday released their personal financial disclosure forms, and included in the millions of dollars which top Obama economics adviser Larry Summers made from Wall Street in 2008 is this detail:
Lawrence H. Summers, one of President Obama's top economic advisers, collected roughly $5.2 million in compensation from hedge fund D.E. Shaw over the past year and was paid more than $2.7 million in speaking fees by several troubled Wall Street firms and other organizations. . . .
Financial institutions including JP Morgan Chase, Citigroup, Goldman Sachs, Lehman Brothers and Merrill Lynch paid Summers for speaking appearances in 2008. Fees ranged from $45,000 for a Nov. 12 Merrill Lynch appearance to $135,000 for an April 16 visit to Goldman Sachs, according to his disclosure form.
That's $135,000 paid by Goldman Sachs to Summers — for a one-day visit. And the payment was made at a time — in April, 2008 — when everyone assumed that the next President would either be Barack Obama or Hillary Clinton and that Larry Summers would therefore become exactly what he now is: the most influential financial official in the U.S. Government (and the $45,000 Merrill Lynch payment came 8 days after Obama's election). Goldman would not be able to make a one-day $135,000 payment to Summers now that he is Obama's top economics adviser, but doing so a few months beforehand was obviously something about which neither parties felt any compunction. It's basically an advanced bribe. And it's paying off in spades. And none of it seemed to bother Obama in the slightest when he first strongly considered naming Summers as Treasury Secretary and then named him his top economics adviser instead (thereby avoiding the need for Senate confirmation), knowing that Summers would exert great influence in determining who benefited from the government's response to the financial crisis.
When Geithner went to the Treasury Department, he held a variety of lower-level positions, including assistant attaché at the U.S. embassy in Tokyo, before being plucked from the great amorphous mass of aspiring civil servants by Larry Summers, then Treasury undersecretary for international affairs, and named his special assistant. With Summers as his backer!!
Last night, former Reagan-era S&L regulator and current University of Missouri Professor Bill Black was on Bill Moyers' Journal and detailed the magnitude of what he called the on-going massive fraud, the role Tim Geithner played in it before being promoted to Treasury Secretary (where he continues to abet it), and — most amazingly of all — the crusade led by Alan Greenspan, former Goldman CEO Robert Rubin (Geithner's mentor) and Larry Summers in the late 1990s to block the efforts of top regulators (especially Brooksley Born, head of the Commodities Futures Trading Commission) to regulate the exact financial derivatives market that became the principal cause of the global financial crisis. To get a sense for how deep and massive is the on-going fraud and the key role played in it by key Obama officials, I highly recommend watching that Black interview (it can be seen here and the transcript is here).
This article from Stanford Magazine — an absolutely amazing read — details how Summers, Rubin and Greenspan led the way in blocking any regulatory efforts of the derivatives market whatsoever on the ground that the financial industry and its lobbyists were objecting:
As chairperson of the CFTC, Born advocated reining in the huge and growing market for financial derivatives. . . . One type of derivative—known as a credit-default swap—has been a key contributor to the economy's recent unraveling. . .
Back in the 1990s, however, Born's proposal stirred an almost visceral response from other regulators in the Clinton administration, as well as members of Congress and lobbyists. . . . But even the modest proposal got a vituperative response. The dozen or so large banks that wrote most of the OTC derivative contracts saw the move as a threat to a major profit center. Greenspan and his deregulation-minded brain trust saw no need to upset the status quo. The sheer act of contemplating regulation, they maintained, would cause widespread chaos in markets around the world.
Born recalls taking a phone call from Lawrence Summers, then Rubin's top deputy at the Treasury Department, complaining about the proposal, and mentioning that he was taking heat from industry lobbyists. . . . The debate came to a head April 21, 1998. In a Treasury Department meeting of a presidential working group that included Born and the other top regulators, Greenspan and Rubin took turns attempting to change her mind. Rubin took the lead, she recalls.
"I was told by the secretary of the treasury that the CFTC had no jurisdiction, and for that reason and that reason alone, we should not go forward," Born says. . . . "It seemed totally inexplicable to me," Born says of the seeming disinterest her counterparts showed in how the markets were operating. "It was as though the other financial regulators were saying, 'We don't want to know.'"
She formally launched the proposal on May 7, and within hours, Greenspan, Rubin and Levitt issued a joint statement condemning Born and the CFTC, expressing "grave concern about this action and its possible consequences." They announced a plan to ask for legislation to stop the CFTC in its tracks.
Rubin, Summers and Greenspan succeeded in inducing Congress — funded, of course, by these same financial firms — to enact legislation blocking the CFTC from regulating these derivative markets. More amazingly still, the CFTC, headed back then by Born, is now headed by Obama appointee Gary Gensler, a former Goldman Sachs executive (naturally) who was as instrumental as anyone in blocking any regulations of those derivative markets (and then enriched himself by feeding on those unregulated markets).
Robert Rubin
He served as the 70th United States Secretary of the Treasury during the Clinton administration. Before his government service, he spent 26 years at Goldman Sachs, eventually serving as a member of the board and co-chairman from 1990 to 1992; Chairman of Citigroup.
Robert Rubin promotes Geithner to NYFed to run it. Geithner served as Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Secretaries Robert Rubin and Lawrence Summers.
Lawrence Summers
Summers earned $2.8 million in speaking fees from major financial institutions,[46][47] including Goldman Sachs, JPMorgan Chase, Citigroup, Merrill Lynch and Lehman Brothers. Mr. Geithner joined the Department of Treasury in 1988 and worked in three administrations for five Secretaries of the Treasury in a variety of positions. Geithner served as Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Secretaries Robert Rubin and Lawrence Summers.
Robert K. Steel
Former vice chairman at Goldman. Robert K. Steel, a former vice chairman at Goldman, was tapped to look at ways to shore up Fannie Mae and Freddie Mac.
Mark Patterson
Right from the start, Geithner's top aid is from Goldman Sachs, Mark Patterson.
In 2004 Patterson became a lobbyist for Goldman Sachs, with the position of Vice President (2004-2007), and Managing Director (2007-2008).
Maxine Waters Grills Geithner On Goldman Sachs (VIDEO)
April 2009
Rep. Maxine Waters (D-Calif.) grilled Treasury Secretary Timothy Geithner on Tuesday about the role of investment bank Goldman Sachs in various government efforts to prevent a collapse of the financial industry.
During a contentious hearing before the House Financial Services Committee, Waters asked Geithner to confirm that his predecessor was a Goldman Sachs CEO, then followed up by questioning whether the firm would be one of five asset managers in the just-announced Public-Private Investment Program.
"It is possible that if they are qualified we would consider them along with everyone else," Geithner said.
"You hear a lot about the dissatisfaction about the bonuses," Waters said, "but underneath all of this is a conversation about the linkages and the connections of a small group of Wall Street types that are making decisions."
Waters advanced the linkage conversation by asking Geithner to confirm whether Goldman Sachs received TARP funds, whether Geithner's current chief of staff formerly worked for the firm, whether Goldman Sachs received funds from bailout-king AIG, and whether Goldman Sachs was somehow involved in the government's decision not bail out Lehman Brothers.
Geithner answered the last question in the negative. But as HuffPost's Tom Edsall documented:
The roots of the linkage between Goldman Sachs and AIG go back to the closing months of the Bush administration, as the financial meltdown reached crisis proportions and key decisions were made that are now reaping the whirlwind. Remember who played a key role in deciding to bail out AIG? Henry Paulson, the Goldman CEO-turned George W. Bush Treasury Secretary. Paulson, according to a September 27, 2008 New York Times piece by Gretchen Morgenson, led a team of regulators and bankers in early September to determine what to do with the most severely wounded financial institutions.
One of the participants in those meetings was Lloyd C. Blankfein, Paulson's successor at Goldman Sachs.
Out of those meetings came the controversial and heavily criticized decision to allow
Lehman Brothers, a Goldman competitor, to go belly up, and to bail out AIG. Starting with $85 billion from the Fed, taxpayers have pumped a total of $170 billion into the giant insurance company. The bailout was crucial to Goldman in that it permitted AIG to pay off its $12.6 billion debt to the firm, $8.1 billion of which was to cover AIG-backed credit derivatives.
"I am just asking the questions," Waters said, "because the talk is...that this small group of decision makers at the center of it is Goldman Sachs and that's what's causing a lot of the distrust, because people are thinking or believing that Goldman Sachs, because of the connections, have had a lot to do with the decisions that are being made."
Geithner took umbrage.
"I think it's deeply unfair to the people who are part of these decisions to suggest that they were making judgments that in their view were not in the best interest of the American people," Geithner said.
To reword Geithner, The fraud bankers did not think it was fair that people thought that they, the fraud bankers, were not making judgments that were not in the best interest of Taxpayers. Yes Tim that is what we were saying all along. How can these Bankers that created and wrote the crap PLS-RMBS now to be trusted when just a few months to years earlier THEY were the perpetrators of the crimes? How should this be fixed? Bail them out and imprison the innocent AIG, Fannie Mae, and Freddie Mac? In 2015 these people need to be prosecuted for their crimes on the American Tax Payer!
DEFINITION of 'Collateralized Debt Obligation - CDO'
A structured financial product that pools together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors. A collateralized debt obligation (CDO) is so-called because the pooled assets – such as mortgages, bonds and loans – are essentially debt obligations that serve as collateral for the CDO. The tranches in a CDO vary substantially in their risk profile. The senior tranches are relatively safer because they have first priority on the collateral in the event of default. As a result, the senior tranches of a CDO generally have a higher credit rating and offer lower coupon rates than the junior tranches, which offer higher coupon rates to compensate for their higher default risk.
The MBSs of the "Government-sponsored enterprise", Fannie and Freddie were considered to be "the equivalent of AAA-rated bonds" because of their high standards and suggestions of guarantee by the US government.[21]
Agency MBS is NOT PLS-RMBS:
Agency MBS(Fannie Mae and Freddie Mac) is AAA Grade from top to bottom. Equal to Treasury bond.
PLS-RMBS (private loan security, think banks and countrywide) is AAA rated for a portion of the security.
RMBS is very similar to Risk Sharing Fannie and Freddie are doing now.
The difference is Fannie and Freddie risk sharing is about 95% AAA securities, in 2007 RMBS was more like 60% AAA, and even that number turned out to be too high, thus causing HUGE losses by whoever bought these securities from banks, countrywide and investment banks. Goldman Sachs is an investment bank that sold $150 billion worth of these RMBS junk securities that indeed went belly up.
While private-label subprime mortgages would never be able to make that claim, by "slicing" the pooled mortgages into "tranches", each having a different priority in the stream of monthly or quarterly principal and interest stream,[22][23] they could create triple A rated securities from the tranches with the highest priority — the most "senior" tranches.
Since the most senior tranche(s) was like a "bucket" being filled with the "water" of principal and interest that did not share this water with the next lowest bucket (i.e. tranche) until it was filled to the brim and overflowing,[24] the top buckets/tranches (in theory) had considerable creditworthiness and could earn the highest credit ratings, making them salable to money market and pension funds that would not otherwise deal with subprime mortgage securities.
Since Citigroup and other firms focused on achieving high ratings, the (four) senior ranches rated triple A made up 78% or $737 million of the deal. Eleven tranches were "mezzanine" — three rated AA, three A, three BBB and two BB (junk). The most junior tranche was known as "equity" or "residual" or "first loss". It had no credit rating and was split between Citigroup and a hedge fund.[25] The more "junior" the tranche, the higher its risk and the higher its interest rate in compensation. [26]
The private RMBS market largely collapsed after 2008 and has been replaced by government-backed securitization characterized by much tighter underwriting and higher standards!
Knowing all this, would you say Timothy Geithner just pull off the biggest heist in American history with his Goldman buddies?
Would you say the political will of the American people is not enough to know the truth?
Do you want the truth to be told?
I just told it.
I backed it up with many examples and references from Goldman Sachs, The Ny Times, ABC, Washington Post, FHFA and Treasury.
Timothy Geithner, you can keep your lie of protecting the taxpayers and know the TRUTH is coming!
Fannie Mae and Freddie Mac are victims, and Banks and Goldman Sachs got away with it, so far.