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The Misunderstood Treasury-Goldman Connection
Kooky conspiracy theorists will have a field day with the New York Times' expose of numerous mysterious contacts between former Treasury Secretary Henry Paulson and Goldman CEO Lloyd Blankfein during the height of the financial crisis last September. But it's all a big misunderstanding. Sure, Paulson, a former Goldman CEO, signed an ethics agreement in 2006 barring him from dealing on specific matters involving Goldman. And yes, Paulsons' own calendars now show he had 26 calls with Blankfein in 2007 and 2008 before he received an ethics waiver from Treasury lawyers. But Paulson probably made all those calls just to remind Blankfein that he couldn't talk to him until he got a waiver. "During the week of the A.I.G. bailout alone, Mr. Paulson and Mr. Blankfein spoke two dozen times, the calendars show, far more frequently than Mr. Paulson did with other Wall Street executives." But the calendars don't disclose what the substance of the conversations were. I, for one, have no doubt they were just chewing the fat about the AL East penant race or the latest plot twists of The Real Housewives of New York. A Goldman spokesman said the conversations were designed to "provide a market perspective on conditions and events as they were unfolding." The fact that Paulson spoke much more often with Blankfein than other bank CEOs just means that Goldman had more "market perspective" than other banks. A senior government official claims Paulson said that he had been warned by Treasury lawyers not to contact Goldman executives directly, but that Paulson told him he had disregarded the advice because the "crisis" required action. (Judging by Paulson's 13 calls with Blankfein -- more than all the contacts he had with the CEOs of Lehman, JP Morgan and Merrill Lynch combined -- way back in August 2007, the "crisis" obviously started more than a full year before Paulson ever publicly acknowledged it. One of a Treasury Secretary's jobs is to keep things like this on the down low.) Paulson kind of, sort of denies the remark, saying through his spokeswoman that he doesn't "recall" saying it. Case closed. Paulson's decision to let Goldman competitors Bear Stearns and Lehman fail while propping up Goldman trading partner AIG at all costs had nothing to do with protecting Goldman. AIG's demise posed a "systemic risk" -- Bear's and Lehman's did not. Period. And besides, Goldman has insisted over and over again (when will you people get it through your thick skulls?): it was fully insulated from any collapse of AIG and thus was never in any danger. So it makes perfect sense that Goldman couldn't have cared less whether AIG survived and paid off billions in committments or went belly up. Unless, that is, you believe Paulson's spokeswoman, Michele Davis, who says that Paulson requested the ethics waiver because federal officials were worried that Goldman was at risk of failing later the same week that Lehman imploded. "The waiver was in anticipation of a need to rescue Goldman Sachs," Ms. Davis said, "not to bail out A.I.G." But what would Paulson or federal officials know about Goldman's business? Besides, Paulson last month swore to Congress that he had "no role whatsoever in any of the Fed’s decision [sic] regarding payments to any of A.I.G.’s creditors or counterparties." Sure, Paulson personally sacked AIG's CEO on September 16, apparently drafted a letter to AIG the same day, and had calls with Blankfein the morning the AIG rescue was announced (before he got the ethics waiver). And, sure, two senior government officials claim that Paulson "played a major role in the A.I.G. rescue discussions over that weekend and that it was well known among the participants that a loan to A.I.G. would be used to pay Goldman and the insurer’s other trading partners." But who are you going to believe: anonymous government officials or the former head of a respected bank like Goldman?
Even before the release of Paulson's calendars, one confused congressman asked Paulson a question that illustrates just how little the kooky conspiracy theorists understand: "Is it possible that there’s so much conflict of interest here that all you folks don’t even realize that you’re helping people that you’re associated with?"
Silly congressman -- of course they realize.
I liked how the NYT tried to start impartial by saying he sold his interest in GS but neglected to say he did so and avoided $10's of million in capital gains taxes. That'd be enough reason to take the job there for a skinflint like Hank.
My partner and I started a squid themed blog a few months ago which discusses the financial catastrophe among other things. Needless to say we were quite pleased when Taibbi's piece on GS came out. In light of today's NYT article, my partner came up with this excellent photoshop of Paulson as vampire squid which we thought readers here might enjoy.
let's try again. Here's the link: http://cephaloblog.wordpress.com/2009/08/10/lord-of-the-rat-fucking-vamp...
Qui tam (Black's Law Dictionary pronunciation: kwày tæm) is an abbreviation from the Latin "qui tam pro domino rege quam pro sic ipso in hoc parte sequitur" meaning "who as well for the king as for himself sues in this matter." Black's Law Dictionary defines a qui tam action as "an action brought by an informer, under a statute which establishes a penalty for the commission or omission of a certain act, and provides that the same shall be recoverable in a civil action, part of the penalty to go to any person who will bring such action and the remainder to the state or some other institution." Qui tam is a provision of the Federal Civil False Claims Act that allows private citizens to file a lawsuit in the name of the U.S. Government charging fraud by government contractors and others who receive or use government funds, and share in any money recovered. This unique law was enacted by Congress in order to effectively identify and prosecute government procurement and program fraud and recover revenue lost as a result of the fraud. The qui tam provision has had the effect of privatizing government legal remedies by allowing private citizens to act as "private attorneys general" in the effort to prosecute government procurement and program fraud. Although most of the early successes in qui tam actions have been against defense contractors, more and more actions are being filed that involve other governmental agencies such as Health and Human Services, Environment, Energy, Education, NASA, Agriculture and Transportation. U.S. recoveries for qui tam cases, as of the end of 2003, has totaled $7.8 billion. During the same period, relator shares, as a result of the recoveries, has totaled $1.3 billion.
Can't somebody initiate a qui tam action against Paulson on behalf of the taxpayer for defrauding the taxpayer, or for running a conspiracy to defraud the taxpayer? He took $100s of millions for turning the master crank on the system that cranked out bad paper that was only bought because of the GSEs implied guarantees, then he turned the crank on a new machine to print a bunch of money to funnel to his co-conspirators at Goldman, lying all the time to Congress and everyone else about how it was necessary to save "the system". Fraud. Against the taxpayer.
George W. Bush:
"You can fool some of the people all the time, and those are the ones you want to concentrate on."
Finally something makes perfect sense!
Go back to sleep are bubbles are programed every 2 years now that we have a better economist and firewall.
They took the market down, you couldn't do a thing.
They stole you money, you couldn't do a thing.
They played with you fool, took the market even further down, you couldn't do a thing.
You sold, they bought your stuff from you, using your money, you couldn't do a thing.
They took the market higher, 50-60% higher, you couldn't do a thing.
You will buy here, they will sell your stuff to you again, you won't give a $hit....
You are a greedy basturd living in a unethical nation, you deserve to be treated like a $hit.
Unlike Robert Paulson, in LIFE, his name is HANK PAULSON- repeat after me little Goldman space monkeys!
Official Gubmint Ethics Waiver: Do you, Hank Paulson, Take this investment bank, Goldman sachs, to love, honor and cherish, till death do you part?
Hank:I do
Official Gubmint Ethics Waiver: I now pronounce you ethically ok. You may give Goldman $billions$
where's timothy mcveigh when you need him?!
I'll finally get a good night's sleep the day when Paulson is arraigned on various and sundry charges. I look forward to the perp walk. He is no better than a cheap hood. Where is a prosecutor with balls? This is an easy one. Show anyone of the pampered spoiled brats who numbered among his minions a picture of Bubba, their future cell companion, and they'll sing the high notes to the last verse - just set up the video cam and ask for specifics.
Scum.
Benji boy,
Not your best work but the article didn't need a sarcastic interpretation anyway. The story is clear as crystal and cannot be interpreted any other way, no matter how GS, Treasury or Fed try to spin it.
Kudos to Gretchen for a fine piece of reporting.
Due to popular demand I have registered and obtained a ZH identity. It should be clear why I chose this fellow as my cover. Incidentally, TG if you're listening, get a real job.
Whether By Consent Or Conquest, We Will Have World Government.
Little Jimmie Warburg is that you?
Plan's going exactly to plan - the answer is conquest.
In case you can't tell, I'm bein sarcastic
Just curious - still curious - as to who it was that loaded up on the short expiration, way out of the money BSC puts in size just before Bear blew up? I'm confident the SEC's on the case but has anyone heard anything?
I think it was more of a secret crush.
*telephone ring*
Blankfein: Hello? Hello?
*Silence, followed by some heavy breathing, and then dial tone*
Two minutes later, telephone ring
Blankfien: Hello? Hello?
*Silence, followed by some heavy breathing, and then dial tone*
Two minutes later, telephone ring
Blankfein: Hank! Knock it off! I know it's you!
Paulson: Oh, sorry--must have dialed the wrong number. But since I called, are you maybe free for a pizza tomorrow night?
Blankfein: Let me get back to you--gotta see if the old lady is screwin' the pool guy tomorrow.
*Five minutes later, telephone ring*
Blankfein: Hello?
Paulson: Did you talk to the pool guy yet?
Blankfien: Nope. You didn't give me enough time. call me another 20 times, and I'm sure IO'll have an answer for you.
I've met Henry on several occasions, and have had many indirect business relations with him. I can tell you this: Paulson did a patriotic duty in letting Lehman Brothers and Bear Stearns fail while saving Goldman Sachs and AIG. He should be commended rather than vilified. In a time of irrational panic, Paulson made the right decision to get us through the tough times. If only McCain had been elected, we'd been able to put all this behind us, but Obama and his followers like to look backwards rather than forwards. Now here we are on a witch hunt that will prove to be counterproductive. Let's move on and prosper off Paulson's great decisions.
phil, phil, phil.....i am beginning to think
that someone over polished your bald head....
you're speaking incoherently....
hope hank saves you a table at 21 club....
and don't forget to save room for some after
lunch cock....
c'mon phil, did you get some of that alaskan pelt or not??
Irrational panic? Coming out of one of the largest speculative bubbles in history? One in which, the derivatives and assets were marked to be "worth" more than all the money in circulation?
Consolidation of banks is not productive nor does it help the masses prosper - it only raises the rate of profit as monopolies take hold and competition whithers.
I really hope you were being sarcastic.
You don't get out and look at the posters names much do you?
Finally, someone who gets it. The only election result better than McCain would have been Phil Gramm himself. If only Gramm-Leach-Bliley had been enacted sooner, we might have averted this whole mess entirely.
Hey, Lloyd's number was still on my speed dial list from the days back when i was CEO, right next to the pizza take-out button. Sometimes i would hit Lloyd's number by accident. Chill!
Mr. Blankfein : Hey Paul you big sexy beast. How's it hanging.
Mr. Paulson: Oh it's hanging good. How's the business of selling people your stress testing software so you can get information about what everyone has and doesn't have.
Mr. Blankfein: Oh great. It's amazing. People actually pay you to collect information about them because they think you are trying to HELP them. LOL
Mr. Paulson: I know it's crazy. People are stupid.
Mr. Blankfien: So you need to know how screwed up everyone is don't ya?
Mr. Paulson: How'd you KNOW!!
Sounds about right except I have a hard time believing that L.B. "says" LOL in conversation.
Paulson, Bernanke and Turbo Tax Tim should all be in prison along with a host of other parasites that a feasting on a dying beast.
So they needed "market color"?
"During the week of the A.I.G. bailout alone, Mr. Paulson and Mr. Blankfein spoke two dozen times, the calendars show, far more frequently than Mr. Paulson did with other Wall Street executives."
That's a Goldman plated rainbow. We should go easy on the Hank he was just letting Lloyd do what he had been taught at GS. Get in before anyone else, get the most critical information and then trade ahead of it. In this case though Lloyd had to pull weight for all the other "clean" dealers -- the Euro friends and US cronies and keep his firm from imploding.
From the New York Times;
Financial companies that received multibillion-dollar payments owed by A.I.G. include Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).
Big foreign banks also received large sums from the rescue, including Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion).
Stinky, low class Lehman and Bear failed. Yup, clean out the over-leveraged greasers.
Perhaps that's why Lloyd's wife was singing "My Baby Does the Hanky Panky" on all her shopping expeditions at Bergdorfs during the meltdown. And here I thought she just liked Tommy James and the Shondells.
I bet Turbo Timmy also has an ethics-waiver-plated hotline to 85 Broad.
Did the calls go:
LB: Hank is that you
HP: Yep
LB: If you don't get us money your $300,000,000 is toast
HP: ok, checks is in the mail.What about Lemman and Bear
LB: Screw them
HP:OK There Toast
LB:bUY SEE YOU IN THE HAMPTON'S
I smell moral hazard burning the midnight oil..Claims by Lloyd that they were never in danger of collapse??
Thanks for setting me straight. I'll be sure to up my meds so I don't get anymore funny ideas the next time around.