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Paulson's Revealing Phone Records
But, the four-day period of greatest call concentration is particularly striking. This was after Lehman tanked and Bank of America got stuck with Merrill. Between September 18 and 21 (when advantageous bank holding company status was approved for Goldman and Morgan Stanley), Blankfein far outpaced Mack in terms of calls with Paulson. He put in 11 and received eight outgoing (19 in total), whereas Mack only placed four calls to Paulson and received five (nine in total). This indicates the level at which Goldman Sachs and Morgan Stanley coordinated their bank holding company push—with the world crumbling, these former competitors united as friends—but also the extent to which Goldman was the main driver. During those four days, Paulson and Geithner kept up their pattern of firm contact. Paulson called Geithner 28 times, whereas he only called Bernanke 11 times, even though bank holding company approval came from Bernanke.
Other bankers were looped in, too. But again, these were mostly megabank officials, including Citigroup’s senior counselor, Robert Rubin, and its CEO, Vikram Pandit (34 between them); Merrill Lynch CEO John Thain (24); JPMorgan Chase CEO Jamie Dimon (21); followed more distantly by Wells Fargo CEO John Stumpf (three).
4) Robert Rubin Was Paulson’s Guy at Citigroup
Pandit may have been the CEO, but it was Robert Rubin who was Paulson’s preferred Citigroup contact, engaging in 26 calls versus just eight for Pandit. No surprise: Paulson and Rubin had both been Goldman Sachs CEOs and Treasury secretaries. That’s the most exclusive club out there.
Frankly, this whole group forms a little club. The New York Fed and Wall Street are historically tight. Goldman Sachs, the New York Fed, Treasury, and the White House (Goldman was Obama’s second-largest campaign source of contributions) are recently tight. The day after Citigroup got a massive $301 billion federal government guarantee, plus an additional $20 billion from one TARP program, and $25 billion from another, Obama selected New York Fed Chief Geithner as his Treasury secretary, and appointed former Treasury Secretary (and Rubin mentee) Larry Summers to lead his National Council of Economic advisers. The baton had been passed. Paulson effectively groomed Geithner, just as Rubin had groomed Summers and pioneered the path between the top spot at Goldman and Treasury for Paulson.
Whenever you have too much power concentrated in the hands of a few men, things don’t turn out so well for everyone else. That’s strikingly evident by the fallout from the crisis, and the selective bailout and favoritism of the firms in control of the access and money flow. As the FDIC comes close to shutting down its 100th small bank, Goldman and JPM Chase are getting set to announce another set of stellar quarterly results and gearing up for record bonuses. Bank of America and Citigroup are hoping to post some great numbers of their own, floated on public capital and federal aid.
What’s wrong with this picture? Absolutely everything.
Nomi Prins is author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Before becoming a journalist, she worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London.
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Genni2002
Like common criminals, they break into our houses and take everything of value from us and here is Paulson, holding the flashlight. Oh, but wait, they shoot us on the way out the door.
What a bunch of conniving, scheming, thieving pirates, all sitting up there on their golden finance toilet thrones plotting with our own gov on how to steal from us. If this isn't dereliction of duty, then let all the criminals out today! It is time to arrest these *inside* traders...
hockeydog
Genni, let's arrest em and then hang em high!
OOps! Sorry, we are talking about the President and all of his men.
Looks like it is getting harder and harder to put the gameplan
together again.
First they have us thinking this has gotta be an R vs D issue.
Let's confuse the country and have em squabble over things
like "immigration, healthcare, a little war here, a little terrorism
there." Let's keep em bellyaching, and while they are watching
the shells, the pea has already been slipped off the table.
By the time anyone figures the game out, these old boys
will have cleaned us out!
Genni2002
I, too, am not into the D vs. R issue when it comes to the matter of this financial mess. Not that I am a brilliant banker or anything, but my feeling is that they all should have been allowed to tank, let the chips fall where they may. And yes, did see It's a Wonderful Life....
YARROW
I can't be convinced that GREED isn't mainly the reason our country is in this mess. I can't be convinced that BOTH parties aren't responsible. Many people are willing to peel grapes if necessary to make a living.
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lx-Isaac
Seriously, the hatred is unjustified. Are the Feds and Wall street too close? Yes. Could crisis have been handled better? yeh.
Buts its absurd to blame the Fed and wall street for every single wrong that happened.
Its not unreasonable that the group consulted is small. Its a bloody crisis. You cant get everyone's opinions, then do analysis for all of it in time. You choose the people with the most experience, capability and hope the best.
Whatever wrongs you feel they did, saving the banks prevented a financial collapse. Global financial economic theory is tough, requiring a lot of judgment calls. To be frank your American just dot understand enough to be making any opinion about whether what was done is right or wrong. Almost no economist, whether private or acadamic think it was wrong to save the banks. Not doing it would ave been a lot worse for everyone. That part is apparent to almost everyone who studied economics.
And yet popular rage is to be vented and its always easy to blame others.
Genni2002
'scuse me...why do they get to benefit with huge profits, runaway bonuses and risk taking to the absurd like there is no tomorrow, then when the proverbial shit hits the fan, tomorrow does arrive, they get bailed out?? Plus, there are absolutely no consequences at all. Even children have consequences when they are naughty. It is unforgivable. No phone calls. Even one is too many. The stench of inbreeding is palpable and sickening.
merersu
So many on this thread act like Wall Street and the Fed having been doing the same thing for the last 30years! Reagan opened this quagmire and last September was the culmination of those policies. Yes, it sucks that Paulson and the gang had to do these things to keep the worlds financial systems above water, and no it's not fair, but what else would you have had them do? The Dow passed 10,000 today and that's as a direct result to what they did a year ago. This is the free market system Rethugs always espouse at work. That's why the system will never be fair and will always crap on the little guy. And that's all of us who are not banking execs if you didn't know.
whipmawhopma
Genni2002 - lx-Isaac has a valid point or two. Maybe not the only valid points, but some of them.
It wasn't all Wall Street and the Feds. Some of it was the people of the United States themselves. Buying houses on speculation, borrowing money on their houses to buy cool stuff that they just had to have, buying houses that they could not afford.
And then there are the politicians, who for whatever reasons, went along with or thought up various schemes and laws to help themselves and their buddies.
And then the regulators who did not regulate.
And the rating agencies that apparently really are supposed to be rating the corporations that pay them.
And then there are the American people as citizens who want big benefits from the Congress, to be paid for with small taxes and money borrowed from strangers.
It's like a cruise ship of fools with nobody on the bridge really running things, because the crew is down in the casino, pigging out at the buffet, or watching the game on television.
Genni2002
Can completely agree with you on the regulators and rating agencies, slightly less wrt Congress, however, the people who were given loans by banks and via mortgage brokers don't agree at all.
It is the banks responsibility to tell us our buying power. Again, you would prefer to have a surgeon vs. a banker doing you brain surgery. You would probably not even want a banker assisting the surgeon? Would rather have a certified mechanic, no doubt, under the hood of your merc, no?
These were / are finance people who should be knowledgeable about finance, financial risk and obligation, purchasing power and etc. pushing their products on untrained and hardworking (in other jobs) people. People who would have malpractice lawsuit up the wah-zoo if they screw it up. Why should we expect no less from the people whose job it is to tell us our purchasing power? For example, it is not a mortgage situation, but our trusty bank (with a relationship over 15 years old) pressured you in (have heard of this happening with at least three friends and on at least 3 occasions for my hubby and me) pushing all types of 'vehicles' to invest our money in and etc.. But, not in the world of finance, no irresponsibility there..
sophia5
Paulson and Geither were "tight" in Goldman . . . AND competitors with Lehman ?
Goldman was " TOO BIG TO FAIL? "
Lehman was " ALLOWED " To Fail ?
Coincidence ?
Embers
Isaac, you're wrong. We had a financial collapse. Only a handful of rich bankers were saved by the bailout. The rest of us are still just struggling to survive.
Any idiot can connect the dots / add two and two in this situation.
We can blame the Fed and Wall Street for the vast, vast majority of the problems our country is having now. Absolutely.
And whip, it is true that many people bought things that they could not really afford during the run-up to this crisis. But who were the idiots lending them the money? Wall Street and the Fed.
lx-Isaac
so smokers are blameless, the cigarette manufactures are all to blame?
Your 'Any idiot can connect the dots / add two and two in this situation.' is just plain wrong. Nothing is as easy and clear cut as that. The news grossly simplifies things, the real situation is much more complicated. But making gross simplifications and blaming others gets more ratings.
I'm not saying bankers didn't benefit, they did. But what the goverment did was far from being wrong. And the blame for the crisis is far from being just the bankers alone. EVERYONE had a part to play. Even you average guy who overspends and doesnt save, or the one who blindly invest savings in stock. Some people got screwed over, but the whole issue isnt a clear cut 'banks took our money, lets burn them' deal
susanai
In all of this blather over your crisis I have never heard mention of Bush in any of this. Why. If the President had been a democrat in 2007-08 we would not have heard the end of it. I love the way republicans are blaming this on Obama now. Idiots.
hasbro
I understand what you're saying and it makes sense.
I think something that is overlooked is the fact that folks like the Chinese and Saudi's wanted to know that our government was backing up their investments, (in companies like Goldman, Merrill, etc.). From what I understand when Lehman went under some holders of very large accounts were attempting to get out of our system altogether. Kind of a "run on the bank" on a massive scale. It is reasonable that Paulson and company had to do something about that, at all costs. It's not too hard to imagine a catastrophic result for this country.
I don't know whether things are really being fixed or judgement day has just been postponed but it's clear that the folks in charge up until the crisis weren't doing their job. Specifically, big business republicans and all those politicians from both parties that colluded with wall street have been a disaster for the country.
The way wall street is set up with little or no regulation is akin to a giant pyramid scheme.
It's funny, the "american dream" is more about greed than anything else.
lx-Isaac
Did the bankers benefit? Yes. But their benefit is our benefit. Do they deserve their benefit? no. But we cant help ourselves if we dont help them. Thats just how it is. The failure of the banking system would be catastrophe.
People presume the billions should be spent on THEM instead of the BANKS. In reality, its being spent one both. Bank systems failing would have damaged everyday americans just as much as the banks themselves. Unfortunately people dont get it.
If the goverment divide up the money and mail it to every citizen, or use it for public projects and didnt bail out the banks, the end result would have been worse for everyone. No one would have benefited.
Common sense is a misnomer. Glenn Beck talks about common sense governing, but thats just stupid. finance and economic theory/practice goes against common sense a lot of the time, thats why there are all kinds of acadamic research about it. Thats why u need years of training. Common sense says we should let the banks fail and save the avg joes, but thoery/practice is clear thats not an option. U cant save the avg joes if the banks crash.
Commentators/reporters/politicians etc realize this, but exploit this lack of understanding for their own gain. Ignorance reigns.
susanai
Isaac - you are so right. You can't be an American. I have come to the conclusion that most americans are nuts. They drag the world down and then blame who? Pres. Obama - are they crazy? Yes.
escomments
How do we know that Paulson wasn't planning this reaction to the meltdown with Geithner and his other buddies from the banking industry? Why so many calls to Obama? Obama hadn't set up his Economic team yet, had he?
I don't like it. It's fishy.
lx-Isaac
Edit: average American just don't
Baddchild
Funny, Nomi tries to write this article as if the 0bama team was more concerned about the economy by the amount of calls when we all know that they were only concerned about getting elected and was backroom dealing with Paulson to helm make sure the economy kept tanking.
GPatton
We know how Goldman works, don't we? Everything a Goldmanguy or Goldman gal does, he/she benefits, the firm benefits, and the client (or this case the US Gvt./Mr. Ms. Taxpayer?) Well, two out of three ain't bad! George Patton
AmericanPravda
"Such a parcel of rogues in a nation!" Robert Burns.
bcaldwell
This is surprising only in the fact that it shouldn't be surprising. Paulson was reading the tea leaves and Obama was making sure that he had the skinny on the economic goings on in order to gain a political advantage which explains his very cool demeanor in the whole process- he knew what was coming because Paulson told him. Paulson may have told McCain the same things but it was processed differently by his team.
The truth is for anyone that wants to research this is that as far back as April of 2006 you could see this coming starting in the subprime market. One should check out National City's "sale" of its subprime First Franklin unit to Merrill Lynch. One could check out Goldman Sachs buying up large amounts of MBS at about the same time and then shorting them later that Fall. But Paulson would not because his buddies were benefiting and by extension he was as well. All of these guys KNEW what was coming as early as 2006. Check out ml-implode.com and its archives they knew and its proven they knew.
I take issue with another blogger's assertion that these are common criminals. These were very UNcommon criminals. Paulson, Dimon and Wells Fargo devised a plan to get rid of Goldman and Chase's competitors and as a bonus, destroy millions of people's lives.
But, lost in all of this, is the culpability of the FED and just common people. The FED kept lowering rates encouraging ARM's. Regular Joes were buying houses with no money down in effect running their own mini hedgefunds believing that property values ALWAYS go up. Paulson, Goldman and Dimon took advantage of this way before the crash last year. The crash was predictable. Funny, as much as I think Glenn Beck is a clown, I can remember listening to him and seeing his show on CNN back in late 2006 and he called the whole thing as did Krugman whom I am no fan of either.
Embers
A magazine called "Countryside" (for farmers) published an issue in 1999 titled "The Second Great Depression," and it described all the things that have now emerged as causes for this crisis. I've been reading about this in various places for years. The signs have actually been readable for a long time.
ThinkAgain
I don't get the obsession with these phone calls. These parties were all in the middle of a crisis, of course they were talking constantly. Bush was for all intensive purposes out at point.
bgeasyas123
First really intellignet post. They're phone calls! No transcripts, no call lengths, just the number of calls! I am just as furious about the crisis/situation as anyone else, but this is some really weak stuff. I expect more, even from TDB.
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ThisThatTheOther
I agree that the number of calls doesn't establish much, not knowing what the calls concerned or their length, but the phrase is "for all intents and purposes."
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BlueMoose
I think the results speak for themselves. It's not been pretty but the economy is recovering nicely. Paulson was right to leave those who causes the crisis out of the solution.
snooks
What results or recovery are you talking about and who is recovering? Last time I checked we had double-digit jobless rates.
GPatton
Recovering nicely? It's a jobless recovery, jackass. 401ks have become 201ks, real estate won't recover for years. The dollar is tanking, and the stock market's poised to lose a lot of ground. George Patton
W3Research
Washington Mutual was unlawfully seized and gifted by a colluding Sheila Bair of the FDIC to JP Morgan Chase and its corrupt CEO Jamie Dimon in order to keep them afloat ...
Paulson threatened the then CEO of WaMu to sell
his company to Jamie Dimon of JP Morgan Chase! ...
Please read the following Websites for the whole story ...
WAMUQ: Shareholder Information ...
http://www.wamu-shareholders-resources.com
http://www.wamurape.org
http://www.wamustory.com
http://www.wamuqd.com
P.S. ...
Just this past week even The Street had this to say ...
WAMUQ: JPMorgan's WaMu Deal: Collateral Damage.
http://www.thestreet.com/story/10603450/1/jpmorgans-wamu-deal-collateral -damage.html
Charlemagne712
wamurape.org....that certainly sounds like a fair and balanced site
W3Research
Washington Mutual was unlawfully seized and gifted by a colluding Sheila Bair of the FDIC to JP Morgan Chase and its corrupt CEO Jamie Dimon in order to keep them afloat ...
Paulson threatened the then CEO of WaMu to sell
his company to Jamie Dimon of JP Morgan Chase! ...
Please read the following Websites for the whole story ...
WAMUQ: Shareholder Information ...
http://www.wamu-shareholders-resources.com
http://www.wamurape.org
http://www.wamustory.com
http://www.wamuqd.com
P.S. ...
Just this past week even The Street had this to say ...
WAMUQ: JPMorgan's WaMu Deal: Collateral Damage.
http://www.thestreet.com/story/10603450/1/jpmorgans-wamu-deal-collateral -damage.html
afisher
Rehashing who did what to whom will be an on-going debate. The bottom line (1 year after) is that banks are posting profits (by keeping losses hidden) and the # of jobless Americans is not shrinking.
My guess is that the GWB admin. was hoping that this problem could have been delayed until after he left office and then the spin would have been entirely different. Be that as it may, what has improved, where are the regulations that would help to protect the generic public against this type of systemic failure from re-occurring? The amount of dollars ($225M in 09) being spent to prevent oversight and stricter regulations by Wall Street/Banking to prevent regulatory reform is mind boggling. So, follow the money...and contact your legislator is you think they are not meeting the needs of the "man on the street".
Sorry to interupt the fingerpointing and whackadoodle: who is responsible games.
Thank you.
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