The Fourth Branch of the U.S. Government: Goldman Sachs?

Quietly and almost unnoticed by most Americans, the US Federal Government introduced a fourth branch to its political structure in 2006. As you know we already had three branches; they are:

§ The Judicial: the Supreme Court

§ The Executive: the President

§ The Legislative: Congress

This pretty much has us covered in terms of political strategy… but what about financial issues? Everyone knows Congress has no clue how to allocate capital. And the Executive Branch doesn’t exactly have a great track record when it comes to financial matters either (we’ve run a deficit virtually every year since 1970).

Shouldn’t we have a Financial Branch of government? A group of fiscal experts entirely devoted to keeping the US’s fiscal house in order?

Well, we actually do, but instead of installing a branch of smart, genuine financiers interested in benefiting the American people, we installed a bunch of greedy crooks intent on stealing as much of the public’s money as possible with no consequences what so ever.

Ladies and Gentleman, I present to you America’s Financial Branch of the Government: Goldman Sachs.

Trying to detail exactly how integrated Goldman (GS) has become to the Federal Government would be like trying to track the peanut butter swirls in Ben and Jerry’s Chocolate Peanut Butter Swirl ice cream. Indeed, with the exception of Ben Bernanke and a few other officials, Goldman Sachs provided all the lead characters for the Tragic Comedy that is our latest Financial Crisis.

Central to the entire mess is Hank “the Hammer” Paulson, our former Public Money Privatizer, or Secretary of the Treasury as he is commonly known. To chronicle the full intricacy of Paulson’s web of cronies and the methods he used to funnel public funds to them and their business during the Crisis would require a book, not an essay.

However, one can draw a great many conclusions about Paulson’s central beliefs on business and politics by mentioning that one of his first positions of power was serving as assistant to John Erlichman, the central architect of Richard Nixon’s Watergate Scandal: a man who believed that when it came to wining seats of power, it’s best to break and enter, steal, and destroy one’s enemies at all costs.

Erlichman was convicted on conspiracy, obstruction of justice and perjury. Paulson went on to become CEO of Goldman Sachs.

Beyond Paulson, Goldman’s reach in this crisis is virtually unending. John Thain, former CEO of Merrill Lynch, was a former Goldmanite. So was Robert Rubin, the Chairman of Citigroup (C). Then there’s Robert Steel, the head of Wachovia, Ed Liddy, who Paulson put in charge of the nationalized AIG (AIG), Mark Patterson, the current Treasury Chief of Staff, Neel Kashkari, the guy in charge of allocating TARP funds…

Heck, even Tim Geithner was mentored by the afore-mentioned Robert Rubin.

What’s staggering is that no one seems outraged by all of this. It’s not too difficult to connect the dots on what happened: A former Goldman exec was put in charge of allocating public funds to other former Goldman execs who in turn allocated the funds to their employees in the form of bonuses and enormous salaries. Indeed, it’s telling that Paulson’s original proposal for the $800 billion bailout entailed NO curtailing or oversight of executive compensation at the firm’s receiving our money.

I’m starting to run out of room here. But if you’re interested in these issues and learning more about Goldman Sach’s involvement in our Federal Government, I STRONGLY urge you to read Matt Taibbi’s recent expose on the firm in Rolling Stone magazine. Be forewarned, you will be infuriated by what Taibbi reveals. But if it gets people contacting their local representatives and Senators asking why we haven’t launched any investigations into Paulson’s allocation of public funds.

You can see Taibbi’s article online at:

http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html

Good Investing!

Comments

[Clive Corcoran:]

"What’s staggering is that no one seems outraged by all of this."

Plenty are outraged I am sure but where would you suggest channeling the outrage? The inter-connectedness of the web of cronyism makes it too big to disentangle.

Jun 25 11:59 AM

[DaveW:]

What has become 'Too Big to Fail' has simultaneously become 'Too Big to Question'. And as long as the masses can get their Tour of Duty 11, Grand Theft Auto 15, etc. they will be pacified. The hope lies in the one thing that pisses *all* folks off, $5 gas, sadly, it's too far away to facilitate real change. May that it happens before 2012...


On Jun 25 11:59 AM Clive Corcoran wrote:

> "What’s staggering is that no one seems outraged by all of this."
>
>
> Plenty are outraged I am sure but where would you suggest channeling
> the outrage? The inter-connectedness of the web of cronyism makes
> it too big to disentangle.

Jun 25 12:28 PM

[tom shane:]

"Be forewarned, you will be infuriated by what Taibbi reveals." -
Believe it or not, I'm more infuriated by this irresponsibly written article. I have another conspiracy theory - writers of this sort of articles are out to create waves, make a name for themselves, and justify their worth. Kind of like little kids cheering on a natural disaster so they don't need to go to schools.

Jun 25 01:00 PM

[DaveW:]

I usually don't jump to the defense of authors, but Tom, one article/one author does not make waves. CNBS and the mob make waves, only a few are sounding the alarm and thank God for them!


On Jun 25 01:00 PM tom shane wrote:

> "Be forewarned, you will be infuriated by what Taibbi reveals." -
>
> Believe it or not, I'm more infuriated by this irresponsibly written
> article. I have another conspiracy theory - writers of this sort
> of articles are out to create waves, make a name for themselves,
> and justify their worth. Kind of like little kids cheering on a
> natural disaster so they don't need to go to schools.

Jun 25 01:16 PM

[D. McHattie:]

Goldman Sachs is a branch of government?

More like the other way around.

Jun 25 01:45 PM

[Marli:]

my sentiments exactly!


On Jun 25 01:45 PM D. McHattie wrote:

> Goldman Sachs is a branch of government?
>
> More like the other way around.

Jun 25 02:53 PM

[Marli:]

Hey Tom,

The New York Times, Bloomberg, and Forbes Magazine have all run major articles highlighting the massive potential for conflict of interest between Goldman Sachs, the Treasury and the New York Fed. Look for an article entitled The Guys at Government Sachs at nytimes. com
Google 'goldman sachs conflict of interest' and you'll realize that well respected journalists have been sounding the alarm for years.

Summers is dead on. This is a serious issue that isn't getting enough attention. Perhaps you would have probably dismissed any editorials sounding the alarm about inappropriate relations between Arthur Andersen and Enron as 'irresponsible'. Don't wait until after a scandal erupts.


On Jun 25 01:00 PM tom shane wrote:

> "Be forewarned, you will be infuriated by what Taibbi reveals." -
>
> Believe it or not, I'm more infuriated by this irresponsibly written
> article. I have another conspiracy theory - writers of this sort
> of articles are out to create waves, make a name for themselves,
> and justify their worth. Kind of like little kids cheering on a natural
> disaster so they don't need to go to schools.

Jun 25 03:03 PM

[Swashbuckler:]

If the GS alum are ever sent up because of criminal activity, I hope someone is nice enough to send them some Get Out Of Jail Free cards. That would go over big with the wardens.

Jun 25 03:21 PM

[Contrary Harry:]

Sadly this is nothing new. How deep did Halliburton have it's fingers into government activity that generated Billions of revenue for it? This type of corruption is a serious issue that affects all branches of government at all levels. I fear that asking a few politicians to fix this will not solve the problem. More like a massive revolt of people fed up with the mess. Spreading the word is a step in the right direction.

Jun 25 04:20 PM

[Living4Divi...:]

Goldman Sachs like all Nationalized Banks is to be run to meet the social and fiscal policies of its owners, without regards to growth or profits

Jun 25 04:51 PM

[basehitz:]

I share the outrage of the author and echo many of the comments. If I were to post all the articles written by major publications highlighting the questionable practices of Government Sachs, it would be the longest post I ever made. The collective commentary of this critique strongly suggests actions were inappropriate, possibly legally actionable. Here's just a small sampling:

www.marketwatch.com/ne...

www.nypost.com/seven/0...

www.bloomberg.com/apps...

The last one highlighting backdoor payout to GS and others at full value of bad bets suggests a conflict of interest in that Paulson, former CEO of GS, no doubt has substantial personal financial interest in GS well-being. Yet he sees fit in his role as treasury to hand them billions of tax payer funds, which were never paid back and won’t be. But given the revolving door between govt and WS, especially GS, I expect no such action from the bought politicians who perpetrated what appears to be a multi-trillion $ fraud against the American taxpayers to protect the privileged few.

Jun 26 09:21 AM

[althusius:]

Congress is still doing Goldman Sach's bidding. The House of Representatives approved Cap and Trade today. Matt Taibbi states this is Goldman Sach's latest scheme to swindle the American public.

Jun 26 12:05 PM

[Oregonrain:]

Lets face it..the Goldman gang is running the place. There is no question about it in my mind. What to do is the question.

Jun 28 11:03 PM

[Gerry Sullivan:]

The favored treatment of Goldman Sachs is my greatest outrage of this financial crisis. The week that Lehman was allowed to fail, the Treasury and Fed stepped in to save AIG. Later, AIG paid off 100% on Credit Default Swaps. The biggest winner was Goldman Sachs.

Goldman Sachs now very profitable and ready to pay huge bonuses. What if the government said to the CDS counterparties that AIG was bankrupt (it certainly was) and the counterparties could fend for themselves in court.

GS would have lost an immense amount of $. GS made very bad bets on the CDS contracts with AIG but made money on them.

In the future much more anger will be directed at Goldman Sachs.

Jun 29 08:08 AM

[Ryu Mei Co:]

Angry at GS? I am huffing and puffing furious!

Jun 30 02:38 AM

[Liqal:]

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re: Martial Law being discussed in 2008
... check out RECRO site

Jul 11 08:07 PM