The taxpayers of the US are the losers with Goldman Sachs (NYSE:GS) employees the winners in this game called “Last Man Standing”. With most of their competitors being either bought out under duress or allowed to go bankrupt they have been left holding the bag. Even a leprechaun could not have been as lucky as to finding a bag so full of gold.
Nomi Prins, a former managing director for Goldman Sachs in New York, was interviewed by Juan Gonzalez for “Democracy Now!” right after the record profits at GS was announced.
Nomi Prins said that GS paid back the $10 billion Troubled Asset Relief Program (TARP) money in order to avoid the type of media scrutiny AIG
received after they announced their employee bonus payouts earlier this year. She went on to explain in the interview:
The bigger amount of money that has gone to Goldman has come through $12.9 billion from the AIG bailout that went straight to Goldman, its biggest counterpart; $28 billion worth of FDIC-backed guaranteed debt, meaning the FDIC put up a program last fall, and it said, “For banks that deal with consumers”—not banks that deal with multibillion-dollar companies or investors, but people—“we will provide guarantees for debt,” which means that those companies can raise debt to help consumers cheaply. Goldman said, “Alright, fine, we’ll take some of that.” And they took $28 billion worth of that, and they have up to $35 billion that they can take under the FDIC program that was never meant for a company like Goldman Sachs.
In addition, there is a ton of money, there are trillions of dollars at the Fed, not all of that went to Goldman, but that has secretly gone to a number of banks in the system, of which Goldman is one, for which the Fed refuses to disclose any information or any detail, which also goes into this. So when Goldman says—has the nerve to say, feels entitled to say—that it’s going to pay its bankers record bonuses after the travesty that it and other banks have created in the markets, it is on the back of federal subsidies that effectively come from our pockets.
The result of those record profits is that Goldman Sachs (GS
) will be paying out record bonuses to their employees this year on the backs of the US taxpayers. Their public relations department has a bunker mentality and has only opened their gun turrets long enough to shoot down any of the arguments being put up by the pundits who are against them paying out those bonuses.
The stock market investment community is also celebrating this turn of events and points to the record profits at GS as a sign that the economy is recovering. It has, at least for the employees of GS, but the remainder of the country continues to suffer record unemployment and is still looking for answers that will get us out our economic quack mire.
The actual count in dollars the US government is guaranteeing the banking business keeps going up every day. Right now those guarantees are up to almost 14 trillion dollars. As a form of comparison that amount would pay off every single mortgage in this country, healthcare and subsidizing student loans. Do you know of any individual consumer who has actually been able to walk into a GS bank and borrow money for a business or buy a car?
One way to stop this taxpayer bailout mess is for the Federal Election Commission to include a provision in their rules that would prohibit any of the companies receiving TARP money to make contributions to any candidate for federal office under the Federal Campaign Finance Laws. The time limit should be five years from the date the TARP money was paid out and will put an end to this endless cycle of “You rub my back and I’ll rub yours”.
Disclosure: The writer does not own any stock or commodities.