I previously promised to post about Goldman Sachs' connections with the Obama administration and I have not been able to return to the topic. However, in light of the SEC's recent proclamation that it will pursue fraud charges against Goldman Sachs, there is no better time than now. Let me preface my comments by stating that the SEC's investigation of Goldman Sachs will be an absolute farce. The Obama Administration is so inextricably intertwined with Goldman Sachs that 1600 Pennsylvania Ave. should be renamed the Gold House. GS donated almost $1m to Obama’s presidential campaign, more than any other contributor except Cal-Berkley. (By the way, Citigroup added $701K and JPMorganChase another $695K). In December 2008, a New York Times editorial questioned the motivation of then New York Federal Reserve President Timothy Geithner’s decision to let Lehman Brothers fail (GS's other competitors: Merrill Lynch & BearStearns similarly did not receive bailouts). Two days later, Geithner advocated for the bailout of AIG and its counterparties. As a result of the bailout, AIG was able to pay many of its creditors and trade partners, including a cool $6 billion to GS. In September 2008, Geithner had a meeting to discuss the AIG bailout, and GS CEO Lloyd Blankfein was the only Wall Street leader at the meeting. At the time, GS was AIG’s largest trading partner. During the campaign, Obama attended a private GS dinner and when it came time to name a running mate, Obama turned to GS Board Member James Johnson for help. Johnson was forced to vacate the post as a result.
Former Goldman Sachs' employees fill a number of high-level cabinet and departmental posts or otherwise have close connections to GS. Mark Patterson, a former GS lobbyist and former VP of Gov’t Relations, is Tim Geithner’s chief of staff. Obama’s deputy national security adviser, Thomas E. Donilon, was paid $3.9 million in 2008 by a Washington law firm whose major clients include GS. Lawrence Summers, Obama’s chief economic adviser, received $135,000 last year for a speech he made to GS executives. Other high level financial positions held in the Obama administration by former Goldman Sachs executives are Neel Kashkari, heading the TARP bailout; Gary Gensler, top executive at the Commodity Futures Trading Commission; Michael Paese, Rep. Barney Frank’s top aide, who is the chair of the House Financial Services Committee; former GS Vice Chairman Robert Hormats is the State Department's undersecretary for economic, energy and agricultural affairs; Dianna Farrell, Deputy Director, National Economic Council, is a former GS Financial Analyst; Stephen Friedman, Chairman, President’s Foreign Intelligence Advisory Board, is a former GS Board Member (Chairman, 1990-94; Director, 2005-2009); Philip Murphy, Ambassador to Germany, was the former head of Goldman Sachs, Frankfurt; and John Thain, Advisor to Treasury Secretary, Timothy Geitner, was GS President and Chief Operating Officer (1999-2003). But here's the kicker: the Obama administration created a new position at the SEC: COO of the SEC enforcement division. With whom did they fill the post? None other than Adam Storch, former VP of Goldman Sachs’ Business Intelligence Group. So the guy who is in charge of enforcing any potential penalties against Goldman Sachs is a former GS guy. You just can't make this stuff up.
Meanwhile, GS’s stock is up 77% this year. GS will pay a total of more than $22 billion in salaries and bonuses to its 29,400 employees. Average compensation will hit $772,857, an all-time record. In 2006, before the financial crisis, the company paid out $661,490 per employee. Oh, how it pays to be in bed with the big O...
