Goldman Sachs, Obama, Money

When Obama said he wanted bi-partisanship, this is probably not what he had in mind: Democrats and Republicans in Congress speaking in a united voice against corporate executives that have been equally cosy with Democrats and Republicans.

As in: equally cosy with Senator John Warner, that bad Republican, and Chris Dodd, who presented himself as a mild progressive in the last Democratic presidential primary.

As in: equally cosy with the Fed and Treasury under Clinton and Bush. As in: pretty darn cosy with President Obama himself.

Forget the bonuses at AIG. Chump change. Let's put what Goldman Sachs has been up to in plain English. Goldman Sachs had made a lot of esoteric financial transactions with AIG. Banks were collapsing at the time, leaving their investors with huge losses. When things started looking shaky at AIG, Goldman and other investors started calling in their claims, and pushed AIG off the cliff.

Now ask yourself: with banks collapsing, why would you push the one you had put so much money in to collapse?

Answer: because you had your boys on the inside in Washington, that's why. And your boys got a bail-out package for AIG which actually paid you more than your claims that broke the bank. What investors had demanded from AIG was collateral on debts. But they actually got with the bailout was the whole damn amount, 100 cents on the dollar.

To put it even more bluntly: if AIG had managed to not collapse and not require $180 billion in taxpayer money, Goldman Sachs would be sitting today with some very very shaky investments. But since AIG collapsed, the folks at Goldman cleaned up.

Or even more bluntly: Goldman used AIG as a funnel.

That's a nice trick. It's like two guys rolling someone on the street when the first guy comes up on the right and throws a punch after which the guy on the left quietly lifts the mark's wallet. Of course you run the risk that the cops might see you. Then again, if you have the cops in your pocket...

OK, that is a simplification. It is not the whole story. But it is a big part of the story.

But but... wasn't there an election between the AIG bail-out and today? The world changed, didn't it?

Goldman Sachs employees gave just shy of a million dollars to the Obama campaign, ranking second in contributions. Citigroup and JPMorgan ranked sixth and seventh. Goldman Sachs gave Obama four times more than they gave McCain.

This is one big fat ugly chicken that is coming home to roost.

Our political attention span being what it is, we might need reminding that there was actually a big debate over this very thing last year. From my July 1 blog:

When Barack Obama pulled out of public campaign financing, I wrote a column about his money machine, noting that despite all the small Internet donors, his campaign is still mostly funded in the most traditional of ways. Numerous readers taking offense at my characterization of Obama's fundraising as dominated by "fat cats." In light of new details on Obama's fundraising which have become available, now would be a good time to revisit this issue.

I noted that that, by the end of June, Wall Street had already given Obama $9.5 million, that four out of his top five contributors are employees of financial industry giants, with Goldman Sachs at the top of the list. Even conservative New York Times columnist David Brooks was appalled: "Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government. Over the next few they might just take over the whole darn thing."

The reader response was overwhelmingly negative. The debate was over which was more significant: the half of Obama's money that came in small Internet contributions, or the half that came from big corporate money. I argued that:

adding a layer of small Internet donations (45% of Obama's money) on top of all the traditional campaign money (55% of Obama's money) does not change the game of politics and money. It just adds another layer to the same old cake. To really change the game, one would need to replace all that traditional money with small Internet donations. ... Just think through the basics: if on one side you have over a million people giving you little donations that make up 45% of your budget, and on the other side you have a handful of people giving you big donations that make up 55% of your budget, whose telephone calls are you going to take?

So here we are with the world economy collapsing and the big question is exactly this: whose calls is Obama going to take? Because both sides are calling, big time. I don't have to tell you who is winning so far.

But I am more optimistic than I thought I would be at this point. The looting of the US Treasury has not gone as planned. Everything is spiraling out of control. And Americans are actually mad! Bankers are in tears (at least according to their congressional testimony). When Republican congressmen are calling for corporate execs to commit mass suicide, you know the ground has shifted.

Have things changed so dramatically that Obama will have room to dump his biggest campaign contributers overboard? That question will be answered in the coming weeks.

Now is not the time to be quiet. Now is the time to yell bloody murder. We will soon know whose call comes through the loudest.

Comments

[Jezreel]

PTA: "Goldman Sachs employees gave just shy of a million dollars to the Obama campaign, ranking second in contributions. Citigroup and JPMorgan ranked sixth and seventh. Goldman Sachs gave Obama four times more than they gave McCain.

This is one big fat ugly chicken that is coming home to roost. "

First, it is customary for employees of large firms to make collective donations to politicians. Many employees at Goldman Sachs and other firms that donated to Barack Obama's campaign were middle income people just like me.

Second, Barack Obama was not POTUS nor was he involved in early talks between Goldman Sachs, AIG, the Fed, Treasury and other government agencies at the beginning of the economic collapse. He had no influence over the decision to allow Lehman to fold and AIG to be saved.

Third, this is old news. Former Governor Eliot Spitzer and other reputable journalists have written about this issue exhaustively. None of them implied the existence of impropriety on President Obama's part. Moreover, Congress has held hearings on this issue, though not exhaustively.

Fourth, Mr. Ostertag, your use of innuendos as in the above excerpt renders your entire article less credible than it would otherwise be.

[USA1776]

Hold your Senators and Reps feet tot he fire. Call them, find out what consumer protection bills they are sponsoring. Here is CA, Boxer and Feinstein are doing a whole lot of nothing and are Washington insiders at this point. Call Dick Durbin and Ted Kennedys office and offer support for the bills they are introducing on behalf of Main Street.

[dianhow]

Good ideas. yes- We all need to stay very involved in the process- so we are not fooled ever again.
As far as politicians go- I will trust Obama over BUsh Cheney any day of the week. We do need real finance reform - protection for consumer foods - R X- kids toys- all of it.

[CarmanK]

I want the taxpayer TARP money back, I want the 29.99% interest that other banks are charging for short term use of their money and I want the bonuses withheld from any employees who worked for the whores of Wall Street financial institutions taking TARP money. I want re-regulation and break up of the financial entities that got too big to fail And I want to know the extent of the "foreign investments" that the US is SAVING. If the brainiacs leave wall street, then gooo d riddens, . It probably is good that they turned to finance than science/en­gineering-­God only knows what they would have done with fissile materials and hazardous waste had it been their collective responsibility to preserve, protect and dispose of the dreggs of industry in the US. REGULATIONS ARE NEEDED TO CONTROL GREED, how come the repugs think they were wiser than God, who knew that mankind needed laws in order to prevent chaos and cotrol man's tendency to excesses.

[Rule Of Law]

Saying that Goldman had smart people who knew how to make money in any climate is like saying that the Big Four (Stanford, Crocker, Huntington and Hopkins) knew anything about how to build or run a railroad.

They didn't. Never had built one and had no idea how. But they knew where the money was and they had the insider connection to go and get it! It's called Crony Capitalism.

It has nothing to do with the best rising to the top or the American Dream. It has everything to do with who you know, who you drink with, who you've paid off, and who you've put in office who now owes you favors.

It's, if anything, anti-free market and anti-democracy as it is a fixed game from start to finish. Goldman has been pulling strings in DC since the first Depression--check it out. Now that the country is based on an economic model where finance is larger than industry--remember when we actually made stuff?--the power is in the hands of a very few bankers, with Goldman right at the top of the heap!

[djwfutbol]

So, now we are going after Goldman-Sachs? The company that really did have smart people, who saw the mess for what it was and worked out ways to profit from it. The American Way, in my opinion.

This is a red herring. The solution is not to shoot the players, it is to regulate the game.

This money isn't real. It's just computer data moved from column to column. The focus has to be on bolstering lending, so that business can function, employees can be paid, contracts can be signed, goods can be bought and sold. That is all that matters. Let them have their bonuses. They are irrelevant.

[phaster]

Thankyou for this article.I truly wanted obama to succeed but my hopes were dashed by his cabinet appointments and retreating on campaign promises.wall st people and lobbyist saturate his cabinet and appointments.The latest Geitner plan is a fraud on the american people and treasury and if there was enough space Icould explain in detail its problems.So much for choice of phone calls he is going to answer.

[WorkingClass]

I was amused when I saw a bumber sticker that said "shat better not happen". Today I saw one that said "shat happens FAST! Obama better come down on the side of the people SOON.

[Liz Randol]

thank you.

when the American people start screaming bloody murder, Obama will dump the Wall Streeters and go back to his populist instincts.

He will not sacrifice his presidency to Wall Street, and take the economy down with him, not on his watch.

The guy is too smart to let Wall Street sink us all.

I hope.

[Rule Of Law]

Last guy who tried that was JFK...

[Asmodeus]

Excellent article. This is exactly how I've been feeling about all this. Bravo!

[carson32520]

Is Goldman Sachs the Anti-Christ? Well, let's see; they are lust-greedy, anti freemarket (destroying their competition, Lehman Bros, Bear, etc...), immorale (corrupting politicians, 3.5mill to Obama), morphing into a bank while Paulson (once Goldman Sachs head) was in charge of Treasury so they can collect bailout money, scheming with AIG to cash in on more bailout money while that money is actually being funneled to Goldman Sachs. The list, looting and dead bodies goes on and on. Who's going to stop Goldman Sachs? NOBODY, they own the government.

Hey "Rage Groups", you're targeting the wrong people. You should hold open season on Goldman Sachs executives not AIG. The government is not going to do anything about GS because they work for them.

[Asmodeus]

Lol! Don't forget the 'Mark of the Beast' RFID chips they want to implant. You'll have the ability to be tracked in everything you do, and go into debt with a wave of your hand all at once. What could possibly go wrong?

[Rule Of Law]

When Goldman and Morgan used their insider contacts (Paulson) to have Lehman go belly up rather than get the bailout everyone else did, they showed just a little bit of the power they control in DC. Articles have been written about it right here on HuffPo that show how they were able to take down one of their biggest competitors and come out holding bags of our money.

Anti-christ? Nah.

Worse--their investment bankers.

[racetoinfinity]

Right-on, right-on!

We will see shortly whether Obama is part of the elite plutocracy or part of the solution. He'll have to get rid of Geithner and Summers who are Wall St. enablers.

Read "America's Fiscal Collapse" -

http://www.globalresearch.ca/index.php?context=va&aid=12517

[racetoinfinity]

This article is even more to the point - it's about how AIG funnels money to Goldman Sachs - The market is happy today, because Goldman Sachs is going to clean up:

"The Real AIG Conspiracy" -

http://www.globalresearch.ca/index.php?context=va&aid=12784

[OVERSITE]

hank paulson got goldman sachs director to be new president of AIG

AIG gives goldman sachs 13 billion which should be returned


put paulson under oath

[dmeehan]

For me, the disappointment at this point is that the Obama administation has the opportunity to make REAL CHANGE due to the seriousness of the crisis we are in -- to transform the fundamental priorities of the american economy to prepare us for the 21st Century and beyond. He seems to want to do that with his budget priorities of Energy, Healthcare, and Education -- but he doesn't seem to recognize that this change needs an updated financial system to be successful.

He seems to be trying to have it both ways --- the "prosperity" of the last 15 years (which we have been finding out was an ephemera and has really only benefited the "ghosts" of wall street and not left us with any lasting benefit), plus the progressive revolution that we need to survive as a nation.

Some have criticized Obama's budget as being "radical". The truth is he's not being radical enough.

[edwcorey]

The truth is he ran claiming that change comes from the bottom up. The bottom has been screaming, but he put the bad shepherds in charge--the Summers, Geithners, et al.--the top dogs who herded the sheep to slaughter in the first place. They fooled us once, to their shame. This time, the shame is ours is we allow it.

[Gib]

As a big supporter of Obama, I find your piece very perceptive. It echoes my concerns about the influence of Goldman Sachs on successive administrations, D and R. These are the guys who were pushing their complex financial instruments onto naive customers while secretly shorting them. They are the smartest gang of white-collar crooks.

[MESGAIN26]

Wall Street racketeers that infected the global economy with a quadrillion dollar derivatives bubble, using deliberately deregulated mechanisms.[iv] They have successfully held the nation hostage with a universal credit freeze and threats of systemic collapse if trillions of dollars in ransom demands are not met. The racketeers who bribed members of Congress to deregulate Wall Street,( IE ) FED'S