How Goldman Sachs' Bet on Obama Paid Off

Goldman Sachs has made a lot of bets that paid off handsomely over the years -- for example, its bet against the subprime housing market that gained the Wall Street giant $4 billion as the housing bubble imploded in 2007. One of the firm's biggest bets has been on Barack Obama, and that bet seems to be paying off too.

The "vampire squid" raised more money for Obama's 2008 presidential campaign than any other bank or Wall Street firm, over $1 million from Goldman employees, officers, etc. If the goal was to gain access to the White House, the plan seems to have been wildly successful. As McClatchy Newspapers noted in 2010:

Several former Goldman executives hold senior positions in the Obama administration, including Gary Gensler, the chairman of the Commodity Futures Trading Commission; Mark Patterson, a former Goldman lobbyist who is chief of staff to Treasury Secretary Timothy Geithner; and Robert Hormats, the undersecretary of state for economic, energy and agricultural affairs.

Lawrence Summers, an Obama economic advisor during the early days of his administration, was reportedly paid $135,000 by Goldman Sachs for a one-day visit in 2008. And in the spirit of the revolving door I've complained about before, the same McClatchy article noted that "Goldman is retaining former Obama White House counsel Gregory Craig as a member of its legal team."

Of course, Goldman had powerful connections before, including Bush administration Secretary of the Treasury Henry Paulson, a former Goldman CEO. Maybe it's just coincidence that the firm got a great deal during the TARP bailout, receiving some $23 billion in direct or indirect federal aid, according to McClatchy, along with actions that helped Goldman (like the bailout of AIG) and hurt rivals (such as Paulson's refusal to rescue Lehman Brothers). But it sure looks like it helps to know the right people, and to have helped them get into office.

And now, in a story that got pretty much lost amid all the other breaking news in late August, Goldman honcho Lloyd Blankfein just hired a new lawyer to help him through the ongoing Department of Justice investigations of possible wrongdoing. According to the New York Times , that lawyer, Reid Weingarten, was once a Justice Department employee, where he worked "with another young prosecutor, Eric H. Holder. Mr. Holder, now the attorney general of the United States, remains one of Mr. Weingarten's closest friends."

Nice move.

Oh, and it was recently revealed that the Securities and Exchange Commission has been shredding documents related to past investigations, making it vastly harder for present or future investigators to connect the dots between past and present misconduct.

Maybe this is all just coincidence, but it sure looks like Goldman's bet on Obama is paying off.

 

Follow Preeti Vissa on Twitter: www.twitter.com/Greenlining

Comments

[Edward Wilkes]

08:41 PM on 09/04/2011

I voted for the great half and half hope, but within months I knew I made a big mistake!

[Countess]

09:34 AM on 09/02/2011

This was obvious from the very beginning of this administration and it was a serious reminder of just how corrupt the political system has become and explains why so many diehard democratic commentators have had such a hard time trying to understandin what they call the mistakes of this president which have been in fact a direct result of corrupt politics. The party faithful in both parties simply do not want to believe that their parties and their leaders are little more than fronts for their corporate sponsors but unless and until this less than intelligent attitude changes there is little hope of serious change in America. Only public financing of elections can save us from ourselves.

[AZreb]

09:24 AM on 09/02/2011

When you have so many financial groups' insiders now in government, what the heck do you expect? "Government Sachs" Geithner comes to mind immediately. Then add those form large corporations such as GE - you know, the one that doesn't pay taxes - and we actually do have the best government money can buy.

[Peanut Santiago]

05:36 PM on 09/01/2011

I noticed that right away.....that Obama's picks for the Fed, Treasury, and as financial advisers were guys from Wall Street and banks like Goldman Sachs.

THAT was one thing I knew spelled trouble.

You can NOT have the foxes guard the hen house and THAT is just what happened.

[anfractuous]

01:23 PM on 09/01/2011

Goldman is going to have to funnel some of that money my way before I ever vote for Obama again. Why should I come out of the voting booth feeling like one of Lloyd Blankfein's tentacles, but with nothing to show for it? The notion of volunteer voter is a quaint relic and needs to be replaced by a system where the voter shares in the spoils.

[The JillyBean]

03:46 PM on 09/01/2011

His (lack) of credentials, and any meaningful public service work were enough for me to not vote for him. Of course the way they ran the election and macerated Hillary Clinton provided another reason not to.

[Peter Combs]

12:05 PM on 09/01/2011

a lot of other companies have benefitted as well and as much from the Obama administration and gave him nothing...