By Josh Price
From The UK’s Guardian:
Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm’s 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.
A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.
Staff in London were briefed last week on the banking and securities company’s prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever. Figures next month detailing the firm’s second-quarter earnings are expected to show a further jump in profits. Warren Buffett, who bought $5bn of the company’s shares in January, has already made a $1bn gain on his investment.
Goldman is expected to be the biggest winner in the race for revenues that, in 2006, reached £186bn across the entire industry. While this figure is expected to fall to £160bn in 2009, it will be split among a smaller number of firms.
Isn’t it interesting that Goldman Sachs appears to have been the big winner from the financial market collapse? I’m sure Goldman’s success over the last 6-8 months wasn’t aided at all by the fact that its former CEO, Hank Paulson, just so happened to be Treasury Secretary while Bear Stearns and Lehman Brothers (two of Goldman’s competitors) collapsed.
I’m sure that’s simply coincidental. Right?
This reminds me of something that conservative talk show host Michael Savage reiterated all through last fall: America has become a country of GoldMan Sachs, by Goldman Sachs, and for Goldman Sachs. This story only validates that statement.
I know it’s starting to look like we’re piling on Treasury Secretary Hank Paulson, and we are–for good reason.
Read this story and try to justify why this empty suit is still in office.
What is the definition of a financial institution under the Troubled Assets Relief Program (TARP), Treasury Secretary Henry Paulson was asked on Tuesday. He couldn’t give a specific answer.
Rep. Jeb Hensarling (R-Tex.), a member of the House Financial Services Committee, told Paulson he recently read about a group of plumbing contractors who were applying for TARP funds. They wanted to use the money to refurbish foreclosed properties, and they made the case that doing so qualified them as a financial institution.
“And so in your mind, since you are essentially in charge of disbursing the funds, can your give me a clearer, black-and-white definition of what a financial institution is?” Hensarling asked Paulson.
“Congressman, I can’t,” Paulson responded. “We have a broad definition, we got very broad authorities and powers [from Congress], and I think that’s appropriate.
This just gets worse every day.
More and more people, including Congressmen and Senators, are starting to see Treasury Secretary Hank Paulson for the what’s-good-for-Goldman Sachs-is-good-for-America stooge he is, in my opinion.
Senator Jim Inhofe (R-Ok) is the latest to call Paulson out:
U.S. Sen. Jim Inhofe said Saturday that Congress was not told the truth about the bailout of the nation’s financial system and should take back what is left of the $700 billion “blank check” it gave the Bush administration.
“It is just outrageous that the American people don’t know that Congress doesn’t know how much money he (Treasury Secretary Henry Paulson) has given away to anyone,” the Oklahoma Republican told the Tulsa World.
“It could be to his friends. It could be to anybody else. We don’t know. There is no way of knowing.”
Inhofe’s comments, unusually pointed even for a senator known for being blunt, come on the heels of Paulson’s shift in how he thinks the bailout funds should be spent.
Last week the Treasury secretary announced he was abandoning his plan to free up the nation’s credit system by buying up toxic assets from troubled financial institutions. Instead, Paulson wants to take a more direct action on the consumer credit front.
“He was able to get this authority from Congress predicated on what he was going to do, and then he didn’t do it,” Inhofe said.
“So, that’s enough reason right there.”
Michelle Malkin has a great article summarizing the absurdity that is Hank Paulson as Treasury Secretary.
As we have been saying folks this bailout and the subsequent ownership power it has given to the United States government is a potential springboard to a form of socialism.
One of my primary questions as finally been answered: When does the government have to relinquish ownership in the banks and other institutions it now holds as a result of the bailout?
Answer: Never.
The U.S. government is under no obligation, ever, to surrender any of the assets it purchases as part of the federal financial bailout plan, a Treasury Department official told CNSNews.com on Friday.
That includes the ownership interest the Treasury is buying in nine major banks and the shares it hopes to purchase in perhaps hundreds of other smaller banks around the country.
“It would be (left) up to the government’s discretion as to when they would want to sell it (private assets) back,” spokeswoman Jennifer Zuccarelli said.
Under the bill signed by President Bush, only the Treasury Secretary’s purchase authority is set to expire, not the authority to hold or relinquish assets held by the government.
“We can hold them for as long as we want,” she said. “We just can’t purchase after that date.”
Now it’s possible, indeed likely, that a McCain administration would sell the government’s ownership stake, but it’s not a forgone conclusion. Moreover, in an Obama administration the prospects for selling the ownership stake go down significantly in my opinion.
This is precisely what I have been trying to stress about this bailout. Yes, the $700 billion part isn’t good, but it’s the government ownership and the duration of that ownership that ought to scare you more.
I truly believe we’re headed for some heated showdowns over this in the next couple of years. This is a much bigger issue than people realize.
What did I tell you? I wrote on Tuesday that if the financial markets continued to decline we would likely see Congress or the Bush administration come back to us and say the government needs even more control over the economy. Guess what? We may already be heading down that road:
Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.
Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.
But just remember, the bailout wasn’t socialistic at all. Ha.
UPDATE: Michelle Malkin has a great post up today on this subject:
There’s a lot of blog buzz over Barack Obama’s membership in the socialist New Party. You can read about it here, here, and here.
A year ago, I might have gotten as worked up about this as everyone else seems to be.
But after watching a GOP White House and Republican collaborationists fork over billions upon billions in socialist aid to private businesses, presiding over the most massive nationalization efforts I’ve seen in my lifetime over the past year — and then watching John McCain pitch his Treasury Department-as-national loan servicer plan during the debate — it’s hard for me to muster up much more angst than I already have.Socialism is here and now.
Well it would appear that way at least according to this profile of the guy tapped to distribute the $700 billion:
Kashkari, it turns out, was one of the original authors of the bailout plan. In a secretive effort over “many, many months,” he was a part of a small team at Treasury working on the plan, said David H. McCormick, under secretary for international affairs.
Why is this fact not a big story? Hank Paulson tells us two weeks ago that we had to pass the bailout immediately because things are so bad. If they have been working on contingencies for “many, many months,” Why wasn’t something other than the bailout proposed months ago? Clearly the folks at Treasury saw this problem coming down the line. Why was this worked on so secretly? Please don’t tell me it was kept secret to avoid panic in the financial markets.
What’s absolutely mind-boggling is to read some so-called conservatives making the case for socialism, or trying to spin the bailout in way to make it seem less socialistic. Take this post over at RedState titled “The conservative case for socialism.” Now that title is a bit misleading because the author isn’t claiming the bailout is a form of socialism, he’s instead trying to make the pill easier to swallow by arguing the bailout isn’t socialism:
However I think the word ‘socialist’ is being used too broadly now, without much thought, and as the hammer to drive a reflex rejection of government action. I believe that while this reflex just happens to be useful most of the time, due to the massive expansion of the government in the period 1933-1980, but to be always opposed to government is a liberal (read libertarian in modern language) reflex, not a conservative one.
I assert that the financial recovery bill, and other interventions being made by the Treasury and the Federal Reserve are precisely that. We are not taking a planning role in the economy, outside of the bounds of the Constitution; we are taking control of our money supply, which is one of the duties of the government. We are not confiscating property; we are buying property at prices that are too high if anything.
What we are doing now is a supply-side intervention. The Treasury and the Federal Reserve trying to preserve the ability of the producers in this economy to get the credit they need to produce, to hire, and to grow this economy.
What?
Let’s take the following point first:
We are not confiscating property; we are buying property at prices that are too high if anything.
While it’s true that the government isn’t confiscating property, it is buying property. Last time I checked, when someone buys something they typically own it. Therefore the government now owns a good portion of the housing and financial industries.
Next:
We are not taking a planning role in the economy
Well I would argue that the financial industry sufficiently flows into the supply chain of most producers and manufacturers, giving the government–at the very least-indirect control over some planning aspects.
It is truly amazing and frightening to see some conservatives trying to explain this step towards socialism away, and tomorrow they will be telling us that they are free-market capitalists.
You think full-blown socialism can’t make it here to America? Think again. Why couldn’t it when you have supposed conservatives telling us this bailout that we know is socialist simply because it doesn’t perfectly fit the technical definition of socialism?
When the so-called anti-socialists are defending quasi-socialism we have a lot to be concerned about.
Yeah that’s right. The same man who was so anxious to get the bailout passed is now urging us to be patient.
Read what Treasury Czar Secretary Paulson had to say:
Treasury Secretary Henry Paulson said Wednesday that financial markets continue to be “strained” but he urged “patience” and said the federal government will use all tools necessary to ensure stability in the financial system.
“We will coordinate the use of our existing and new authorities to restore market confidence by strengthening financial institutions, preventing systemic bank failures, increasing liquidity to financial markets and keeping mortgage credit available and affordable,” Paulson said.
He added: “Every effort will require careful analysis, deliberation and transparency, and some measure of patience from the American people as we create the most effective process possible.”
Where was this “deliberation” and “patience” on your, President Bush’s, and Congressional Democrats’ part during the bailout, Hank??? The nerve of this guy.
Newt Gingrich is absolutely right, Paulson has got to go. What in the world was Bush thinking when he nominated this stooge? Could it be that Bush agrees with him? Obviously.
I don’t know what else to say folks. I am fuming over this. Where is the outrage? If it’s true that roughly 80% of Americans didn’t want this bailout, where are they now? After all, did they accurately represent us?
Serious changes have to be made, and neither McCain nor Obama are the answers. Remember the old saying:
When Democrats and Republicans agree on something rest assured the American People are getting screwed.
That was certainly the case with this bailout.
After the Senate’s vote on Tuesday there was little doubt that the House would follow by passing President Bush’s and the Democrats’ socialist bailout. President Bush then quickly signed it and proceeded to praise his Treasury Secretary Hank Paulson.
The significance of this legislation can’t be understated. This is a direct step towards socialism. I don’t care how Bush or Republicans in the House and Senate who voted for the bailout try to spin it. They just took a page out of Karl Marx’s playbook. And you watch, they’ll have the nerve to get out there and call themselves free-market capitalists. Ha.
Oh, and I’ll leave you with this: The major market indices closed down today. Wall Street and Washington bullying scored a major victory today.
