Geithner and Goldman, Thick as Thieves

[Octafish]

Robert Scheer helps explain why there's plenty o' welfare for Wall Street.

Geithner and Goldman, Thick as Thieves

by Robert Scheer
Published on Wednesday, June 1, 2011 by TruthDig.com

What was Timothy Geithner thinking back in 2008 when, as president of the New York Fed, he decided to give Goldman Sachs a $30 billion interest-free loan as part of an $80 billion secret float to favored banks? The sordid details of that program were finally made public this week in response to a court order for a Freedom of Information Act release, thanks to a Bloomberg News lawsuit. Sorry, my bad: It wasn’t an interest-free loan; make that .01 percent that Goldman paid to borrow taxpayer money when ordinary folks who missed a few credit card payments in order to finance their mortgages were being slapped with interest rates of more than 25 percent.

One wonders if Barack Obama was fully aware of Geithner’s deceitful performance at the New York Fed when he appointed him treasury secretary in the incoming administration. The president was probably ignorant of this particular giveaway, as were key members of Congress. “I wasn’t aware of this program until now,” Barney Frank, D-Mass., who at the time chaired the House Financial Services Committee, admitted in referring to Geithner’s “single-tranche open-market operations” program. And there was no language in the Dodd-Frank law supposedly reining in the banks that compelled the Fed to reveal the existence of this program.

It was merely one small part of that reckless policy of throwing mad money at the banks while ignoring the plight of homeowners whom the banks had swindled, a plan pursued by both the Bush and the Obama administrations that set the stage for the current slide into a double-dip recession. On Tuesday it was reported that home values have continued an eight-month decline back to their lowest point since the recession began. With housing in deep trouble there can be no rebound of consumer confidence or job creation, and the first-quarter growth rate was an anemic 1.8 percent even as Wall Street profits and bonuses flourished. Wages are stagnant, unemployment claims have recently risen and, as The Wall Street Journal headlined on Tuesday, “Economists Downgrade Prospects for Growth.” That same edition of the Journal reported that 44.6 million Americans now survive on food stamps, an 11 percent increase in that misery index over the past year, while Geithner’s friends at Goldman are doing quite well.

Actually, Goldman wasn’t even a bank and was therefore ineligible for those massive government handouts until Geithner helped gain approval for the instant conversion of Goldman from an investment house to a commercial bank. Goldman was granted that status, and with it access to the Fed’s lending, soon after the privilege had been denied to the fellow investment bank Lehman Brothers (the $30 billion mentioned above was in addition to the $43.5 billion Goldman borrowed from other Fed programs). Although Lehman was allowed to go belly up, Geithner engineered the massive bailout of AIG, a move that turned out to be a cover for passing money to AIG’s clients, including the aforementioned Goldman Sachs. The man’s intentions were clear, even if all the secret details were not, when Obama picked him to be his point man in salvaging an economy that Geithner had done much to wreck.

CONTINUED...

http://www.commondreams.org/view/2011/06/01-3

"No banker left behind."

[Starry Messenger]

1. k&r

[northoftheborder]

2. Geithner must be replaced, sooner rather than later, but don't bet on it...

[Mimosa]

5. He's just been so WRONG

But somebody loves him.

BTW, who saw "Too Big To Fail" on HBO? How much of that was right? We know Tim Geithner doesn't look even half as good as actor Billy Crudup. :7

[Octafish]

6. WSWS panned the pic...

HBO’s Too Big to Fail: Propaganda aimed at the US population

EXCERPT...

Too Big to Fail’s depiction of Paulson as a selfless government official strains credulity, to say the least. A brief reference to the enormous amounts of money he made while Goldman Sachs CEO is countered by a Paulson assistant with, “He sold all of his shares before becoming Secretary of the Treasury”! In fact, Paulson was required by law to sell his shares but was allowed to do so tax-free. He made $200 million in the bargain.

[Mimosa]

7. Thanks. I watched and listened it 3 times and TBTF didn't smell right. n/t

[ozone_man]

9. It's more than just Geithner.

Obama appointed Geithner and Summers. It's the whole corporate sleeze factor that permeates the administration, and the previous one, and the one before that. Change we can believe in, because it isn't.

[bullwinkle428]

3. Robert Scheer has been an amazing reporter for years and years,

and I have no doubts about his investigative work being rock solid.

K&R.

[leveymg]

4. I love that photo and the article is a first-rate sketch -- only everyone knew that Goldman got a

huge bailout, and got a major piece of the AIG bailout. The only question was how huge and how many tens of billions went down those rat holes into the same pockets. This puts events, and personalities, into clearer focus.

I'm afraid that nobody currently in this Administration or on Capitol Hill comes out looking like a champion. More of Scheer's article below:

It was back then and is now accurate to speak, as a New York Times headline once put it, of U.S. politics dominated by “The Guys From ‘Government Sachs’ ”—but on an international scale. From the crisis in Greece, where Goldman manufactured toxic tax-based derivatives with abandon, to its betting against the success of the mortgage-based derivatives that Goldman designed and sold to others, the company was nothing short of a massive wrecking ball in the international economy.

Oh yes, what did Goldman do with that taxpayer money it borrowed back in 2008? It needed the money to cover the lousy bets of its Fixed Income, Currencies and Commodities trading unit, which had lost $320 million. Typical of the Goldman dealings in that arena was the $1.3 billion solicited from Col. Moammar Gadhafi’s Libya sovereign wealth fund, which according to a report in Tuesday’s Wall Street Journal lost 98 percent of its value and almost cost some Goldman executives doing business in Tripoli their lives.

But they survived, as the guys from Goldman always do. With the general “no banker left behind” program pursued by Geithner under both George W. Bush and Obama, the theory was that saving the banks would save the country. The first part worked out brilliantly, but the second act never occurred.

[slipslidingaway]

8. knr nt

[girl gone mad]

10. k & r

[Vidar]

11. K&R.