We Insure Goldman Sachs, Why Not Insure People?
Don’t you just love that Lloyd Blankfein? He’s the head of Goldman Sachs who’s just announced that his bank is cutting midyear bonus checks in the amount of $3,400,000,000. Midyear bonuses, you ask? Who gets those? Well, bankers do, because if they wait until the end of the year, in an economy like this, their profits might have evaporated.
Goldman is, as you should know, no longer an “investment bank,” as it was when it was run by former CEO Hank Paulson, who left it to orchestrate the Bush bailout during the meltdown of 2008. On September 21, 2008, Goldman decided to pick up some insurance, so it could put government money to work shoring up its finances, and became an FDIC-insured bank that can borrow at the effective zero interest rate that the Federal Reserve provides to big banks so they lend it to their borrowers for as much as the market will bear.
If they have borrowers, of course, which Goldman does not. Goldman doesn’t do any consumer loans, but it still went ahead and borrowed $28,000,000,000 from the Federal Reserve, money that it is using to make money, and of course, pay bonuses. Those bonuses, Goldman is saying, are a reward for taking wise risks that paid off. I disagree. Goldman has insured against risk by buying influence. Perhaps you don’t know how they turned the AIG disaster into a goldmine. I’ll quote from Glenn Greenwald’s opinion piece in yesterday’s Salon:
Goldman … was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.
But Goldman had the fix in. Remember when Edward Liddy took up the top position at AIG for $1 per year? Well, maybe he only got a dollar from AIG, but Liddy was a member of Goldman’s Board of Directors! And as head of AIG, he took bailout money and plugged that potential hole in Goldman’s bottom line, paying them 100 cents on the dollar for all the worthless “Credit Default Swaps” that Goldman had bought from AIG. How’s that for turning straw into gold? Flaming straw! How does Goldman do it? You know how they always say they have to pay big bonuses for “talent?” Well, Greenwald explains how it works when you pay for “talent”:
[Goldman] received some $13 billion through AIG. More troubling is that the original plan to bail out AIG was concocted at a meeting held last fall, run by then Treasury Secretary Hank Paulson who, before becoming Teasury Secretary, had been CEO of Goldman Sachs. Also attending the meeting was Lloyd Blankenfein, the current CEO of Goldman Sachs. Also at the meeting: Tim Geithner, then head of the New York Fed.
Yes, pay for talent, by all means. God forbid they would lack for the cash needed to buy influence. Since 1989, Goldman has made nearly $30,000,000 in political donations — to Republicans, Democrats, anything that votes! That meant that when Paulson hired Neil Kashkari, another former Goldman executive, to administer the TARP bailout, no one complained even slightly. They just let Goldman guys write Goldman more checks, and more checks, and more checks. Definitely there are no “balances.”
Meanwhile, Americans who have no influence — whose Congressional representatives wouldn’t talk to them for anything in the world — are being booted out of their jobs and evicted from their homes, are looking through the want ads and scrounging for money to pay for health care if anyone will provide it to them since they have no insurance. All that suffering on Main Street has got some people listening to talk radio, and talk radio listeners could be forgiven for thinking that “socialized medicine” is about to destroy what my favorite right winger, the penguin-voiced Mark Levin, calls “the greatest health care system in the world.” Under “the Obama plan,” as Mark calls it, we will all have to wait in line for health care, and will be unable to get every little old treatment that we might desire. Yes, things will get bad, like they are in Canada, Europe and Britain. But almost 20% of Americans get their health care in the local ER, so how great is that?
But I’ve been listening to talk radio long enough that I understand how it works. Corporations good, people bad. It’s a good thing to give billions to big corporations, because they are staffed by people who have a closet full of nice suits, and make fat campaign contributions. It’s a bad idea to give anything to people, because they rarely own even one good suit, and make no campaign contributions. If a corporation gets sick, lots of bankers lose money, like the angry bondholders in the GM bankruptcy. If a person gets sick, they just curl up and die, and no one really cares. So of course you want to insure banks, no matter how much it costs, and you totally wouldn’t want to insure people, no matter how much that might help them. Glad I got that clear in my mind.
AIG, bailout, bank insurance, Blankfein, CDS, credit default swaps, FDIC, Geithner, GM bankruptcy, Goldman bonus, Paulson, TARP