Wednesday, December 14, 2016

Pam and Russ Martens — Still Unprosecuted for its Frauds in the Crash, Goldman Sachs to Be the Financial Brains of the Trump Era

Steve Bannon, who at one time worked in Mergers and Acquisitions at Goldman, will be Trump’s Senior Counselor and Chief White House Strategist.
 Although a Goldman alumnus, Bannon did not play a decisive role there and he was long gone by the time of the financial crisis. His association with Goldman is probably not much of a matter for eyebrow raising. However, Steve Mnuchin and Gary Cohn are another matter, and Cohn especially since he was at ground zero when the GFC almost blew up the world.
Steve Mnuchin, who joined Goldman in 1985 and worked there for the next 17 years, has been nominated by Trump to serve as U.S. Treasury Secretary. That post also entitles Mnuchin to Chair the Financial Stability Oversight Council, a body that frequently meets in secret to deliberate if the U.S. could be looking at another 2008-style meltdown. Yesterday, an article at Bloomberg News raised questions about Mnuchin’s qualifications to serve in one of the most important cabinet posts in government, writing that shortly after Mnuchin had made a windfall last year from the sale of OneWest Bank, problems emerged: “The U.S. Department of Housing and Urban Development opened an investigation into foreclosure practices in a division that handles loans to senior citizens. Accountants determined the unit’s books were a mess. Eventually, the bank’s new owner, CIT Group Inc., discovered a shortfall of more than $230 million.”
Mnuchin, at least, was not at Goldman Sachs in the leadup to the greatest financial crash since the Great Depression. He left in 2002. The same cannot be said for Gary Cohn, the current President and Chief Operating Officer of Goldman, whom Trump has picked to lead the National Economic Council and be his chief strategist in developing his economic policy. It’s convenient that Cohn’s new position does not require Senate confirmation since exactly what he knew about Goldman selling bogus investments to its clients while the firm made billions of dollars betting the instruments would fail might be raised in Senate questioning of Cohn’s fitness to serve.
In the two years leading up to the epic 2008 financial crash on Wall Street, Cohn was Co-President of Goldman. Cohn became a multi-millionaire from the business done in those years, earning $27.5 million in restricted stock and options just in the year 2006. However, as Greg Gordon of McClatchy Newspapers would report in 2009, a key part of Goldman’s business in the years before the crash operated like this: “In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.”
It was a foregone conclusion that Goldman or Citi would have been in the driver's seat if HRC had won. As Sen. Dick Durban said, "The banks own the place."

Populism only goes so far and stops at the door of the big banks that control US financial and economic policy.

1 comment:

Xaiver Buchs IV said...

Meet the new boss, same as the old boss.