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The Lunatics Are Running Our Financial Asylum

May 10, 2010

Imagine you work for a big, a very big, company that makes the latest “what’s-it” everybody wants.  While you did not invent it, you did protect it and promote it and made it the thing everyone has to have.  In fact, the company rewarded you by making you the director of the what’s-it division.  Sales are through the roof and life is good.

Good that is until it is discovered the what’s-its fall apart quickly and have no real value.  Sales drop, the price drops, and investors pull out what little value their investments have by selling stock for a loss.  To make matters worse, it seems you hid critical data from shareholders that would have ended the project before the losses occurred.

What are the chances the company will promote you to senior vice-president in charge of quality control and oversight?  Ice has a better chance in hell.  Still, that is exactly what has happened with our financial system.  The people, the very same people that derailed our economy are now responsible for guiding its recovery.  For example, Treasury Secretary Timothy Geithner worked for former Treasury Secretary Robert Rubin who was the driving force that changed the rules for banking (the Glass-Steagall Act[i]) put in place after the Great Depression.

Recently as Secretary, Geithner complained in testimony to the House Committee on Financial Services the Federal Reserve “does not have any legal authority to set or enforce limits on risk taking by a large global financial firm.[ii]”  Of course, he neglected to point out he was part of Rubin’s team behind removing the Federal Reserve’s authority with the repeal of Glass-Steagall.

As if that was not bad enough, Secretary Geithner’s Chief of Staff is Mark Patterson.  According to his biographical information on the Treasury’s website, “Mr. Patterson was a Vice President at Goldman Sachs from 2004 to 2007, and a Managing Director from 2007 to April 2008[iii].”  Goldman Sachs is one of the companies currently under investigation by the Securities and Exchange Commission (SEC) for fraud[iv] and MR. Patterson was one of the men at its helm.  Will the SEC investigate the Treasury Secretary’s Chief of Staff?  How likely is there even to be a criminal investigation?

Next up is Gary Gensler, the Chairman of the Commodity Futures Trading Commission.  According to his biographical information, he was a partner at Goldman Sachs and worked for the firm for eighteen years[v].  Senior partners at Goldman Sacks must still have his cell phone on speed dial.

Another influential power broker on the administration’s payroll is Larry Summers.  Summers currently serves as Director of the National Economic Council as well as being one of President Obama’s closest advisors.  He served as Treasury Secretary from 1999 until 2001.  A recent article in the Washington Post details over $5 million in payments to Mr. Summers over the last year by a hedge fund and over $2.5 million in speaking fees from Wall Street Firms, Goldman Sacks paid him $135,000 for a single day’s work.[vi] In 2008.  If by chance it was an eight-hour day (not likely) that works out to an hourly wage of $16,875.00.  Maybe Goldman Sacks understood that if either of the Democratic candidates won the election, Mr. Summers was more than likely going to have a role to play. Did that have something to do with them paying him more than the median home price in Atlanta, Georgia[vii] just to make a speech?  Of course not!

It is by no means a one-way street as Goldman Sachs’ hiring of President Obama’s former White House counsel, Gregory Craig illustrates.  While no one can question Mr. Craig’s legal abilities, his knowledge of, and contacts within the administration and Democratic circles cannot be a negative regarding his retention as council.

Washington plays the ultimate game of one-upmanship.  During President Bush’s term in office, it was Vice-president Cheney’s close relationship with Halliburton that, at least, appeared to be a conflict of interest.  Now, in President Obama’s administration we see potential conflicts of interest in many departments and areas dealing with finance and specifically with Goldman Sacks.  Conservatives have every right to point this out as liberals raked them over the coals for the very same thing.  It is hypocritical, to say the least, for President Obama to fill his administration with these dupes and villains of Wall Street and claim they have no bias.

It seems Wall Street agrees with President Obama’s campaign slogan of “Yes We Can,” but adds something to it – “Yes we can!  We can rip-off America and get away with it.”  They obviously have the people in place to do just that.


[i] Banking Act of 1933 (1933).  Print.

[ii] “TG-646: Treasury Secretary Tim Geithner Opening Statement as Prepared for Delivery before the House Committee on Financial Services.” United States – Department of The Treasury – Homepage. Web. 10 May 2010. <http://www.ustreas.gov/press/releases/tg646.htm&gt;.

[iii] “U.S. Treasury – Mark A. Patterson – Chief of Staff to Secretary of the Treasury.” United States – Department of The Treasury – Homepage.  Web. 10 May 2010. <http://www.ustreas.gov/organization/bios/patterson-m.html&gt;.

[iv] “SEC Charges Goldman Sachs With Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages; 2010-59; April 16, 2010.” U.S. Securities and Exchange Commission (Home Page). Web. 10 May 2010. <http://www.sec.gov/news/press/2010/2010-59.htm&gt;.

[v] “Chairman Gary Gensler – CFTC.” U.S. Commodity Futures Trading Commission. Web. 10 May 2010. .

[vi] Rucker, Philip, and Joe Stephens. “White House Economics Aide Summers Discloses Income – Washingtonpost.com.” Washingtonpost.com – Nation, World, Technology and Washington Area News and Headlines. Web. 10 May 2010. <http://www.washingtonpost.com/wp-dyn/content/article/2009/04/03/AR2009040303732.html&gt;.

[vii] Real Estate Education, Information, Marketing Resources & Much More. Web. 10 May 2010. <http://www.realtor.org/wps/wcm/connect/a6c39a80420f5393a656eed140d385a7/rel09q4t.htm?MOD=AJPERES&CACHEID=a6c39a80420f5393a656eed140d385a7&gt;.

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2 comments

  1. good post..


  2. […] T&#1211&#1077 Lunatics Ar&#1077 Running O&#965r Financial Asylum « MHBenton's Blog […]



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