News and Politics | September 23, 2008 | 25 comments

Paulson's former firm to be among largest beneficiaries of bailout: bank

source: http://rawstory.com/news/2008/Paulsons_former_firm_to_be_among_0923.html

Image
Conniepae
No wonder he doesnt want any over sight. Can you believe they are having the person who led us down this road to fix it? This is more bizzare than the warmongers using fake documents and fixed facts to lead us to our FIRST war of aggression against a country which had not killed one American and were not openly threatening us. Do we have to wait for one of them to write a book later to tell us what they are doing to us today? Why wait for the book, we can see it in plain sight today.

by: John Byrne

It certainly pays to be Treasury Secretary if your former firm is a brokerage house, a new study says.

Goldman Sachs Group -- formerly run by Treasury Secretary Henry Paulson, and Morgan Stanley, stand to be among the biggest beneficiaries of a $700 billion US bailout.

"Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment," Jeffrey Rosenberg, Bank of America's head of credit strategy research, wrote in a report obtained by Bloomberg News yesterday.

Paulson was the head of Goldman Sach's investment banking division from 1990 to 1994. He later became chairman and chief executive officer of Goldman, and left his post to join the Bush Administration.

According to the study, the bailout benefits Paulson's former firm more because banks haven't had to write down as many troubled mortage assets under accounting rules. This means that participating in the program would cause them to actually lose capital, as opposed to investment banks, which stand to gain.

Paulson $700 billion program is designed to remove "bad assets" from the US financial markets to prevent credit for businesses from drying up, which would send the economy into a further tailspin. Many businesses rely on credit to fund their daily operations.

Lawmakers are debating the plan today.

"While Goldman and Morgan Stanley, both based in New York, were yesterday granted permission to transform themselves into bank holding companies, the companies so far have operated mostly under investment-bank accounting rules, logging almost $21 billion of asset writedowns and credit losses," Bloomberg News notes.

Goldman made sizable profits in 2007 from the subprime mortgage sector. It, along with Morgan Stanley, has fared better than investment houses Merrill Lynch, Lehman Brothers and Bear Stearns, because it has held a more conservative capital base.

Paulson has admirers: during his Goldman tenure the firm donated 680,000 acres of land in Chile, and he has personally given away $100 million of his fortune to charitable groups.

According to estimates conducted by Open Secrets, Paulson is the richest cabinet member of the Bush Administration.
  1. groups:
    News and Politics,   Politics
  2. tags:
    News and Politics,  Politics,  Accountability Now,  Facts Matter,  5 more
  3.     
    |

25 comments // Paulson's former firm to be among largest beneficiaries of bailout: bank

  • aliasone
    • 0
      aliasone  

    • 1) Has anyone calculated the costs of directly helping the homeowner instead of giving a trillion or two to Wall Street? Not a single Wall Street executive has stepped forward pledging to accept a pay decrease and returning his/her Golden Parachute to help our troubled economy. Not one.

      2) Help troubled home owners to bridge their mortgage payments so that they are able to remain in their homes.

      3) A house that goes into for-closure is a large loss to the homeowner, the banks and now the taxpayers of America.

      4) A for-closed home depresses surrounding neighborhood real estate values which adversely affects all American homeowners.

      5) Do not allow real estate speculators to walk away from their speculative losses if they are financially able to maintain the mortgage. No one bails out an investor who loses money in the stock market. I believe that a good percentage of the people who are walking away from their mortgages are financially viable and more than able to maintain the mortgage. Why should the taxpayer have to pay for rich people to avoid losses?

    • 3 years ago
  • jkh68
    • 0
      jkh68  
    • aliasone:

      1) Dont buy or purchase things you cannot truely afford!

      2) Bush has nothing to do with your decision to overspend and pick a horrible loan. Did he physically force your pin to the paper?

      3) The morgage and finance companies made horrible business decisions and need to "reap what they sow". There is a lack of accountability on their end and the government should let them fail.

      4) We (The American People) should not allow government to have a majority control of our banking and financial industries. That is dangerously Socialism which TRUE Americans should be ALL against.

      Some things to watch out for...

      Paulson and Bernacki (sp?) both have way too much power right now. Much more power than the President and no one is quite sure of their political intentions or motivations.

      My belief is this....

      I believe that this “Economic Crisis” is a political smoke screen that is supported by the media to put fear and panic into the hearts of Americans so they are unable to make clear decisions when it comes time to vote. Ever since last November you could hear the “economic disaster” drum beat from the media getting louder and louder. Meanwhile, Bush sets in motion the tax stimulus plan to encourage consumers to “spend more money on goods and services” not “pay off your credit card bills”. Most people did not use it to pay their debt and essentially a large portion of it went back to the government in the form of tax. In most dumb people’s eyes this was “a gift from our government”. If people would have used this toward their debt it would have been an economic stimulus of roughly over 100 billion dollars towards banks, mortgage companies and financial institutions. Hense…no need for a “bail out” plan.
      Paulson…Warren Buffet and Bernacki are causing the financial crisis to bail out companies they are invested in and they have all grown extremely powerful in the last 2 years. Those three individuals are running this country and their companies have in fact funded the Obama campaign.

      Bush is high level political pawn in this whole mess...he is told what to say and when to say it. He does not have enough intelligence to orchestrate such a demize of our economy.

      We are headed toward Socialism Ladies and Gentleman...pure and simple....What matters is what we (The American Public) decide to do about it. Why we would even consider a KNOWN socialist to run for presidency and be supported by Americans makes a chill run down my spine.

    • 3 years ago
  • matea
    • 0
      matea  

    • Sec. 8. Review.

      Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

      right from the document. wow, gross.

    • 3 years ago
  • stuartalfred
  • Conniepae
    • 0
      Conniepae  

    • Im afraid the Democrats will do what they have done since George W. became President. They will act as though they are listening to the voters, then vote against us. SAD! SAD! SAD!

    • 3 years ago
  • Drawk
  • WhiteNoise
    • 0
      WhiteNoise  

    • What arrogance for Treasury Secretary Henry Paulson who was paid $16.4 million for heading the company that did as much as any to engineer this financial travesty to now insist we must blindly trust him to solve the problem

      Robert Scheer on Paulson's Plan
      "A Fox to Protect the Henhouse?" -- Does it really matter which party is in charge when it comes to bailing out the Wall Street hustlers whose shenanigans have bankrupted so many ordinary folks? Not if the Democrats roll over and cede power to the former head of Goldman Sachs, the investment bank at the center of our economic meltdown. http://www.truthdig.com/report/item/20080924_a_fox_to_protect_the_henhouse/

      Chris Hedges on the Economic Bailout
      "Fleecing What’s Left of the Treasury" -- The lobbyists and corporate lawyers, the heads of financial firms and the crooks who control Wall Street, all those who spent the last three decades assuring us that government was part of the problem and should get out of the way, are now busy looting the U.S. treasury. http://rs6.net/tn.jsp?e=001XRCa8eLJ2VJU80jUK4XRTO8iWgq5P8Z0u1BSj00IlfOt9AdDpgc0T...

    • 3 years ago
  • 1percent
  • rachelmaechel
    • 0
      rachelmaechel  

    • Oh my god. What in the hell is going on here.
      SDLN your video is clear evidence that shows proof of the latest government ploy.

      They got away with 9/11 and now they're gonna get away with this so called 'bailout'.
      Sure go ahead write those thieves a blank check, the money will come out of taxpayer accounts. There will be no one to make sure that this blank check is spent wisely because the contract that they are pushing says NO OVERSIGHT???

      Come the feds are not helping us- However they've been spreading a lie by saying that the bailout will somehow make things better.
      How about you just give each taxpayer 7 grand each. That seems more helpful than giving it to the devils that put us in this situation in the first place.

    • 3 years ago
  • SDLN
    • 0
      SDLN  
    • rachelmaechel:

      I guess if you view Paulson's misdiagnose of the state of the economy as intentional, with the purpose of creating a $700B bailout, then it could be considered a ploy. Is that what you mean? To be honest, though, I hadn't even considered that as an option when I posted the video.

      I saw his misdiagnosis as evidence of his utter incompetence. And now Paulson claims foreknowledge of the doom awaiting our economy if he's not handed unprecedented power and money. I don't buy it. Every crisis is accompanied by a grab for power. I consider this as his.

      But, as I said, I hadn't considered him having a hand in creating the crisis. Interesting.

    • 3 years ago
  • SDLN
    • 0
      SDLN  

    • Paulson discusses the state of the economy on "Meet the Press" in July.

      At 1:38 - "I think it's going to be months that we're working our way through this period. Clearly months. But, remember, the long term fundamentals [of the economy] are very solid."

      At 4:20 - "He have a safe and sound banking system in the United States of America. We have almost 8,500 banks; we've had, just about, I think it's been, 5 bank failures this year.... We have a sound bank system. Our regulators are focused on it. And I think people can take confidence in that."

    • 3 years ago
  • Conniepae
    • 0
      Conniepae  

    • The American people were once again misled. The talking heads promoting investment, investment, investment, were making money for doing it. They were paid to spin stocks and the market. They did their jobs well, they spun people into dizziness. People thought they could get the American Dream moving paper instead of products. George W. was right, it is a house of cards. And, the people who built that house of cards need to be held accountable. They knew they werent using good building practices, they were knowingly negligent. Accountability should be #1! It will deter future negligence, if they know they will be held accountable. A healthy dose of shame would go a long way also! They should be humble and ashamed, or broken and jailed!

    • 3 years ago
  • WhiteCrow22
    • 0
      WhiteCrow22  

    • The Bush Paulson Bernacki "Shock Attack" bailout of Bu$hCo Buddies is appallingly stupid. Do not let it happen! Socializing losses, allowing irresponsibly greedy Senior Executives walk away with millions so that they, and other major shareholders, who are bailed out, can go and buy up all the foreclosed properties that their greed has created would be the coup de gra to the Average American Tax Payer.

      All of the ripoffs from the Iraq War, to Katrina,and from one Shocking Episode to the next up to this present day are nothing but a false government's effort to gain and maintain control of power at the expense of the people they are supposed to represent. Bu$hCo is engaged in the most massive fraud the world has ever witnessed, and most of us are wearing blinders and allowing it to happen as though we are under some kind of spell. Pssst... Do something!

    • 3 years ago
  • Patio_Patty
  • Robroy1
    • 0
      Robroy1  

    • Another bozo crook on the Bush and Cheney team, just what we need. Another Haliburton in the form of a banker and his bank. Bush and Cheney want every last drop of America's money.

    • 3 years ago
  • Riddy
    • 0
      Riddy  

    • I'm sorry guys but I've gotta dissent on this one. I realize that this whole thing looks outrageous and you want to point the finger at someone...but the conspiracy over Goldman has been going on for sometime and it's just not true.
      The reality is that since I began school (and before this debacle) Goldman was really the best firm out there, they mad the best investment decisions because they attract the best talent. Paulson is a good banker and a decent person. I realize that it's easy to draw a line back to his former employer, but the best person for the job is someone who's headed up a large investment bank--in many ways I'm glad we have someone who understands the inudstry like he does.

      If you're going to point a finger, think about your Fed chairmen who allowed interest rates to stay so low for so long, effectively allowing companies to borrow money at negative interest rates versus inflation (did you know that?).
      Also, what about the SEC chairman, Cox? He took away an important rule called the uptick rule which made it harder to sell short stocks into such a downward spiral (See Lehman Brothers)...he should be on the hook for a whole lot more than he has been thus far...
      Look, I understand that everyone is upset about this mess, and you should be. I would just like to say look, I'm a finance major, I graduate in December and in the last 6 weeks 2 job offers (that I NEEDED to get out of debt) have been rescinded...I've been looking for answers too and I really think people need to reconsider Paulson, he may be the only decent pick by this pathetic administration.

    • 3 years ago
  • Conniepae
    • 0
      Conniepae  
    • Riddy:

      Sorry Riddy, Im sure you had you sights on Wall Street and this must be terrible. But better to bust your bubble than ours. We can not afford to do what we did with Iraq. We were misled in plain sight! People have written books about the deceit and nothing has been done. People say "oh it doesnt matter how we got there, were there now".

      We are here now! Its going on today! Why wait till its old news and options are limited by what we have done today? If history has told us anything, its these guys will say anything to get what they want!

      If Paulson was so good, we wouldnt be bailing them out! Enough is enough! I dont care what you have learnt in college, this is the real world, we cant afford mistakes. Paulson should not be making the rules, hes responsible for a large part of our problems!

    • 3 years ago
  • Conniepae
    • 0
      Conniepae  
    • Riddy:

      Riddy, I had included a comment above which I was rude and I am sorry. I have deleted it, but I do want to apologize. Sometimes when one is frustrated, they tend to attack others who think differently. Guilty of that myself on occassion. Sorry!

      Paulson is the wrong one to lead us out of this mess. I think we should call in the pro s. There are people with knowledge who are less involved personally. We need detachment and reason, I dont think Paulson is that person. Paulson may have a conflict of interest and really should recuse himself.

    • 3 years ago
  • WhiteNoise
  • queenofit
    • 0
      queenofit  
    • Image

    • Speaking of contacting our trusted "servants", here is a place where you can send the Senate Committee your thoughts.

      I watched parts of the hearing on cspan today, at one point, one of the senators asked Paulson if he thought that wallstreet should apologize to the American taxpayers [for letting things get this bad]. The creep would not say it, he hem hawed around with some of the usual double speak; the senator persisted, asked him again "would you apologize to the American people?" still he wouldn't do it. Can you believe the ego in that? Shows what his character is. I wasn't surprised. He is one of Bush's cronies.

    • 3 years ago
  • intelligenceisacurse
  • MeganMcKenzie
    • 0
      MeganMcKenzie  

    • Congress needs to take time to think this through carefully and I believe we need to make our beliefs known to our Senators and House Reps.

      It is complicated and not being an economist i cannot begin to sort through all the complications yet I know that if we do not have vigilance and oversight we will be getting screwed a second or third time until it is too late to turn anything around.

    • 3 years ago
  • KorpsMariniers86
  • kennymotown
more from News and Politics:
from the community

top videos