Friday, March 16, 2012

Government Sachs: Goldman's Close Ties To Washington Arouse Envy, Raise Questions.

From the link:

(March 2009 article)

No wonder it's called "Government Sachs." It seems that every few weeks, another Goldman Sachs executive goes to work for a government agency, with bankers landing in positions of power at the Treasury Department, the Federal Reserve, and pulling the levers of the massive trillion-dollar federal bailout.

Goldman Sachs is "a political organization masquerading as an investment bank, and they're sitting at the table with the top people in government," says Goldman critic Christopher Whalen, the managing director of Institutional Risk Analytics, which rates banks and provides customer analytics. He calls Goldman "the most political firm on Wall Street." Both admirers and detractors assert that Goldman's influence has only grown and that it has not always served the best interests of the government.

"People at Goldman are now at a much higher, much more visible level in government," says former Goldman vice president Lisa J. Endlich, who wrote "Goldman Sachs: The Culture Of Success". Endlich thinks that the bigger issue, beyond Goldman, is the influence of Wall Street in the corridors of power. "They are all from the same world - whether it's Morgan Stanley or Goldman filling Treasury or the Fed with people with very similar world views."

Endlich says that the financial agencies used to be staffed by people from industry and academics, along with bankers. Given the widening gap between the salaries of Wall Street and Main Street in recent decades, the concentration of bankers at federal agencies means that they may be a little out of touch with the concerns of working people and businesses.

"There's a bit of a love affair with Wall Street," says Endlich, explaining that much of that is due to the complexity of financial instruments, from credit-default swaps to derivatives, now prevalent in the financial industry. "It's gotten so complete that we seem to only trust those who have worked in that world."

Whalen says that the firm has been adept at using their influence in Washington, D.C. to serve their own interests. "Getting the info before anyone else does and acting on it," he says, claiming that legendary Goldman chairman Sidney Weinberg used to sit in the office of Time magazine editor Henry Luce to soak up the latest tidbits of information.

Whalen claims that the firm was suffering in November and December, until they started "embedding themselves in this administration... When you saw the stock turn, it showed that they had established themselves sufficiently.. Their political stars were in alignment."

Michael Lewis (June 2009, on Fareed Zakaria GPS - Watch CNN video below): "And it is amazing to me the degree to which, say, Goldman Sachs is intertwined with the Treasury, and how they're -- there don't seem to be any independent voices in the thick of the decision-making. The decision-making is all being done by people who one way or another might expect to make a lot of money from Goldman Sachs in the future". + "...Making a fortune creating a mess & making a fortune cleaning the mess..."

Relationship map / Goldman Sachs revolving door:

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