Palin on Goldman
One, called Hudson Mezzanine, was put together in the fall of 2006 expressly as a way to create more short positions for Goldman, the subcommittee claims. The $2 billion deal was one of the first for which Goldman sales staff began to face dubious clients, according to former Goldman employees.
“Here we are selling this, but we think the market is going the other way,” a former Goldman salesman told The New York Times in December.
So today is the big day. Lloyd “God’s Work” Blankfein and Fabrice “Fabulous Fab” Tourre are going to be dragged before the Senate and formally introduced to America via the medium of a hearing of the Senate Permanent Subcommittee on Investigations.
It’s hard to get a read on just exactly what this is all about. I hear conflicting things. On the one hand, one always has to keep in mind that Congress has a history of dragging current news-cycle villains into their arena to get video-whipped for purely political reasons — think the Mark-McGwire-weeping steroid hearings. And certainly the impending vote on the Financial Regulatory Reform bill is an important and very obviously related subplot to the Goldman investigation. So politically there are all sorts of reasons for the Senate to do this now.
The Democrats have a lot to gain by hauling in God’s Work and the Fab to be tarred and feathered. Politically, the most important thing from their point of view is to corner the Republicans politically, showing the country that these evil assholes testifying are the same people who have been sending armies of lobbyists to Washington to kill the Regulatory Reform bill, the same bill that the Republicans are trying to block debate on.
The Republicans, meanwhile, are in the difficult position of trying to sell Wall Street’s position on the Regulatory Reform bill to their base. That might not sound so very difficult, given that the Tea Partiers in particular continue to oppose further government regulation and have used the idea that Barack Obama’s government is “taking over the banking sector” as a rallying cry. But Wall Street isn’t exactly popular with the Tea Party, either, so selling their side of the debate on this bill is a bit of a sticky thing.
Leave it to Sarah Palin to come up with the solution. This is from a post on her Facebook page. I advise everyone to read it, since it’s a highly amusing piece of propaganda:
The current debate over financial reform demonstrates what happens when political leaders react to a crisis with a raft of new regulations. First off, the people involved in writing government regulations are often lobbyists from the very industry that the new laws are supposed to regulate, and that’s been the case here. It should surprise no one that financial lobbyists are flocking to DC this week. Of course, the big players who can afford lobbyists work the regulations in their favor, while their smaller competitors are left out in the cold. The result here are regulations that institutionalize the “too big to fail” mentality.
Moreover, the financial reform bill gives regulators the power to pick winners and losers, institutionalizing their ability to decide “which firms to rescue or close, and which creditors to reward and how.” Does anyone doubt that firms with the most lobbyists and the biggest campaign donations will be the ones who get seats in the lifeboat? The president is trying to convince us that he’s taking on the Wall Street “fat cats,” but firms like Goldman Sachs are happy with federal regulation because, as one of their lobbyists recently stated, “We partner with regulators.”
Sometimes it’s hard not to admire Sarah Palin. You need to have a pair of iron church bells swinging between your knees to pull off a crazy line like this, and she does it almost effortlessly. If you’re scoring at home, the idea here is that banks like Goldman actually want this regulatory bill because it will allow them to “partner with regulators,” i.e. team up with the government, to dominate the economy. This is despite the fact that Washington is currently flooded with financial services industry lobbyists who, in an attempt to kill this bill, are practically lugging suitcases full of money around to throw at the likes of Ben Nelson and Mitch McConnell.
The awesome thing about this is that it’s almost guaranteed to work with the people Palin is targeting. The Democrats here are going to suffer, deservedly so, for having taken so much money in the past from Goldman and banks like Goldman. That fact now allows transparent bullshitters like Palin — who incidentally supported the bank bailouts — to credibly argue that this Regulatory Reform bill is an industry creation. It doesn’t hurt that the Democrats’ last major piece of legislation, the Health Care bill, actually was a monstrous giveaway to industry that allowed campaign contributors to appropriate the power of the state to extract profits from ordinary people.
This Regulatory Reform bill is not that, but if you’re a Tea Partier, what about the past history of the Democrats would lead you to believe otherwise? Thus Carl Levin can get up there and roar all he wants at Lloyd Blankfein today, but the way this is going to play to a good 30% of the electorate is that the Democrats and big Lloyd are putting on a dog-and-pony show in order to smooth the way for the next chapter in their world domination plan. Hell, even writing that right now, I’m starting to believe it myself.
The reality, of course, is that this is a make-or-break moment for Goldman, Sachs. It just may be that the Democrats, after years of intimate partnership with this firm, have finally decided to “go in a different direction” and cut Goldman loose, purely for political reasons. A close friend of mine from Russia points out that there are parallels here to Putin’s ascension to power, when a rookie president pushed into his seat by a gang of oligarchs decided upon election to whack the most obviously odious of the bunch — Bank Menatep’s Mikhail Khodorkovsky — in order to firm up his “reform” credentials and, politically speaking, put himself on the other side the obscene corruption of the Yeltsin era.
Maybe I’m seeing more than is actually there with this Senate business. But with all this noise now about new cases even above and beyond Abacus, it is sure beginning to sound like someone has decided to make an example out of Goldman Sachs.
p.s. Palin, of course, isn’t completely wrong about the concept of “institutionalizing the too-big-to-fail” mentality. As originally conceived by Tim Geithner, the bill would have done exactly that, bailing out top-25 banks with taxpayer money and then only later (and without a specific timetable) getting Wall Street to foot the bill for bailouts. But the newer version makes Wall Street pay up front into a bailout fund. Of course the bill in its entirety is nothing to write home about (see Nomi Prins’s take on the subject), but what little good stuff is in the bill is only there in spite of Wall Street’s lobbying. In other words, the Goldmans of the world would have preferred no bill at all and are still trying to water it down as much as possible. Palin meanwhile is selling it as something Goldman actually wants, a new Obama-Goldman gouge job, in order to increase its market advantage over smaller competitors. It’s clever, you have to admit.