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PAUL B. FARRELL
'Goldman Conspiracy:' RICO? Or Medal of Freedom?
Vote: Racketeers to be indicted or revolutionary American heroes?
ARROYO GRANDE, Calif. (MarketWatch) -- Last week's reader comments made it quite clear that the "Goldman Conspiracy" and Wall Street's growing power and control of our American democracy are deeply disturbing hot-button issues.
Many demand bold, aggressive actions, even criminal prosecution, like those coming from the new administration and the New York attorney general. Read previous Paul B. Farrell.
So what about a federal prosecution under RICO, the Racketeer Influenced and Corrupt Organizations Act?
In an interview with WSJ's Susanne Craig, former Merrill Lynch Chief Executive John Thain told her he was unfairly scapegoated for the growing problems of Bank of America.
First off, conspiracies are tough to prove. In 1933, a group of wealthy Americans, bank and corporate leaders with ties to Germany allegedly attempted to recruit a Marine general to lead a military coup against FDR. The general later testified before Congress about "The Business Plot," as it became known. Congress hinted to the existence of a political conspiracy but, if so, it never went beyond talk. Everyone denied. No charges.
But lots happened after Congress passed the RICO Act in 1970, originally to fight organized crime. The feds tried it against the Hell's Angels, Montreal Expos, Key West police department and Michael Milkin's insider trading at Drexel Burnham. Last year the SEC used RICO against 50 hedge funds accused of naked short-selling. Earlier this month, RICO was the basis of federal indictments against 24 members of a San Diego mortgage company in an alleged conspiracy fraud involving 220 properties.
Maybe next the new administration will go up the ladder to the banks that securitized the mortgages?
The beauty of prosecuting a conspiracy under RICO is that the conspiracy is a separate crime. And all members may be guilty of conspiring to commit each crime in pursuit of the conspiracy's overall agreement. RICO's list includes: Fraud, extortion, embezzling, theft, gambling, money laundering, bankruptcy, securities violations and obstruction of justice.
And right now, that may even cover bankers "cooking the books" using taxpayers' TARP money to generate doctored, phony earnings to deceive investors. And hidden behind the individual crimes may be a collective act of treason to take over control of the American economy as the moneyed "superpower."
With Henry Paulson at Treasury earlier, Goldman Sachs had absolute power, with the absolute backing of the party then in control of Washington. Flash forward: Now, with all their people, programs, lobbyists and connections left behind like landmines inside Washington's new administration, the power of the "Goldman Conspiracy" may now be absolute, as in Lord Acton's historic warning that "power corrupts and absolute power corrupts absolutely."
The 'Goldman Conspiracy's' far-reaching global power
No wonder many investors, citizens and taxpayers feel helpless, worried that nobody, not even, as we wrote last week, "Jack Bauer can stop the 'Goldman Conspiracy.'" Still, Americans want blood. You can feel the public's pulse. Sense a rebellion, beyond teabags, beyond a torture debate -- a revolution's brewing, and not a weak-tea-bag one.
Revolution? Yes, so for a moment consider a bizarre alternative to RICO indictments. Think back to 1776: There were 57 signers of the Declaration of Independence that triggered the first American Revolution. They risked their lives and fortunes by committing treason against the British. Death was the penalty. Many were wealthy, educated professionals, lawyers, physicians, merchants, farmers, landowners. Self-interest and politics motivated them.
But they also believed that "all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness." True heroes. Today they'd be awarded the Presidential Medal of Freedom.
How would you vote? A RICO indictment? Or a Medal of Freedom for service to country? True, Goldman Sachs played a major role in creating the credit meltdown that's destroying the portfolios of an entire generation. And some say the awards to former CIA Director George Tenet and Iraq liaison L. Paul Bremer tarnished the Freedom Medal.
And yet, many of those in the "Goldman Conspiracy" have served honorably in government, in spite of (or because of) their money, biases, errors in judgment and political ideologies. So before "voting," read on, learn more about who's in the global "Goldman Conspiracy:"
The United States Treasury
Yes, Goldman is an elite training program for government leaders. Robert Rubin was Clinton's Treasury Secretary. Paulson was with Goldman for almost 30 years, made $38 million the year before he became Treasury secretary. He got a sweetheart tax deal at the top of the market when he put his $700 million fortune in a trust. All that before the market meltdown that he helped set up.
Paulson was a big winner, while America lost trillions. When all hell broke loose last fall, Paulson brought in Neel Kashkari (as assistant secretary) and other Goldman staffers to spread around TARP's $700 billion.
Earlier we read a perfect summary of the "Goldman Conspiracy's" goal in Matthew Malone's Portfolio piece: "Obama's victory and Geithner's appointment are the completion of Goldman's meticulously crafted plan to become a superpower. The firm now has the clout to impose its will on the financial markets -- and the world." They have become the ruler of the American democracy. And if that's true, then arguably the new president is also a party to their agreement by relying on Goldman's brains and power.
The World Bank
When Paulson became Treasury secretary, Robert Zoellick, a former deputy secretary of state became chairman of Goldman's International Advisors. Then in 2007, Zoellick became president of the World Bank, which lends billions to over 100 nations.
Fannie Mae and Freddie Mac
The portfolios of the two mortgage giants total $5 trillion. Their stock lost 90% of its value last year. So Paulson hired his old Goldman buddies to develop strategies. The conclusions were preordained by that White House: Nationalize only as a last resort.
Commodity Futures Trading Commission
Reuben Jeffery spent eighteen years at Goldman, became chairman of the commission from 2005-2007 while derivatives rapidly expanded, setting up the credit meltdown. He was appointed an undersecretary of state in 2007.
Securities and Exchange Commission
Former SEC Chairman Christopher Cox is a no alumni, but not for lack of trying: Bear Sterns and Lehman complained of traders panic-shorting their stock, but got no help. They failed. But when short-sellers turned on Goldman, Cox pushed thru an SEC ban.
Federal Reserve Bank
Chairmen Alan Greenspan, Ben Bernanke and the next likely Fed Chairman Larry Summers are unquestionably tied in with the manipulative games of Wall Street, most noticeably kowtowing to the "Goldman Conspiracy" and its free-market ideology.
Foreign Intelligence Advisory Board
Stephen Friedman spent about three decades with Goldman, was chairman in the 1990s. He headed George W. Bush's National Economic Council before becoming Chairman of the President's Foreign Intelligence Advisory Board.
AIG
Hank Paulson installed Goldman vice chairman Ed Liddy as AIG's CEO to protect his old firm's $20 billion derivatives exposure in AIG. Then Hank and his Fed buddy Bernanke gave AIG another $150 billion to keep AIG out of bankruptcy, and to make sure AIG's derivative contracts were paid off, including Goldman's $20 billion.
Bank of America and Merrill Lynch
Before becoming Merrill's CEO, John Thain headed the NYSE, and earlier was Goldman's co-president under Paulson, who planted Thain in Merrill Lynch. Paulson later forced Bank of America's CEO Ken Lewis to buy Merrill, avoiding a Merrill bankruptcy and saving face for his old friend, and himself. Last week, Lewis admitted in Congress that Paulson forced him to make the Merrill deal ... and shut up about it.
Citigroup
Robert Rubin spent 26 years at Goldman, a contemporary of Paulson. Rubin rose to co-chairman and left to become Clinton's Treasury secretary. Obama's economic adviser Larry Summers succeeded Rubin at Treasury. From 2007 to January 2009 Rubin was chairman of Citigroup, where he made $126 million. Last fall, Citigroup's stock dropped over 60% in a week. Paulson gave Citi another $20 billion TARP on top of $25 billion previously committed, to help an old Goldman buddy.
Bank of Canada
Former Goldman executive Mark Carney has been at the Bank of Canada since leaving Goldman in 2003. Recently he received a seven-year term as its new Governor.
Bank of Italy
Mario Draghi is an banker and economist who was a partner of Goldman from 2002 to 2006 when he was appointed to a six-year term as governor of the Bank of Italy.
State government
New Jersey Governor John Corzine was with Goldman for 24 years until 1998, serving as CEO and chairman for five years before running for the U.S. Senate.
President's chief of staff
Joshua Bolten, a former Goldman Sachs executive director in the '90s became director of the Office of Budget and Management, then George W. Bush's Chief of Staff.
Goldman Sachs
Recently Jon Winkelried, Goldman's co-COO, resigned after 26 years. He made $67.5 million in 2007 just before the great meltdown. The current CEO, Lloyd Blankfein, also made $68.5 million, earning a total of $210 million during the five-year bull. Back in 2007, the average bonus for the "average Goldman staffer" was an a whopping $600,000, 10 times what the average American makes, while America's markets lost trillions and taxpayers were saddled with trillions in new debt.
What are they -- and many more who lurk in the shadows -- all guilty of in the "Goldman Conspiracy?"
Over the years they have passed back and forth between Wall Street and Washington. Many more anonymously support these Trojan Horses from the sidelines, enjoying big bonuses. Goldman's staff was among the president's biggest donors. But they are bi-partisan. They bet on winners. No matter which political party or which politicians win, Goldman, a master at hedging, always wins.
So yes, Goldman is the "superpower" running America and the world. Who would indict them? Not Obama, maybe New York Attorney General Andrew Cuomo? Or should we just give up, let them have it, even give them Freedom Medals? A bigger question: Do we really have a choice!?
End of Story
PAUL B. FARRELL
'Goldman Conspiracy:' RICO? Or Medal of Freedom?
Vote: Racketeers to be indicted or revolutionary American heroes?
ARROYO GRANDE, Calif. (MarketWatch) -- Last week's reader comments made it quite clear that the "Goldman Conspiracy" and Wall Street's growing power and control of our American democracy are deeply disturbing hot-button issues.
Many demand bold, aggressive actions, even criminal prosecution, like those coming from the new administration and the New York attorney general. Read previous Paul B. Farrell.
So what about a federal prosecution under RICO, the Racketeer Influenced and Corrupt Organizations Act?
In an interview with WSJ's Susanne Craig, former Merrill Lynch Chief Executive John Thain told her he was unfairly scapegoated for the growing problems of Bank of America.
First off, conspiracies are tough to prove. In 1933, a group of wealthy Americans, bank and corporate leaders with ties to Germany allegedly attempted to recruit a Marine general to lead a military coup against FDR. The general later testified before Congress about "The Business Plot," as it became known. Congress hinted to the existence of a political conspiracy but, if so, it never went beyond talk. Everyone denied. No charges.
But lots happened after Congress passed the RICO Act in 1970, originally to fight organized crime. The feds tried it against the Hell's Angels, Montreal Expos, Key West police department and Michael Milkin's insider trading at Drexel Burnham. Last year the SEC used RICO against 50 hedge funds accused of naked short-selling. Earlier this month, RICO was the basis of federal indictments against 24 members of a San Diego mortgage company in an alleged conspiracy fraud involving 220 properties.
Maybe next the new administration will go up the ladder to the banks that securitized the mortgages?
The beauty of prosecuting a conspiracy under RICO is that the conspiracy is a separate crime. And all members may be guilty of conspiring to commit each crime in pursuit of the conspiracy's overall agreement. RICO's list includes: Fraud, extortion, embezzling, theft, gambling, money laundering, bankruptcy, securities violations and obstruction of justice.
And right now, that may even cover bankers "cooking the books" using taxpayers' TARP money to generate doctored, phony earnings to deceive investors. And hidden behind the individual crimes may be a collective act of treason to take over control of the American economy as the moneyed "superpower."
With Henry Paulson at Treasury earlier, Goldman Sachs had absolute power, with the absolute backing of the party then in control of Washington. Flash forward: Now, with all their people, programs, lobbyists and connections left behind like landmines inside Washington's new administration, the power of the "Goldman Conspiracy" may now be absolute, as in Lord Acton's historic warning that "power corrupts and absolute power corrupts absolutely."
The 'Goldman Conspiracy's' far-reaching global power
No wonder many investors, citizens and taxpayers feel helpless, worried that nobody, not even, as we wrote last week, "Jack Bauer can stop the 'Goldman Conspiracy.'" Still, Americans want blood. You can feel the public's pulse. Sense a rebellion, beyond teabags, beyond a torture debate -- a revolution's brewing, and not a weak-tea-bag one.
Revolution? Yes, so for a moment consider a bizarre alternative to RICO indictments. Think back to 1776: There were 57 signers of the Declaration of Independence that triggered the first American Revolution. They risked their lives and fortunes by committing treason against the British. Death was the penalty. Many were wealthy, educated professionals, lawyers, physicians, merchants, farmers, landowners. Self-interest and politics motivated them.
But they also believed that "all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness." True heroes. Today they'd be awarded the Presidential Medal of Freedom.
How would you vote? A RICO indictment? Or a Medal of Freedom for service to country? True, Goldman Sachs played a major role in creating the credit meltdown that's destroying the portfolios of an entire generation. And some say the awards to former CIA Director George Tenet and Iraq liaison L. Paul Bremer tarnished the Freedom Medal.
And yet, many of those in the "Goldman Conspiracy" have served honorably in government, in spite of (or because of) their money, biases, errors in judgment and political ideologies. So before "voting," read on, learn more about who's in the global "Goldman Conspiracy:"
The United States Treasury
Yes, Goldman is an elite training program for government leaders. Robert Rubin was Clinton's Treasury Secretary. Paulson was with Goldman for almost 30 years, made $38 million the year before he became Treasury secretary. He got a sweetheart tax deal at the top of the market when he put his $700 million fortune in a trust. All that before the market meltdown that he helped set up.
Paulson was a big winner, while America lost trillions. When all hell broke loose last fall, Paulson brought in Neel Kashkari (as assistant secretary) and other Goldman staffers to spread around TARP's $700 billion.
Earlier we read a perfect summary of the "Goldman Conspiracy's" goal in Matthew Malone's Portfolio piece: "Obama's victory and Geithner's appointment are the completion of Goldman's meticulously crafted plan to become a superpower. The firm now has the clout to impose its will on the financial markets -- and the world." They have become the ruler of the American democracy. And if that's true, then arguably the new president is also a party to their agreement by relying on Goldman's brains and power.
The World Bank
When Paulson became Treasury secretary, Robert Zoellick, a former deputy secretary of state became chairman of Goldman's International Advisors. Then in 2007, Zoellick became president of the World Bank, which lends billions to over 100 nations.
Fannie Mae and Freddie Mac
The portfolios of the two mortgage giants total $5 trillion. Their stock lost 90% of its value last year. So Paulson hired his old Goldman buddies to develop strategies. The conclusions were preordained by that White House: Nationalize only as a last resort.
Commodity Futures Trading Commission
Reuben Jeffery spent eighteen years at Goldman, became chairman of the commission from 2005-2007 while derivatives rapidly expanded, setting up the credit meltdown. He was appointed an undersecretary of state in 2007.
Securities and Exchange Commission
Former SEC Chairman Christopher Cox is a no alumni, but not for lack of trying: Bear Sterns and Lehman complained of traders panic-shorting their stock, but got no help. They failed. But when short-sellers turned on Goldman, Cox pushed thru an SEC ban.
Federal Reserve Bank
Chairmen Alan Greenspan, Ben Bernanke and the next likely Fed Chairman Larry Summers are unquestionably tied in with the manipulative games of Wall Street, most noticeably kowtowing to the "Goldman Conspiracy" and its free-market ideology.
Foreign Intelligence Advisory Board
Stephen Friedman spent about three decades with Goldman, was chairman in the 1990s. He headed George W. Bush's National Economic Council before becoming Chairman of the President's Foreign Intelligence Advisory Board.
AIG
Hank Paulson installed Goldman vice chairman Ed Liddy as AIG's CEO to protect his old firm's $20 billion derivatives exposure in AIG. Then Hank and his Fed buddy Bernanke gave AIG another $150 billion to keep AIG out of bankruptcy, and to make sure AIG's derivative contracts were paid off, including Goldman's $20 billion.
Bank of America and Merrill Lynch
Before becoming Merrill's CEO, John Thain headed the NYSE, and earlier was Goldman's co-president under Paulson, who planted Thain in Merrill Lynch. Paulson later forced Bank of America's CEO Ken Lewis to buy Merrill, avoiding a Merrill bankruptcy and saving face for his old friend, and himself. Last week, Lewis admitted in Congress that Paulson forced him to make the Merrill deal ... and shut up about it.
Citigroup
Robert Rubin spent 26 years at Goldman, a contemporary of Paulson. Rubin rose to co-chairman and left to become Clinton's Treasury secretary. Obama's economic adviser Larry Summers succeeded Rubin at Treasury. From 2007 to January 2009 Rubin was chairman of Citigroup, where he made $126 million. Last fall, Citigroup's stock dropped over 60% in a week. Paulson gave Citi another $20 billion TARP on top of $25 billion previously committed, to help an old Goldman buddy.
Bank of Canada
Former Goldman executive Mark Carney has been at the Bank of Canada since leaving Goldman in 2003. Recently he received a seven-year term as its new Governor.
Bank of Italy
Mario Draghi is an banker and economist who was a partner of Goldman from 2002 to 2006 when he was appointed to a six-year term as governor of the Bank of Italy.
State government
New Jersey Governor John Corzine was with Goldman for 24 years until 1998, serving as CEO and chairman for five years before running for the U.S. Senate.
President's chief of staff
Joshua Bolten, a former Goldman Sachs executive director in the '90s became director of the Office of Budget and Management, then George W. Bush's Chief of Staff.
Goldman Sachs
Recently Jon Winkelried, Goldman's co-COO, resigned after 26 years. He made $67.5 million in 2007 just before the great meltdown. The current CEO, Lloyd Blankfein, also made $68.5 million, earning a total of $210 million during the five-year bull. Back in 2007, the average bonus for the "average Goldman staffer" was an a whopping $600,000, 10 times what the average American makes, while America's markets lost trillions and taxpayers were saddled with trillions in new debt.
What are they -- and many more who lurk in the shadows -- all guilty of in the "Goldman Conspiracy?"
Over the years they have passed back and forth between Wall Street and Washington. Many more anonymously support these Trojan Horses from the sidelines, enjoying big bonuses. Goldman's staff was among the president's biggest donors. But they are bi-partisan. They bet on winners. No matter which political party or which politicians win, Goldman, a master at hedging, always wins.
So yes, Goldman is the "superpower" running America and the world. Who would indict them? Not Obama, maybe New York Attorney General Andrew Cuomo? Or should we just give up, let them have it, even give them Freedom Medals? A bigger question: Do we really have a choice!?
End of Story
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