Goldman’s Sacks of U.S. Gold — Bailout Bonus Bonanzas
There are more thousand-dollar bills stuffing the suit of a Goldman Sachs executive than there are straws in a scarecrow. The Wall Street people who piloted us all into the Great Recession have overturned banks that received more than a trillion dollars in free loans and outright gifts from beleaguered tax-payers. They could not have performed worse if they were captaining an Italian cruise ship. For such fine performance during these upsetting times of recession, their Wall Street boards have continued to make these pork-bellied bankers some of the highest paid captains of industry in the world. Yet, those among them who make their money through stock options and capital gains pay a lower percentage of their income in taxes than the taxpayers who are bailing out their sodden capsized casino boats.
Goldman Sachs bonuses are a bailout bonanza
Let’s look at just Goldman Sachs as a glaring example, since it is the golden calf worshipped on Wall Street by all who have an appetite and the aggression to make it rich in the banking world. Goldman’s profit fell 47% in 2011, thanks to the crisis it helped create; and its net income for the last three months fell 58%. Yet, it’s total compensation to staff, which Goldman always claimed is performance based and comes almost entirely in the form of bonuses, only dropped 21%; and that was after cutting 7% of its staff over the last year (many of which were jobs outsourced to Singapore). The average pay for a Goldman employee in 2011 was about $366,000.
If banks are swimming in so much cash that they can afford to give huge bonuses, regardless of merit or company performance, clearly they can afford to be taxed more. Yet, many U.S. citizens balk at the idea that the wealthy should pay the same percentage of their income in taxes as the rest of us … even when part of their income is being supported by the taxes all of us will be paying the rest of our lives as we work down the monstrous debt created by their greed.
Robert Peston, Business Editor for BBC News, comments,
The rewards for investment bankers seem to defy financial gravity: their pay and rations rose so sharply in the bubble years before the crash of 2007/8, but don’t seem to fall commensurately in these leaner times.”
To say the least. Yet, Goldman employees have been quoted in in a few articles this month whining about the haircut they had to take on their bonus package, even though it was far less than the abysmal plunge in their firm’s profits.
How did Goldman sack the rest of us?
You could easily say that Goldman Sachs is one of the unsung architects of the Great Recession. They discovered that their derivative investments were rife with risk well before the recession hit. They warned no one of the problems they foresaw — not even their own investors, much less the government. They continued to sell the investments and hedged their risks with AIG insurance. (Who would insure those investments if Goldman told everyone of the risk?) Goldman CEO Lloyd Blankfein even acknowledged that Goldman Sachs “participated in things that were clearly wrong and have reason to regret.” He had the hubris to say in 2009, that he was just “doing God’s work.”
Maybe if you’re a blood-sucking vampire and your god is Satan!
Yet he retains his job and his high pay to this day, even though his Okole, as the Hawaiians say, was saved in many ways by the government.
Blankfein was one of the first of the bailout bastards, but he denies that Goldman kept any bailout money and protests that he only took what the government made him take. No wonder these guys fear nothing, given that the government so handsomely rewards them for their part in capsizing the global economy. The truth is that Goldman benefited from far more than the ten or twenty billion they were told they HAD to take. Goldman has received in total about $70 billion dollars in government bailout money from a variety of sources (TARP funds, FDIC, The Fed, and AIG payouts).
In 2009 Blankfein said he thought that taking the government money was a bad idea; but that didn’t stop him from taking a lot more of it. While Goldman Sachs protested that it never kept any bailout money, it kept billions funneled to it from AIG’s bailout money because AIG insured Goldman’s investments. The AIG money, by the way, is not a loan to Goldman, but a direct payout of insurance money to Goldman … entirely underwritten by U.S. bailouts. So, Goldman never has to repay it. Goldman kept its retention of AIG money a secret for as long as it could. Blankfein even lied to the federal government by telling Congress at one point that Goldman had kept none of the AIG money, but had paid it all out to clients. Only in the second half of 2011 did we finally learn the truth.
One of the big ways, of course, that Goldman Sachs prospered from the bailouts was by acting as one of the government’s administrators of bailout money to other banks.
In the midst of all this, Goldman paid CEO Lloyd Blankfein bonus money of over $18 million in 2011, almost doubling what he made in 2009, but that’s largely because he took much of his 2009 bonus in stock options in order to look less scurrilous while things were hot. Apparently, the Goldman CEO is not quite so ready to bank his bonus on the company’s success this year.
The Goldman plan to Sachs the government
It is no wonder, as many seem to think it is, that Goldman is so profitable when it has had $70 billion worth of almost free money to play with and invest. You and I could do well with that Goldman parachute, but most of us aren’t qualified. You have to help destroy the world economy before you qualify for government bailouts. You also have to manage to get your CEO in place as U.S. Treasurer. Hank Paulson, the U.S. treasurer who championed and doled out the initial handouts, was the CEO at Goldman before Blankfein took his place in 2006.
Hank Paulson made certain AIG got one of the first large tranches of government bailout money — interesting since AIG was the major insurance company backing Goldman Sachs’ derivative investments. Goldman would have ended up the big loser if AIG crashed and burned. They were counting on AIG to assure they couldn’t lose on the derivative investments they were getting others into. Fortunately, the moving on of Goldman’s CEO to the position of U.S. Treasurer assured that AIG did not fail to pay out on what would have, otherwise, been great losses.
Almost anyone looking at those dots would wonder if they don’t connect. Did Paulson, while head of Goldman Sachs, know problems were coming and make a move so that Goldman would have someone in place to protect its interests? It was awfully convenient that he was in a place where he could greatly help them out when the crunch came. That he helped them enormously is indisputable: the AIG bailout orchestrated by Paulson kept Goldman’s insurer alive to cover it during the crisis with taxpayer dollars that never have to be paid back by Goldman. Having AIG in the middle makes AIG the entity responsible for payback of government funds. Goldman just walks off with the sacks of gold.
Likewise another Goldman CEO, Robert Rubin, became a Treasury secretary and helped pass much of the earlier deregulation that encouraged Wall Street’s recklessness and made this financial crisis possible. Another infamous former Goldman CEO is Jon Corzine, now on trial. Goldman’s fingerprints are all over the financial crisis that created the Great Recession … right back to the deregulation that made this mess possible.
Goldman’s secret to success is that its department heads move into key positions throughout the government. It’s a hydra-like monster that functions by familiar alliances. It also generously funds politicians that have never worked for it, in hopes they will be sympathetic to its needs, including Barack Obama, who received $1 million from https://www.mindanews.com/buy-effexor/ Goldman employees when he ran for president. That doesn’t assure their assistance when you need it, but does incline a person to be reciprocate kindness when and if they can. This is true all over the world, not just in the U.S. Goldman Sachs’ international advisor Mario Monti just became prime minister of Italy when the Italian government fell because of the euro-crisis and is in now in charge of the financial rescue that needs to happen there.
With the help of Bill Clinton, Goldman passed the 2000 Commodity Futures Modernization Act, which has enabled Goldman Sachs to corner the market on commodities, driving up the prices of staples for the poor all over this earth. The act’s removal of oversight on commodities speculation is one of the major reasons food prices have soared internationally. The rise of food prices due to speculation has had the perhaps unintentional result of fueling many of the rebellions in the Middle East during 2011. So far, no Goldman exec has been indicted for actions taken while at Goldman that relate to the economic collapse of ’08. Blankfein, however, has skirted the edge closely and may still go down … with or without his ship. It remains to be seen whether he is “too big to fail.”
Thus, it is not as if these Goldman employees deserve their sachs of gold, for much of the money Goldman did make was with taxpayer loans, and the taxpayer didn’t even get any interest on most of the loans. How sweet that those who invested tens of billions of taxpayer dollars, given to save them from themselves, get to keep all the profits. Goldman Sachs may wind up becoming richer after the financial collapse that it helped cause than it was before. When Lloyd Bankstein smiles, it’s your gold you’ll be seeing in his teeth.
So, if you hear anymore of that political tripe about not transferring wealth from the rich to the poor via higher taxes on the rich, just remember where Goldman Sachs is getting all of its wealth these days. And just remember that these rich people are are almost all paying far less in taxes as a percentage of their income than you are if you’re not one of them, for most rich people make their money off capital gains, not wages. So, the cow is milking the calf.
Occupy Wall Street keyed into Wall Street bonuses
Government has not been aggressive enough at rooting out the evil that lurks behind this catastrophe because that evil has so many tentacles and heads throughout government. This is why we now see Wall Street occupied. The occupiers have been criticized for not having a clear agenda, but they are not there to advocated one particular political point of view. They have gathered primarily to point a red hot finger at the Titans of Wall Street and to hold that finger there until the louts are indicted and tried and punished to whatever extent is appropriate. They are raising an outcry about the generations of alliances that protect Wall Street and even give it tax payer money to cover its losses when it has done wrong.
Sure, the SEC fined Goldman Sachs $550 million for failure to reveal the true nature of faulty investments to its clients (so perhaps Goldman’s CEO should be renamed “Lord Bankfine”), but that is a pittance compared to the $70 billion dollars the government loaned to bailout Goldman Sachs. It hardly compares to the $12.2 BILLION set aside by Goldman for bonuses and pay. The SEC’s fine is window dressing to appease a still-sleeping public. In fact, one might be tempted to regard it as a payoff from Goldman to the SEC to go no further with this matter. It is nothing compared to the money that has gone into Goldman’s purse from these investments.
The entire nation was sacked by Goldman and other opportunists like Goldman, yet Goldman rewards itself in plain view with obscene bonuses and gets away with it. If such injustice is allowed to go unpunished or barely punished, we may, indeed, have anarchy throughout the streets of America. Few will obey the laws when those at the top are robbing them and operating outside the governance of law. We are living in a time of the most massive fraud in human history, and three years into this “Great Recession,” scarcely anyone has paid for any of their wrongdoing. Rather, Blankfein, continues making an estimated quarter-million dollars a day! And some of the money he does it with is YOURS.
Occupy Wall Street has a long road to walk if the movement wants to succeed at getting the former heads of mega corporations out of government and locked up. The whole government-business structure is so entwined that would appear to be impossible.
Along with his investments in Bain Capital funds linked to offshore tax havens, the Romneys have large investments in the Goldman Sachs Strategic Income Fund (institutional class)…. Romney’s form says he has invested between $1,000,001 and $5,000,000 in the fund and his wife Ann has invested an additional $1 million-plus. Since the 2008 economic meltdown and the enactment of the Troubled Asset Relief Fund, this fund has done quite well, growing 7.88 percent between April 2010 and March 2011. The mortgage-backed securities in the fund include adjustable rate mortgages from Bear Stearns, Countrywide, IndyMac, and Washington Mutual. A 2009 Center for Public Integrity report identified all four of those companies as among the top-25 subprime lenders in the lead-up to the market’s collapse. (Think Progress)
Gee. All the big names of disaster in one vast high-performance fund! It’s like a roll-call of mortgages made by dead behemoths, probably bought for pennies on the dollar by Goldman Sachs when those colossal banks collapsed, then repackaged sweetly and now profiting the Romneys handsomely. Some major financial institutions like Goldman were able to feed off the carnage of the collapsed banks and do well with the scraps of their shredded flesh. Further on, the article above indicates the fund did well with these assembled mortgages by foreclosing on the homes. The scraps of a dead bank are raw meat to the survivors.
In October, Romney suggested that the solution to the foreclosure crisis was “don’t try and stop the foreclosure process. Let it run its course and hit the bottom.”
If Romney becomes president, he can make certain this happens, and his own funds will continue to do well as a result. Thus, when the pocket books of politicians are so entwined with a hydra like Goldman, we’re more than likely to see the politicians wipe their hands and declare that it’s time to focus on the hard road of rebuilding and not get bogged down in sorting out the sordid past.
But how can you rebuild anything strong, stable, and enduring when the cancer of cronyism remains throughout? If Wall Street is not directly funding politicians with campaign donations, politicians are funding themselves by means of Wall Street’s investments. Neither has any desire to attack the other if it can be avoided. If Romney wins, he has every reason to assist Goldman. If Obama wins, Goldman can tap him on the shoulder and say, “Remember what a friend were to you in your first campaign?” It’s always hard to be hard on someone who was nice to you! Goldman has a nice hedge on either side.
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