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Paulson and His Wall Street Cronies Loot the U.S. Treasury
(Nomi Prins, The Nation, October 15, 2008)
Paulson and his wheeler-dealer pals have proven more interested in preserving their own wealth than in stabilizing the American economy.
the question addressed by Paulson Monday is what to do with that $700 billion? To answer this, he sat down with his friends, the leaders of the largest financial institutions in America that got us into this mess. Namely, Ken Lewis, CEO of Bank of America; Jamie Dimon, CEO of J.P. Morgan Chase; Lloyd Blankfein, Paulson's successor at Goldman Sachs; John Mack, CEO of Morgan Stanley; and Vikram Pandit, CEO of Citigroup. . . . These men have shown themselves to be far more interested in preserving themselves than in stabilizing the general economy for American citizens. And it's a safe bet (probably the safest out there) that their philosophy remains intact. . . . And it turns out that Paulson's Plan B is not to completely abandon plan A. So far, he has decided to spend $250 billion of that $700 billion to buy equity stakes in banks whose future losses are still unknown. The rest could conceivably be used to buy up toxic assets. . . . These, and other related decisions are to be made, in large part, by Paulson's former protégé at Goldman Sachs (and now interim assistant treasury secretary) Neel Kashkari. . . . There are equally eager participants running this plan, too. No fewer than seven policy teams and five veteran government officials have been culled to figure out which banks will receive the most help. (This comes as the leaders of the top five cozy up to Paulson.) . . . There's also no shortage of firms wanting a piece of the action of the bright new Treasury hedge fund. Seventy financial firms have made bids (i.e., asked for money) to become master custodian of the fund, managing inflow and outflow. . . . One hundred firms have bid to become one of the five master program operators that will decide which assets to buy and how to manage them. Let's see if Goldman Sachs makes the cut. . . . The outcome of Monday's meeting included no request for more stringent banking regulations going forward. . . . As Paulson waffles on action and plans, always weighing Wall Street demands first, European leaders are taking more decisive action with their coordinated capital-injection moves. But it remains to be seen whether these will work. Perhaps their actions are an admission of responsibility; British and European institutions also made reckless bets with inadequate capital backing them. . . . But they all of the world's central bankers should really consider injecting more transparency and regulation, to restore international confidence, not just money. They must create a global financial structure that will both contain the fallout and avoid a repeat performance--one that never again will be so opaque, over-leveraged and dangerous.

posted by Lorenzo 11:26 AM