Some people might think it's unfair to accuse Treasury Secretary Henry Paulson of favoring his Wall Street friends, Goldman Sachs in particular. They would argue that, even though he had a 30-plus-year career on Wall Street, he can rise above that and render a fair and balanced recovery plan.Even if Paulson's motives are pure, his deeply engrained biases apparently are not. This is revealed by what is being passed off as a "glitch" in the "rescue plan."
Treasury Department officials met with banking industry representatives to resolve a glitch in the rescue program that has temporarily prevented some 6,000 of the nation's 8,500 banks from applying for government support.
Treasury is buying preferred shares in banks as a way of injecting cash into the institutions. But about 6,000 of the nation's banks don't have publicly traded shares of stock and therefore are not set up in a way to meet Treasury's current qualifications.
The word "duh" comes to mind, followed by the thought, "Paulson is so Wall Street centric that he launched a historic buy-out of the banks, but only thought in terms of those that trade ownership shares on.... Wall Street
The critics of this view will say, "Hey, that's not fair. Paulson operates at a higher level of analysis. He has tasked Neel Kashkari, the Treasury's assistant secretary for international affairs, to be the interim head of Treasury's new Office of Financial Stability."
OK, aside from the fact that the 35-year old Kashkari (pronounced Cash Carry) may not have the years of experience needed to take on such a task, his experience is as a former Goldman Sachs banker at the former [speculative] investment firm once headed by Treasury Secretary Henry Paulson*. In other words, Paulson's selection of Kashkari is further evidence that Paulson is a Wall Street guy with Wall Street centric views and is producing a Wall Street Centric bailout plan.
* Yes, that is two "formers"... Goldman Sachs is a former investment bank, and now is just a commercial bank.
Sources:
Associated Press, White House to banks: Start lending now, Jennifer Loven, October 28, 2008.
Associated Press, Paulson picks interim head for rescue effort, Martin Crustsinger, October 6, 2008.
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Henry Paulson / Goldman Sachs tax liens
Scattered from California to New York: The judgments from the Department of Labor, tax liens against 401-K plans, state tax liens, mechanics lien, judgments from other companies
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"They would argue that, even though he had a 30-plus-year career on Wall Street, he can rise above that and render a fair and balanced recovery plan."
That's such a big nod to the opposition that it made me giggle. I'm not criticizing. I can see why one would like to give people the benefit of the doubt. I'm just waayyyy cynical.
Also, we actually do still have investment banks in the US. The huge ones are toast, but smaller ones are still around.
Here's wikipedia's list of investment banks, some but not all are in the US.
Thanks for the correction.
I said "they would argue that...", not that they would be telling the truth ;-)
Joe Biden said in the debate that he learned never to question one's motives. Well, I agree with you, and so does James Galbraith... these guys are out to use the US government for the personal gain of their faction. (See Bill Moyers Journal 10/24/08).
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