Matt Taibbi: Let's Get It Straight, Hank Paulsen Is a Prick Who Took Down the Economy

[marmar]

via AlterNet:



Let's Get It Straight, Hank Paulsen Is a Prick Who Took Down the Economy

By Matt Taibbi, True/Slant. Posted June 9, 2009.

The Wall Street Journal lets a former Goldman Sachs employee write a power-worshipping ode to Bush's disastrous Treasury Secretary.




"Hank Paulson is a national hero. I said it last October and I'm sticking by it. And now, there's actual evidence to back me up. The TARP bailout worked. The Wall Street crisis is over." -- by Evan Newmark from "Mean Street: It's Time to Enshrine Hank Paulson as National Hero" -- Wall Street Journal.

So here's the letter I wrote to the Wall Street Journal after reading Evan Newmark's paean to Hank Paulson last week:

Dear WSJ,

Just out of curiosity -- did Evan Newmark ever work for Goldman, Sachs? And if the answer to the question is yes, don't you think that might have been a good fact to disclose before he fellated Hank Paulson in his "Mean Street" column?

Sincerely,
Matt Taibbi

Can you imagine what a craven, bumlicking ass-goblin you'd have to be to get a job working for the Wall Street Journal, not mention up front that you used to be a Goldman, Sachs managing director, and then write a lengthy article calling your former boss a "national hero" -- in the middle of a sweeping financial crisis, one in which half the world is in a panic and the unemployment rate just hit a 25-year high? Behavior like this, you usually don't see it outside prison trusties who spend their evenings shining the guards' boots. I can't even think of a political press secretary who would sink that low. Hank Paulson, a hero? Are you fucking kidding us?

Exactly what part of Paulson's record is heroic, Evan? The part where he called up SEC director William Donaldson in 2004 and quietly arranged to get the state to drop capital requirements for the country's top five investment banks? You remember that business, right, Evan? Your hero Paulson met with Donaldson and got the rules changed so that Goldman and four other banks no longer had to abide by the old restrictions that forced banks to actually have a dollar or two on hand for every ten or so they lent out. After that, it was party time! Bear Stearns in just a few years had a debt-to-equity ration of 33-1! Lehman's went to 32-1. By an amazing coincidence, both of these companies exploded just a few years after that meeting, and all of the rest of us, Evan, ended up footing the bill, thanks to a state-sponsored rescue of Bear and a much larger massive bailout of Wall Street in general, necessitated in large part by the damage caused by the chaos surrounding Lehman's collapse. .................(more)

The complete piece is at: http://www.alternet.org/story/140522/let%27s_get_it_straight%2C_hank_paulsen_is_a_prick_who_took_down_the_economy/

[AndyA]

1. This whole Wall Street thing needs to be investigated, and people need to be prosecuted

for their greed and their crimes. If it means they lose everything they have, so be it.

You cannot just create a mess like this and walk away from it, yet that appears to be what's happening. And yes, failure to prosecute will be a reflection on the Obama Administration.

[howmad1]

14. Yeh, right!

Like the Obama administration gives a shit what Wall street is doing to America. Seems to me, Wall Street has Obama just where they want him, in their back pocket.

[truedelphi]

20. Obama let us know very early on where his sympathies lay

Late Nov 08, on "Sixty Minutes," Obama said that "Hank is working hard."

Sort of his "Good job there, Brownie" moment.

Then the talk by David Simon last night to the National Press Club - Simon focused on how Wall Street entices every industry to lower its standards so that profits soar, usually destroying that industry in the process.

What industry has shown that they care about the American people? Not the newspaper industry, or other big media, not health care, not the automobile industy, they don't care about anything but their profits.

[JanusAscending]

33. Wow!

You really tell it like you THINK it is , don't you?? Welcome to DU, and let me be the first to call BULLSHIT on your blanket indictment on our new President. What could you do in 4 months I wonder. You do remember that it was that "other" one that got us into this mess??? It only took him 8 yrs.!! More is going on behind the scenes than you and other nay sayers like you, could even IMAGINE! Time will tell, and if I'm right, will you take back what you said about our President?? I doubt it. For what it's worth, and I haven't heard nor read anyone speculate on this one yet, I think that Bush really knew what he was doing when he put Paul Wolfowitz in charge of the World bank, just at the right time. I think this LOSER and the neo cons knew exactly what they were doing. Think about it. It was right after the World bank dumped the asshole, that all this emergency bank bailout fiasco began!!:rant: :thumbsdown:

[Octafish]

2. People need to read more.

Especially this article.

Or maybe it was the way the Treasury Department refused to tell the Congress really anything at all about how it chose whom to give TARP money to; how when the Congressional Oversight Panel asked Paulson what criteria he was using to decide who gets bailout money and who doesn't, he sent Congress back a copy of a TARP application form. Maybe it was that. Or maybe it was the way Paulson got a $200 million tax deferral thanks to an obscure rule that allows executives who join the government to defer taxes on their holdings. That means that not only did Paulson use billions of our money to bail out his own mistakes, he managed to use a loophole to get out of paying his fair share of that same bailout.

Thank-a-you, marmar. Pure gold.

[DemReadingDU]

7. Read more, or at least open their eyes and pay attention

This was a good article

[laststeamtrain]

3. "craven, bumlicking ass-goblin"...SCORE!!! n/t.

[xiamiam]

4. taibbi rocks...thanks for this..nt

[The Wizard]

5. Matt Taibbi hammers the point home

Hank Paulson belongs in prison. Let's make a two for one trade with North Korea.

[chimpymustgo]

6. Taibbi is a truthteller. And roundly shellacked on DU for it. GREAT article.

-snip-

Meanwhile your own Goldman, Sachs ended up with a 22:1 debt-to-equity ratio a few years following that meeting, a number that would have been much higher if one didn't count the hedges Goldman bought through a company called AIG. Thanks in large part to Paulson's leadership in his last years as head of Goldman, the company was so massively over-leveraged that it would have gone under if AIG -- which owed Goldman billions when it went into its death spiral last September -- had been allowed to collapse. But thanks to Hank Paulson, who heroically stepped in and gave AIG $80 billion the same weekend he allowed one of Goldman's last key competitors, Lehman, to collapse, Goldman didn't have to go without that money; $13 billion of the AIG bailout went straight to Goldman. So I guess we have Paulson to thank for the fact that he used about $13 billion of our taxpayer money to essentially bail out his own fuckups. I mean, that's heroism if I've ever seen it. Audie Murphy has nothing on that. Sit your asses back down, Harriet Tubman, Thomas More, Gandhi and Jesus Christ. Hank Paulson is in the house!

-snip-

[underpants]

34. Taibbi is the best out there today by far

that, of course, is the reason you never see him on television

[ProfessorGAC]

42. He's Regularly On Maher's Show

I like him on there, too!
GAC

[HamdenRice]

8. I agree that the TARP 1 bailout worked. But it was Barney Frank's and Gordon Brown's handiwork

Paulson, who looked like a panicked Uncle Fester during the financial crisis, presented a one page bill to Congress.

Barney Frank then wrote a 100+ page bill that tried to ensure that the cost of TARP would ultimately be carried by the banks when they recovered.

Then British Prime Minister Gordon Brown addressed his own country's financial crisis through direct capital injection/partial nationalization and stabilized British banks. The US then followed the British model, with the Treasury purchasing preferred shares in the TARP 1 banks -- shares that carried a mandatory 5% dividend payable to the Treasury.

The banks have been making those dividend payments (about $17 billion on an annualized basis) and some are asking to pay back the entire full face amount of the preferred -- meaning that not only did TARP 1 save those banks, but upon repayment, will have made a tidy profit for the taxpayer.

So it really was Barney Frank and Gordon Brown who saved the day.

[girl gone mad]

30. You just don't give up.

Let us know when they've paid back all $1T, and not with money funneled from the TLGP or other government giveaways. Until then it's entirely disingenuous to claim that TARP has been anything but a losing proposition for the taxpayers.

[HamdenRice]

43. When you get the basic facts wrong, it's hard to take you seriously

TARP 1 was $350 billion (about $750 billion authorized, but only half used), not $1 trillion.

The Fed has carried out several "bailouts," one of which is in the trillion dollar ballpark so perhaps that's what you are referring to.

But that is a commercial paper facility and commercial paper is paid back in 30, 60 or 90 days, so yes, it has already been paid back. And re-lent. And paid back. And re-lent. With interest.

You just don't give up spreading misinformation, do you?

[avaistheone1]

39. I think it is way too soon to tell. An article in yesterday's Bloomberg

is saying that many of these banks which are showing good returns actually have some seriously questionable accounting going on.

This disaster is far from over. Don't buy into the MSM spin.

[Hannah Bell]

41. i've heard rumblings that the stress tests were a bit rigged to get the results desired.

[avaistheone1]

45. Bank Profits From Accounting Rules Masking Looming Loan Losses

June 5 (Bloomberg) -- Big banks in the U.S. say they’re on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6.
Treasury Secretary Timothy Geithner, after “stress testing” 19 banks on their ability to withstand a worsening economy, declared in early May that Americans can be confident in the banks’ stability and resilience. Wells Fargo & Co. and Morgan Stanley were among banks raising $43 billion in new capital since then through share sales.

“With our capital and assets, stressed as they have been, we can go back to focusing all our attention on managing our business and restoring value,” Citigroup Inc. Chief Executive Officer Vikram Pandit said after Geithner’s examinations were completed.
The revival may be short-lived. Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.

With our capital and assets, stressed as they have been, we can go back to focusing all our attention on managing our business and restoring value,” Citigroup Inc. Chief Executive Officer Vikram Pandit said after Geithner’s examinations were completed.

The revival may be short-lived. Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.

The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.

‘Bogus’ Profit

Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

http://www.bloomberg.com/apps/news?pid=20601109&sid=alC3LxSjomZ8#

[HamdenRice]

44. Agreed.

By worked, I meant it avoided the complete meltdown in September that we were very close to.

Whether all the banks pull through is still an open question.

[Dr.Phool]

9. "A head of lettuce".

If anyone besides Paulson had been running Goldman Sachs earlier in this decade -- if a person with a serious brain injury had been in his place, for instance, or a horse, or a head of lettuce -- we'd all be better off today, because there wouldn't be so many toxic Goldman-underwritten mortgage-backed CDOs on the market. We, all of us, are paying the freight for assholes like Paulson, and like you, for that matter. And while we're getting over it, slowly, you're really not helping when you open your mouth and pat yourself on the back for all the good deeds you've done. Spare, us, okay? Just give it up.

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

[paparush]

10. "ass-goblin" might just be the name of my next band

Taibi..slicing and dicing as only he can.

[xxqqqzme]

11. I get the impression Taibbi is upset.

That guy can sure create some great word pictures. I mean "craven, bumlicking ass-goblin" is a joy to read.

[Uncle Joe]

12. I never thought of this angle.

"Meanwhile your own Goldman, Sachs ended up with a 22:1 debt-to-equity ratio a few years following that meeting, a number that would have been much higher if one didn't count the hedges Goldman bought through a company called AIG. Thanks in large part to Paulson's leadership in his last years as head of Goldman, the company was so massively over-leveraged that it would have gone under if AIG -- which owed Goldman billions when it went into its death spiral last September -- had been allowed to collapse. But thanks to Hank Paulson, who heroically stepped in and gave AIG $80 billion the same weekend he allowed one of Goldman's last key competitors, Lehman, to collapse, Goldman didn't have to go without that money; $13 billion of the AIG bailout went straight to Goldman. So I guess we have Paulson to thank for the fact that he used about $13 billion of our taxpayer money to essentially bail out his own fuckups. I mean, that's heroism if I've ever seen it. Audie Murphy has nothing on that. Sit your asses back down, Harriet Tubman, Thomas More, Gandhi and Jesus Christ. Hank Paulson is in the house!"

In effect the government subsidizing the monopolization of an industry by bailing out one favorable corporation while allowing another to fail and the dynamic that created the lose conditions allowing those corporations to hang them selves was that same government entity. I wonder if Paulson knew all along that Goldman Sachs would be bailed out at taxpayer expense while he allowed Lehman to drown when he spiked their party punch?

Thanks for the thread, marmar.

[katty]

13. Paulsen is a blood-sucker

[phantom power]

15. The ass-goblins are still firmly in charge.

It makes me very angry.

[pscot]

16. This is all so incredibly wrong.

No investigations, no indictments, and the administration is doing its damnedest to get the crap game up and runing again. All the looters have to do is hunker down until all this blows over. The public will forget and the swindlers who took the country down will get to hang onto everything they stole.

[progressoid]

17. Yep and he had/has plenty of help to do it.

A lot of those foxes are still guarding the henhouse.

[Wednesdays]

18. K&R

:kick:

[mullard12ax7]

19. By taking a gov't job, Paulson kept $500 million tax-free

from his retirement accounts, a "little" perk meant to give people an incentive to work for the government.

[truedelphi]

21. Hey there welcome to DU.

[DuaneBidoux]

22. The fault is not in any one person--it is the culture of Wall Street, the Bankers, AND both parties.

We always want someone easy to blame...but it started long ago and went on under virtually every president and congress since Reagan.

Step by step, even and especially under Clinton and Rubin, we have been dismantling the safeguards that were put in place after the great depression.

And worst of all, I fear Obama is wimping out on really fixing the problem, being satisfied with band aids.

[Lucky Luciano]

23. nicely said

:thumbsup:

[KG]

27. oops

[KG]

28. +1

[valerief]

24. Taibbi is is right on money. Hmm, nowadays I should be saying he's right on the debt. nt

[marmar]

25. " he's right on the debt."

:)

[Serial Mom]

26. He tells the truth like it is n/t

[L. Coyote]

29. HELLO! Bush tax cuts, War on Iraq ..... Bush destroyed the economy.

[mascarax]

31. Where is Henry "Hank" Paulson now?

Back at Goldman Sachs on contract basis?

(Oh, and yes: another great article by Taibbi - did WSJ print his letter?)

[snappyturtle]

32. K&R WOW! Love it. Thanks for posting. nt

EDIT: WOW! WOW! "...............a head of lettuce!" Thank you for the wonderful article! Hope many read it....it's just perfect. I hope the President reads it too and gives it a lot of thought!

[chill_wind]

35. There's simply no equal to Hank! (Chuck Schumer, D-N.Y.)

"In the world of finance and international markets there's simply no equal to Hank," said Sen. Charles Schumer, D-N.Y., who praised Paulson's experience in international finance and relationships with Chinese business leaders and government officials.

"We need someone who is seasoned. We need someone who knows markets," Schumer said.

Bush praised the Senate for its quick action.

memory lane: http://www.marketwatch.com/story/senate-confirms-paulson-as-treasury-secretary
June 28, 2006

[marmar]

36. Good old Chuck.....who also gave us the gift of Mukasey.

With Dems like him......

[chill_wind]

46. Paulson was confirmed by unanimous voice vote.

By 2006, Senate Dems weren't_even_pretending to stand up for the Democratic Party. Depressing.

[sce56]

37. You know this sounds to me just like the shit we would get under Shrub! You know

like the "Blue Skies Initiative" that says it is cleaning up the sky when in reality it is letting it get more polluted!Fixing the problem when they are just stealing more money

Where is that change we voted for?

[DCKit]

38. K&R for the OP as much as the insightful comments. n/t

[democrank]

40. Once again, Matt Taibbi tells it like it is.

Unlike Paulsen, he`s a real treasure.

[The Second Stone]

47. Why yes he did work for Goldman Sachs

http://findarticles.com/p/articles/mi_hb5555/is_200204/ai_n21940686/
and it is easily googleable.