So, what’s the Restless Knight getting worked up about this time? It’s actually something I’ve been consistently restless with since the beginning of the financial melt-down.
While the banking industry played monopoly with the people’s money, many of them received coveted “Get Out of Jail Free” cards. At least, that’s the way it appears. Too bad, because the people they screwed did not get that compensating “Get Out of Bankruptcy” card, or any other chance but ‘fat’, for that matter.
The Obama administration seems to lack the temerity do anything about this, as no banker has seen the inside of Club Fed. If it was good enough for Martha Stewart, than why not these stalwarts of financial insatiability? When running for President in 2008, Mr. Obama turned down public financing so his campaign wouldn’t be hamstrung by a lack of funds. Unfortunately, some of his main backers were Wall Street firms. In fact, Barry collected twice the money that his opponent did from the finance industry. This was reversed in the 2012 election, with Romney grabbing the lion’s share from these institutions.
Then Mr. Obama appointed deer-in-the-headlights Timothy Geithner as his first Secretary of the Treasury, who saved the banking industry, but told the rest of the world where to stick it. Now the President has nominated Jacob Lew to fill that soon-to-be-vacated post. Lew has been known to ‘hang out’ with Lloyd Blankfein (more about that lovely chap below).
Larry Sommers (who was paid a measly $135,000 for a single appearance before Goldman), and Robert Rubin, had both been Clinton’s Secretaries of Treasury and might possibly have had some influence on the decision to repeal the 1933 Glass-Stegall Act. It had been enacted after the Great Depression in order to prevent banks from over-extending themselves, and to avoid a repetition of that crash. It was meant to keep banks from becoming too big to fail. We know what resulted when that safety net was removed. Gee, what a surprise.
Let’s talk about my favorite bank, Goldman Sachs, which had been lead by Robert Rubin, a twenty-six year veteran of the company, and CEO, prior to his stint in the Clinton cabinet. Lew was a hedge fund manager at Citi, another of God’s worthy institutions.
As you might have read, Goldman’s CEO since 2006, Lloyd Blankfein, has boasted that what his company was doing, with transactions that would precipitate the most horrific financial debacle since the Great Depression, was God’s work. I spoke to God about this, and He denied it, in no uncertain terms, “Not me. Never told him to do it.”
But God also mentioned that all labor is God’s work, including the enterprise of making license plates. In this vocation, Mr. Blankfein could actually produce something not just billionaires could use.
Here is my analogy of the Credit Default Swap fiasco in layperson’s terms
Let’s say I’m a car manufacturer. I construct an automobile with a built-in design flaw. Let’s call this car the Bummer (rhymes with another automotive obscenity). It looks shiny and beautiful, boasts a fine EPA mileage rating and is reasonably priced. I stake my company’s reputation on this car, aggressively campaigning for my clients to get it while it’s hot. But what I conveniently forget to tell these buyers is that I have taken out an insurance policy on this vehicle, knowing that the engine will explode very soon after the Bummer hits the road, BECAUSE I DESIGNED IT THAT WAY. I also encouraged thousands of others to purchase insurance on the Bummer, for which my company received a sizable commission. What helped make the sale of the Bummer so successful was the blessing given it by trusted rating agencies, such as S&P (Yes, the same folks who downgraded U.S. credit in 2011).
So, I sell my Bummers, with high expectations to my friends (analogous to the trust Madoff had with Mets owner, Fred Wilpon). But unlike the banking industry mafia, Bernie M. had exchanged his Get Out of Jail Free card for a shot at owning Board Walk and Park Place. Now I let the financial world in on a hot insurance deal. And unlike typical insurance contracts, where the policyholder is also the owner of the insured property, Mr. Blankfein’s deal allows anyone to buy into this policy. It’s no different from planting an incendiary device in the basement of some unsuspecting jerk, and then getting all the neighbors to take out fire insurance on it.
We hear there’s a new sheriff in town. Name’s Mary Jo White. Obama has tapped her to chair the SEC, allegedly the watchdog for the finance industry. If their efforts, just before the ‘08 crash are any evidence, it’s a dog that can easily be bought off for a Liver Snap. Hopefully, Mary Jo will be the missing teeth for the Securities and Exchange Commission. Some have doubted her as the best choice for the job, having defended Wall Streeters in her previous role at Debevoise & Plimpton, a white-shoe law firm. Others believe she can use the knowledge gained protecting these miscreants, sort of like the way the most successful lobbyists come from the hallowed halls of Congress, and certainly know their way about.
So, to serve justice, these men without honor need to be fitted with the proper attire, and pursue God’s work from the inside.