Getting the Lead Out

Let’s see… when the government bailed out insurance giant, AIG, the primary beneficiary among AIG clients was… you got it… financial huge guy… Goldman Sachs. $12.9 billion worth of insurance for trading losses! And when the Federal Reserve went into “stimulus” interest rates that hovered around zero to get credit flowing again… it flowed $52 billion in cheap loans to the new “commercial bank” – yeah, Goldman Sachs, which promptly put that money into small and mid-cap businesses NOT. They used lots of that money to fuel their own trading frenzy, borrowing money to buy stock as the market surged significantly higher than its very bottom a few months ago. They paid back the $10 billion in TARP money, not because they wanted to be good citizens; they couldn’t tolerate the compensation caps required by the feds for companies with TARP on their books.

Goldman has joined with financier-billionaire, Warren Buffet, in donating $0.5 billion to help their image, but on the whole, they’re really scared. Yeah, the same investment bank that routinely places powerful voices within any sitting government… Henry Paulson, former Goldman CEO, and then… er… George Bush’s last Secretary of the Treasury. Robert E. Rubin, head of the National Economic Council and later Treasury Secretary under President Bill Clinton, once served as a Goldman board member and Co-Chairman.

Hey, how about Larry Summers, one of President Obama’s primary economic advisors? According to the April 4 Salon.com, Goldman was nice to him… in cash: “That's $135,000 paid by Goldman Sachs to Summers -- for a one-day visit. And the payment was made at a time -- in April, 2008 -- when everyone assumed that the next President would either be Barack Obama or Hillary Clinton and that Larry Summers would therefore become exactly what he now is: the most influential financial official in the U.S. Government.” They knew that if Obama or Clinton were elected, the ability to bribe… sorry… engage and pay Larry Summers in such a flagrant manner would no longer be on the table. Obama even considered Summers to be Secretary of the Treasury!

So why are these bankers so scared? They’re about to be paid so much money as part of their allocated profit pool, what’s to worry about? I mean, we know that Goldman bankers are “doing God’s work.” After all, current Goldman CEO Lloyd Blankfein said so early last month in an interview with the London Sunday Times. He also apologized for Goldman's role in the financial crisis, saying that the bank “participated in things that were clearly wrong and have reason to regret.” Ya think? Naw, Lloyd, those subprime mortgage bundles were wonderful. So was charging amazing advisory fees to tell companies to borrow themselves silly, to leverage their assets up to their eyeballs. Goldman showed real leadership to pressure on the SEC to end the debt restrictions on the “too big to fail” investment banks resulting in that inexcusably stupid April 28, 2004 lifting of debt-equity ceilings for the big boys. Hey, it worked! You took out two of your biggest competitors, Bear Stearns and Lehman Bros. with that one. Okay, there was a little collateral damage to the economy along the way.

So given that horrific track record and the obvious contrast of their profiting wildly at the expense of the American taxpayer, Goldman’s a little wary of flaunting their lifestyle these days while they are receiving some of the highest bonuses they have ever paid… too bad the rest of the country, the tax payers who bailed Goldman out… aren’t having a particularly bounteous time. So, according to the November 30 BusinessInsider.com, not only have they cancelled their mega-Christmas party for the second year in a row, but December will be a particularly low key month in general: “The Business Insider [noted] the voicemail all Goldman Sachs employees received earlier this month. They were told not to organize small parties even if no firm money goes to pay for them… By ‘small,’ Goldman means exactly twelve. Starting tomorrow, they can hang out outside of Goldman in groups of eleven, but not twelve.”

But Goldman bankers are still terrified. Apparently, they recall the angry protests on the lawns of AIG executives when they announced huge bonuses back in May. Dangerous stuff taking barrels full of cash while people are losing their jobs, left, right and center. I recall a statement by Marie Antoinette in the boiling early days of the French Revolution centuries ago: “Let them eat cake!”

Hey, there is only one prudent thing for a terrified investment banker, unsteady hands shaking in fear, to do: apply for a permit to have a gun! Alice Schroeder, for the December 1^st Bloomberg.com, notes: “‘I just wrote my first reference for a gun permit,’ said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.

“I called Goldman Sachs spokesman Lucas van Praag to ask whether it’s true that Goldman partners feel they need handguns to protect themselves from the angry proletariat. He didn’t call me back. The New York Police Department has told me that ‘as a preliminary matter’ it believes some of the bankers I inquired about do have pistol permits. The NYPD also said it will be a while before it can name names.” Guns and billions of dollars of compensation… maybe even over $20B this year… end of year payments will be out soon! Kinda makes you go all warm and fuzzy inside.

I’m Peter Dekom, and this whole Goldman debacle never ceases to amaze me.