Matt Taibbi destroys Hank Paulsen
Remind me never to get on Matt Taibbi’s bad side. Taibbi asked The Wall Street Journal, “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?“ He then informs us Evan Newmark was a managing director at Goldman and then savages Hank Paulsen:
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.
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…
Or maybe it was Paulson’s foresight in heading off the crisis before it happened that inspired you? Maybe it was the way Paulson pronounced the subprime fallout “contained” in 2007 and called the economy the “strongest in decades?” Or maybe it was the way he remained calm last July, saying that it was a “very manageable situation” and “our regulators are on top of it?” Remember how he said all that shit, Evan, just about six weeks before the world exploded? …
Or was it his non-intervention last summer when gas prices hit $4.50 a gallon thanks again to his old buddies at Goldman and Morgan Stanley, who juiced the commodities market with so much speculative cash that oil prices soared despite the fact that supply was up and demand was down all year? Do you remember that part? How about the way food prices soared thanks to the same commodities speculators? According to the World Food Program at the UN, about 100 million people joined the ranks of the hungry last year during the commodities spike.
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.
Posted by James on Tuesday, June 09, 2009