The only change Obama brought us was more corruption

Flopping Aces

 

In the WSJ former AIG CEO Hank Greenberg recently posed a question:

The recently released list of businesses bailed out by the Federal Reserve was not as surprising to me as it was to many members of the general public.

What is clear from the list is that the notion of equal protection ensconced in the Constitution was missing in September 2008. Rather than trying to spread both the burden and benefit of the bailout evenly among members of the U.S. financial services industry, key decision makers at the Fed and Treasury arbitrarily determined which companies should become wards of the federal government (AIG) and which should be permitted to live on (Goldman Sachs and Morgan Stanley). Goldman Sachs was permitted to live by enjoying markedly lower interest rates and access to credit facilities amounting over time to approximately $600 billion.

Federal decision makers had six months following the Bear Stearns collapse in early 2008 to formulate an effective response to foreseeable liquidity difficulties in the U.S. financial-services industry. Instead, the bailout turned out to be a rush for funds that benefited some and punished others. Goldman Sachs, Morgan Stanley and others were permitted to become bank holding companies and have access to cheap federal funds, while AIG was denied this opportunity for reasons never fully explained. It is important that an independent body is convened to seek reasons for these actions.


The answer is simple. Robert Rubin.

Arguably no one Robert Rubin has benefited more from the “platinum revolving door” than Robert Rubin. Rubin, Treasury Secretary under Bill Clinton, spent 26 years at Goldman Sachs and another 9 years at Gitigroup. Rubin took more than $126 million while Citigroup was going down the toilet. He and Jamie Gorelick both seem to prosper no matter how much destruction accompanies them.

As Treasury Secretary, Rubin once intervened in a Mexican financial turmoil with an interesting motive:

Another momentous event in Goldman’s history was the Mexican bailout of 1995. Rubin drew criticism in Congress for using a Treasury Department account under his personal control to distribute $20 billion to bail out Mexican bonds, of which Goldman was a key holder. On November 22, 1994, the Mexican Bolsa stock market had admitted Goldman Sachs and one other firm to operate on that market. The 1994 economic crisis in Mexico threatened to wipe out the value of Mexico’s bonds held by Goldman Sachs.

How convenient.

In 1998 Travelers (insurance) merged with Citicorp (banking). Glass-Steagall had kept banking and insurance separate since 1933. Sanford Weill of Citicorp and John Reed of Travelers wanted Glass-Steagall dismantled or they would have had to spin off the insurance business. To help with the deconstruction of Glass-Steagall, Weill and Reed enlisted the help of one Robert Rubin.

Robert Scheer:

The goal is to use your government position to advance the interests of your future employer, and Orszag and Rubin’s actions in the government and then at Citigroup provide stunning examples. As Bill Clinton’s treasury secretary, Rubin presided over the dismantling of Glass-Steagall, the legislation that would have prohibited the creation of the too-big-to-fail Citigroup. He was rewarded with a $15-million-a-year job at Citigroup, where he became a leader in the bank’s aggressive move into high-risk ventures.

Lefties are quick to blame Republicans for the repeal of Glass-Stegall but it was engineered by Robert Rubin and friends.

Those who had hoped for “Hope and Change” got precious little of that “change” when it comes to monetary matters. They’re all Rubinites:

It’s not unlike what happened after the collapse of the failed economy in the Soviet Union. The corrupt and inept communist bosses who were tossed out of power ended up back on top by stealing their way into ownership positions in the economy’s newly privatized companies.

Similarly, delivering the exact opposite of “change,” President-elect Barack Obama is putting some of the nation’s most notorious foxes in charge of guarding the chicken coop by way of a proposed economic team that Jackie Calmes, The New York Times correspondent on national economic policy, calls “a virtual Rubin constellation.”

Obama’s “choices for his top economic advisers — Timothy F. Geithner as Treasury secretary, Lawrence H. Summers as senior White House economics adviser and Peter R. Orszag as budget director — are past proteges of (former Treasury Secretary Robert) Rubin,” explains Calmes, formerly the chief political correspondent for The Wall Street Journal’s Washington bureau.

Geithner, picked to succeed Treasury secretary Henry Paulson, was Rubin’s undersecretary for international affairs at Treasury; Orszag was a dependable Rubin ally during his years at Treasury; and Summers served as deputy Treasury secretary under Rubin.

And Orszag? Following the Rubin Rule, he’s doing just fine:

On Thursday, Peter R. Orszag, President Obama’s first budget director and a protégé of Mr. Rubin, followed in his mentor’s footsteps and joined Citi’s investment banking group as a vice chairman.

Mr. Orszag, 41, is the second cabinet official to join Citi this month, and his appointment comes days after the Treasury Department’s $10.5 billion stock offering helped further extricate the bailed out bank from Washington.

snip

Inside Citigroup, the guessing games have already begun about how many zeros will appear on his paycheck — as well as the requisite jokes about whether his package would pass muster with the federal pay czar. Such a job typically pays at least $2 million to $3 million, according to bankers.

So Rubin makes Citigroup too big to fail, Orszag bails out Citigroup with our out with our money and in return Citigroup rewards them very handsomely.

Dodd-Frank is an absolute farce, thanks to these fine gentlemen:

The failure to provide serious regulation of the financial industry to avoid future downturns is documented in devastating detail in a Dec. 28 Bloomberg report by Christine Harper: “The U.S. government, promising to make the system safer, buckled under many of the financial industry’s protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives.”

Rubin wasn’t alone in pushing for the repeal of Glass -Steagall. There’s another name you might find familiar:

The reason for that failure is obvious from the president’s choice of advisers, featuring Rubin acolytes from the Clinton years. Harper writes: “While Obama vowed to change the system, he filled his economic team with people who helped create it,” referring to, among others, Timothy F. Geithner, who had gone from the Clinton Treasury Department to head the New York Fed, where he presided over the salvaging of Citigroup and AIG. As Obama’s treasury secretary, he was quick to appoint a Goldman Sachs lobbyist as his chief of staff. Geithner’s subservience to Wall Street was reinforced by White House top economic adviser Lawrence Summers, Rubin’s deputy and then replacement in the Clinton administration, who pushed through the repeal of Glass-Steagall and fought against the regulation of derivatives.

Fought against the regulation of derivatives? Anyone remember the role of derivatives in the current financial crisis?

And that guy Geithner at the Treasury? Guess what his job was while at the NY Fed.

He was supposed to keep an eye on……………guess who?

Citigroup.

As president of the New York Federal Reserve Bank, Timothy Geithner often preached that gargantuan financial firms like Citigroup should be held to the highest regulatory standards to make sure they couldn’t take on too much risk. But when it came to supervising Citigroup in recent years, the record shows that the New York Fed eased the reins as the company blew billions on subprime mortgages and other risky deals that ultimately forced the biggest bank rescue in U.S. history. Now, the 47-year-old Geithner heads to the Senate in coming days as President-elect Barack Obama’s nominee for Treasury secretary. He’s won accolades for his expertise and work ethic, but there’s been little attention to his record as a Fed watchdog.

Geithner failed to do his job at the NY Fed and Obama rewarded that failure in making him Treasury Secretary of the United States. I am going to stick my neck out here and prognosticate that when he leaves office, Geithner will find employment immediately at….

Citigroup.

But we’re not done yet.

As a pretext for financial reform, the SEC filed fraud charges against Goldman. In the settlement that followed, Goldman paid a $550 million fine but admitted no wrongdoing. It has been noted that while this appears to be a large sum, it was but two weeks profit for Goldman.

At the American Thinker, Fred Sauer shows us just what Obama’s financial reform has brought us:

The real crime of the matter is revealed by our discovery of exactly the nature of Goldman Sachs Mysterious Business. Quite simply, the Mysterious Business is the largest highly leveraged hedge fund in the world that is run exclusively for the benefit of the employees of Goldman Sachs. All risks are absorbed by the Federal Reserve System with the U.S. taxpayers standing by at all times as ultimate guarantors.

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