Our Goldman Overlords

[Goldman Sachs] has an extraordinary history of placing its executives in high-ranking governmental and quasi-governmental positions, from treasury secretaries to senators to the heads of the World and European Central Banks. Goldman has been implicated in the trafficking of toxic mortgages, a sprawling state corruption case in Malaysia, the manipulation of world commodity prices and a heinous episode involving Greece in which the bank helped to mask the country's ballooning debt while simultaneously working with JPMorgan Chase to create an index for betting against Greece's economy.

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The new [GOP] party line, emanating both from Washington and from Alt-Right yahoos on the Internet, is that [Goldman bankers] are no longer the swindling scum-lords Trump said they were a few months ago [during his campaign], but simply smart businessmen.

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Donald Trump has filled his White House with [...] Goldman veterans.

His chief strategist, the unabashed white-supremacist loon Steve Bannon, is a former Goldman banker, as is adviser Anthony Scaramucci. Steve Mnuchin marks the fourth Goldman-pedigreed treasury secretary in the last four presidencies, after Bob Rubin, Lawrence Summers and Hank Paulson.

But the real shocker is the recent appointment of Goldman Chief Operating Officer Gary Cohn to the post of director of the National Economic Council.

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Donald Trump made a lot of political hay out of the iniquity of people like Cohn during his campaign. But his recent appointments are absolute proof that his "populist" message was a crock all along – not that we couldn't have guessed anyway.

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[While other banking institutions were crashing at the end of 2007,] legend on the street was that Goldman was somehow not only going to survive the crash, but prosper and make big profits. How did Goldman do so well during a financial hurricane? The New York Times had an answer: its leaders were smart – and humble!

"Goldman's secret sauce, say executives, analysts and historians," the paper wrote, "is high-octane business acumen, tempered with paranoia and institutionally encouraged — though not always observed — humility."

Where did writers Jenny Anderson and Landon Thomas Jr. get the idea that Goldman's smarts saved them during the mortgage crisis? From Goldman, of course.

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Chaired by Michigan Sen. Carl Levin, the PSI [Senate Permanent Subcommittee on Investigations] scrupulously detailed the efforts by Goldman to get out from under the mortgage crash by dumping its disastrous mortgage investments on its own clients as it simultaneously bet against them.

  Matt Taibbi

This is the point in the movie "The Big Short" where I lost my viewing cool. I did not know about that particular maneuver until I watched that excellent film. If you haven't seen it, I recommend it highly.

I guess we can still say Goldman officials were smart.  At least smart enough to get politicians in their pockets and convince them to make taxpayers absorb the bank's losses.

This maneuver, colloquially described since as the "Big Short" episode, was perhaps the most lurid example of Wall Street iniquity during the crash years. And Trump's new economic adviser, Cohn, played a central role.

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At the tail end of 2006, Goldman execs saw that a) the subprime mortgage market was in serious trouble, and b) the bank itself was dangerously overinvested in it. So they made a frenzied, often deceptive effort to induce their clients to eat what should naturally have been their own losses.

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In one mortgage-based deal called Hudson 1 securities, Goldman helped sell its toxic holdings by saying the bank's interests were "aligned" with those of potential clients, because it would own a tiny, $6 million slice of the deal.

The bank left out the fact that it had a $2 billion bet against the same deal.

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The sales rep [who made one deal to dump some of its toxic inventory on Basis Capital] was so elated that the subject line of his email read "Utopia." He told other execs he'd found the ultimate sucker. "I found white elephant, flying pig and unicorn all at once," he crowed.

Basis Capital later claimed it lost $56 million in six weeks. It filed for bankruptcy within months of the Timberwolf deal.

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Through deals like this, Goldman within months went from having a $6 billion bet on mortgages to having a $10 billion bet against them – a "big short."

All of these moves were made with the assent of the Firmwide Risk Committee, which included Goldman CFO David Viniar, Blankfein and Cohn.

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Goldman probably should have gone out of business in 2007-2008. Two little-discussed acts of government welfare in September of 2008 helped save the company.

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Have you ever seen a Goldman branch or a Goldman ATM? Probably not, because it isn't a commercial bank. But on September 21st, 2008, the government gave it permission to call itself one.

This move, so desperately needed that it was executed on a Sunday night, allowed Goldman access to mountains of life-saving cash from the Federal Reserve.

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The other key move was a decision by the SEC to ban short-selling of financial stocks. This nakedly anticapitalist maneuver allowed Goldman to fend off attacks by speculators who correctly sensed the company was in deep trouble.

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Goldman's higher-ups ended up having a great year. While the whole financial world was collapsing due in large part to behaviors like that of his own bank, Blankfein made $68.5 million, a record for a Wall Street executive. Cohn made $67.5 million. The two were the McGwire and Sosa of the profiting-off-others'-misery era. The bank, meanwhile, would lay off 3,200 lower-level employees within a year.

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For all their brains and humility, these geniuses needed the government to halt the free market on their behalf to survive.

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They are scum, and it's absolutely fitting that so many of them will end up serving the Trump administration.

Fitting, but dangerous for world. We already hear tales of banks doing the exact same things they were doing that led to the 2008 world financial disaster. Get ready for the next.

...but hey, do what you want...you will anyway.