‘The Legs of a Potential Scandal’

New York magazine’s Joe Hagan writes about the suspicions surrounding Goldman Sachs, insurance giant AIG, and last fall’s TARP bailout:

The AIG rescue is the incident from which all other Goldman conspiracy theories spring — the original sin, in a sense, of Goldman’s current public tarring. It’s the act that first made the average man on the street sit up and say, “Hey, wait a minute. The secretary of the Treasury [i.e. Henry Paulson], who used to be the Goldman CEO, just spent $85 billion to buy a failing insurance giant that happened to owe his former firm a lot of money. Does that smell right to you?” It also seems to have the legs of a potential scandal, with Neil Barofsky, the inspector general overseeing the Troubled Asset Relief Program, conducting an audit of the buyout.
Then again, if you’ve just posted $3.44 billion in second-quarter profits in an environment where, say, Morgan Stanley just reported a $1.26 billion loss, what does it matter what people say? . . .

Read the whole thing. These three facts — (a) Goldman has spectacularly profited, at a time of rising unemployment, foreclosures and bank failures, (b) Goldman was the primary beneficiary of the TARP bailout, and (c) Goldman’s former CEO was the driving force behind TARP — are hard to reconcile in any way that doesn’t raise the suspicion of corruption.

SIGTARP Barofsky’s investigations are clearly raising questions embarrassing to the people who backed the bailout.

BTW, a friend e-mails to say that Barofsky’s estimate of $23.7 trillion TARP liability is a number that “assumes The End of the World As We Know It, or Armageddon, in short.” The e-mailer adds:

The number is correct, but the vast majority of the dollars are called, precisely, “contingent liabilities.” They may, and they may NOT, become actual liabilities. [Bailout Nation author] Barry Ritholtz, who tends to be a lefty politically but a very hard-ass “numbers” guy pointed that out.
Yes, the bailout is unpopular and yes, it seems that Goldman Sachs has benefitted far beyond the laws of probability. Ritholtz agrees with that, too. And yes, CitiBank should be closed and sold for scrap.
But be careful with that $23T stuff.

The key part is, “The number is correct.” The likelihood that taxpayers will actually be required to fork over $23.7 trillion is remote, but it’s not a number that Barosky pulled out of a hat.

Oh, and speaking of scandal, Instpundit reminds us that today is the official publication date for Michelle Malkin’s Culture of Corruption: Obama And His Team of Tax Cheats, Crooks, and Cronies. It’s the Best. Book. Evah! Today at her blog, Michelle looks at Obama crony Valerie Jarrett. This afternoon, Michelle will be on Sean Hannity’s radio show and his Fox News TV show.

So buy two copies and give one to a liberal friend, just to annoy him.

The United States of Goldman Sachs

“They exist, and others don’t, and taxpayers made it possible.”
— anonymous “industry consultant,” quoted by the New York Times, reporting that Goldman Sachs is expected to post record profits Tuesday, nine months after getting $12.9 billion in last fall’s bailout

“The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
— Matt Taibbi, Rolling Stone

Financial incest

Just in case you thought Obama was going to rid Washington of insider cronyism:

Treasury Secretary Henry M. Paulson Jr.; Citigroup board member Robert E. Rubin; and Timothy F. Geithner, the president of the Federal Reserve Bank of New York, have for years followed one another in and out of jobs in government and industry. Their close relationships helped pave the way for one of the largest and most dramatic government interventions to date in the financial crisis. . . .
The bailout came only days after Paulson made comments that many in the financial markets took to mean that he would leave any future bailouts to the Obama administration. But once Citigroup’s stock price plunged 60 percent last week, Rubin, an old colleague from Goldman Sachs, told Paulson in phone calls that the government had to act, according to industry sources familiar with their discussions.
Geithner, too, shared a close relationship with the pair.
He worked for Rubin at the Treasury Department in the 1990s and now is President-elect Barack Obama’s nominee to follow Paulson as Treasury secretary.
As Citigroup’s lead regulator, Geithner was deeply involved in the rescue of the firm, participating in meetings and conference calls with Paulson through the weekend. He did, however, withdraw from direct interactions with Rubin and other Citigroup leaders in these negotiations after his name was leaked as Obama’s nominee, according to people familiar with the discussions.

You voted for Hope. You got Goldman Sachs.

(Cross-posted at AmSpecBlog.)

UPDATE: A friend writes:

It doesn’t matter who you vote for. You always get Goldman Sachs. As someone famous is reputed to have said to Nelson Rockerfeller, “Why do want to run the country? You already own it.”

Indeed, but you’d think that voters would eventually see through the liberal class-warfare charade. But if it weren’t for gullible voters, where would the Democratic Party be?