It's Geithner who brings the Goldman Sachs links right into the WH (whereas under Bush it was H. Paulson). The continuity of positions is so amazing that it can't be coincidence. If it weren't for the ongoing finance crises, Geithner would be heading up teams of trade reps visiting China, India, Brazil and Russia.
But the Goldman Sachs links are too strong to ignore (even if Sachs has quit working for Geithner). http://www.guardian.co.uk/business/2010/apr/18/goldman-sachs-prosecution-wall-street-crackdown http://www.bloomberg.com/apps/news?pid=20601087&sid=abo3Zo0ifzJg Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms. The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund. As part of Geithner’s kitchen cabinet, Sperling and Sachs wield influence behind the scenes at the Treasury Department, where they help oversee the $700 billion banking rescue and craft executive pay rules and the revamp of financial regulations. Yet they haven’t faced the public scrutiny given to Senate-confirmed appointees, nor are they compelled to testify in Congress to defend or explain the Treasury’s policies. “These people are incredibly smart, they’re incredibly talented and they bring knowledge,” said Bill Brown, a visiting professor at Duke University School of Law and former managing director at Morgan Stanley. “The risk is they will further exacerbate the problem of our regulators identifying with Wall Street.” While it isn’t unusual for Treasury officials to come from the financial industry, President Barack Obama has been critical of Wall Street, blaming its high-risk, high-pay culture for helping cause the financial-market meltdown. ‘Reckless Behavior’ Speaking to financial executives last month, Obama said: “We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.” At the same time, the president has promised to change Washington by keeping lobbyists for special interests at a distance and by making decisions in the open. Sperling and Sachs are each paid $162,900 at the Treasury. Along with four others, they hold the title of counselor to Geithner. Sachs, 46, withdrew earlier this year from consideration to be the Treasury’s top domestic finance official, a job that would have required Senate confirmation. Geithner’s predecessor, Henry Paulson, brought on a coterie of non-confirmed advisers from Goldman Sachs at the end of his term. Paulson, who had been the firm’s chief executive officer, defended the arrangement as necessary to quickly bring in top talent when the financial system was on the verge of collapse. Awaiting Confirmation The title of counselor had been generally reserved for those awaiting confirmation. Some of Geithner’s aides now work in that capacity, including Lael Brainard, who has been nominated to be undersecretary for international affairs, and Jeffrey Goldstein, the nominee to be undersecretary for domestic finance. “The use of counselors provides an opportunity to bring valuable expertise into the department to serve in a close capacity with the secretary,” said Rob Nichols, a former Treasury official under Secretaries Paul O’Neill and John Snow, neither of whom relied extensively on unconfirmed aides. “It’s important that they complement, but don’t supplant, the Senate confirmed appointments.” The use of unconfirmed counselors can cut both ways. It allows Geithner to bring in staff quickly by avoiding the arduous confirmation process. On the other hand, the aides don’t get as tough a vetting by the White House or Congress and remain less accountable than Senate-confirmed officials. Understanding Markets Treasury spokesman Andrew Williams said the department needs people with a deep understanding of markets and the financial system, especially as it works to fend off the worst recession in half a century. “The secretary thought that the best way to utilize their talents was to allow these individuals to provide advice to the secretary on policy issues through appointments as counselor,” Williams said. All of Geithner’s counselors are subject to federal ethics rules, including a pledge to avoid contact with their former firms for at least a year, Williams added. Most officials at the Treasury who have been approved by Congress come from academic, legal or non-Wall Street backgrounds. For example, Geithner’s deputy, Neal Wolin, was president and chief operating officer for property and casualty operations at insurer Hartford Financial Services Group Inc. in Hartford, Connecticut. Michael Barr, the assistant secretary for financial institutions, was a professor at the University of Michigan Law School. Merrill Lynch Executive An exception is Herb Allison, who runs the office that administers the financial rescue. He had been chief executive officer of mortgage finance company Fannie Mae and retirement- services firm TIAA-CREF, and before that was a longtime executive at Merrill Lynch & Co. in New York. Along with Sperling and Sachs, Geithner’s inner circle also includes counselor Lewis Alexander, the former chief economist at Citigroup; Chief of Staff Mark Patterson, who was a lobbyist at Goldman Sachs, and Matthew Kabaker, a deputy assistant secretary who worked at private equity firm Blackstone Group LP. Patterson’s and Kabaker’s jobs did not require confirmation. One counselor who doesn’t have a finance background is Jake Siewert, a press secretary for President Bill Clinton who came to the Treasury after working as a vice president at New York- based Alcoa Inc., the largest U.S. aluminum producer. Alexander, who left Citigroup in March to join the Treasury, was paid $2.4 million in 2008 and the first few months of 2009, according to his financial-disclosure form. He advises Geithner on economic trends and does research on financial markets. Toxic Assets Kabaker, who works on domestic finance policy and helped craft the Treasury plan to spur banks to sell their toxic assets, earned $5.8 million working on private equity deals at Blackstone in 2008 and 2009 before joining the Treasury at the end of January, his disclosure form shows. Much of the compensation was in stock that Kabaker, who worked at Blackstone for 10 years, was awarded when it went public in 2007. On his disclosure, Sachs estimated that he would receive $3.4 million in income from Mariner. The precise figure was not given because the books hadn’t closed on a number of partnerships when he joined the department in January. As of Feb. 23, when he signed the document, Sachs said he was also owed a 2008 bonus where the value was “not ascertainable.” Sachs’s former firm also had agreed to repurchase his shares in Mariner Partners Inc., an investment fund. Sachs estimated his income from the fund at $1 million to $5 million. Sachs, who declined to comment, also specializes in domestic finance. Work on Education In Sperling’s primary job, he was paid $116,653 by the Council on Foreign Relations for work related to education in developing countries. Sperling’s disclosure shows he supplemented his salary through a variety of consulting jobs, board seats, speaking fees and fellowships, to bring his total income to more than $2.2 million in the 13 months ending in January. He was paid $480,051 as a director of the Philadelphia Stock Exchange and $250,000 for providing quarterly economic briefings to two hedge fund firms, Brevan Howard Asset Management LLP and Sterling Stamos Capital Management. Sperling spoke at a Washington event hosted by the Houston- based Stanford Group Co. in November 2008, three months before its chairman was sued by the Securities and Exchange Commission for allegedly bilking investors of $7 billion. He also spoke at a Washington event in October 2007 that was sponsored by Citigroup, which has received $45 billion in government assistance. Paid Speeches Sperling, 50, was paid for his speeches through the Harry Walker Agency, which books speakers. His disclosure form does not list how much he was paid for each speech. Sperling also drew a $137,500 salary from Bloomberg News for writing a monthly column and appearing on television, according to his disclosure. Goldman Sachs paid Sperling the $887,727 for advice on its charitable giving. That made the bank his highest-paying employer. Even Geithner’s chief of staff Patterson, who was a full-time lobbyist at the firm, did not make as much as Sperling did on a part-time basis. Patterson reported earning $637,492 from Goldman Sachs last year. “My sole work for Goldman Sachs was as lead consultant on the creation, design, and initial implementation of ‘10,000 Women,’ their $100 million philanthropic effort to give business and leadership education to poor women around the world,” Sperling said. His total income of $2.2 million was unusually high, Sperling added. The Wall Street ties are troubling to some advocates for investors. “Where is the transparency this administration promised?” asked Lynn Turner, a former chief accountant at the SEC. “You just wonder, who is representing middle Americans?” http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abxGHUSTAPTI Conflicts of Interest’ Magnetar, in an e-mailed statement, said it didn’t select the assets going into its CDOs, that it didn’t have a particular view on the housing market and that both underwriters and collateral managers understood its strategy of betting against “particular tranches.” Tricadia told investors in prospectuses for the almost $10 billion of CDOs for which it served as asset manager that it might or would bet against the collateral it selected. In April 2007, the firm took it one step further by disclosing in a 399- page prospectus that it took the opposite side of trades that the CDO entered into through UBS, the underwriter. “General statements with respect to the possibility of conflicts of interest are not going to inoculate banks or asset managers or hedge funds,” said Pickhardt. Tricadia, which also said it would buy some of the CDOs’ most junior slices, was created in April 2003 as an affiliate of Marnier Investment Group, a hedge-fund firm whose management included Lee Sachs, now a counselor to Treasury Secretary Timothy F. Geithner. Tricadia co-founder Michael Barnes didn’t respond to messages seeking comment. The CDO at the center of the SEC case is one of at least 23 Abacus deals created by Goldman Sachs, and one of the only ones for which the firm hired an outside asset manager, according to prospectuses. The others were managed by Goldman Sachs. Synthetic CDOs CDOs are investment vehicles that repackage pools of assets such as home-loan bonds, buyout loans and bank capital notes into a series of new securities with varying risks. The vehicles come in three varieties: synthetic, meaning filled with credit- default swaps instead of actual securities; cash, which are filled with actual bonds; and hybrids, with a mix of both of debt and default swaps, which are derivatives that offer payments if the securities they reference don’t perform as expected, in return for regular premiums. The Abacus deals were synthetic CDOs tied to mostly subprime home loans and commercial mortgages. UBS, in a series called North Street from at least 2000 through at least 2005, and Deutsche Bank, through its Start program in at least 2005 and 2006, also issued synthetic CDOs tied to mortgages, according to Bloomberg data. http://www.huffingtonpost.com/2010/03/04/lee-sachs-quits-treasury-_n_485173.html WASHINGTON — The Treasury Department says a top aide to Treasury Secretary Timothy Geithner is leaving the department next month. Treasury spokesman Andrew Williams confirmed late Wednesday that Geithner aide Lee Sachs, the department's point man in the financial crisis, is stepping down. Sachs is leaving because he views his chief objective, bringing stability to the country's financial sector, has been largely met, The Wall Street Journal reported. His move may be seen as a further sign the economy has stabilized following its worst crisis since the 1930s and signals the Treasury Department is shifting from crisis management to shepherding an economic recovery. _______________________________________________ Marxism-Thaxis mailing list Marxism-Thaxis@lists.econ.utah.edu To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
