Sachs of Gold
The story thus far: Not content with plunging the world’s economy into the worst crisis since the 30’s, the avaricious and reckless bankers have been saved from ruin—momentarily—by our taxes, yet they continue to treat us with breathtaking contempt. Far from feeling any remorse or humility, they pay themselves annual bonuses larger than what most people earn in their lifetime, and do so with an arrogance that beggars belief.
In a speech delivered last November in Texas, the sainted editor of this journal zeroed in on Goldman Sachs and its head honcho, Lloyd Blankfein. He is the bum who helped inflate and then profited from a bubble that burst and cost tens of millions of Americans their jobs, incomes, savings, and home equity. For his part, Blankfein has not only refused to apologize but, after repaying the company’s initial $10 billion bailout allotment, pledged $500 million over five years to help 10,000 small businesses. It was a crumb thrown to the hungry for a public-relations exercise. A real contribution would be in the high billions and aimed directly at taxpayers.
But that is not the way of the banks. When America emerged from the Great Depression, a tightly regulated banking system was in effect. The first big wave of deregulation, under Ronald Reagan, led to the savings-and-loan crisis of the mid-1980’s. Taxpayers ended up footing the bill to the tune of $300 billion in today’s money. Once liberated from regulation, bankers’ greed went into overdrive. Wall Street Sammy Glicks invented new ways to screw the public and further enrich themselves. For example: A mortgage company would loan $500,000 to a borrower who had no means to repay, then turn around and sell the loan to Wall Street investment houses. The latter would then resell it—for a tidy profit—to hedge funds as a bond. The hedgies would then buy a form of insurance against the bond defaulting, called credit-default swaps, and so on down the line. Eventually, the game was up, but by then the bankers, starting with Goldman Sachs, had enriched themselves beyond imagination.
When the you-know-what hit the fan, Uncle Sam, using your tax dollars, stepped in and wiped them clean. Then, after a few months the Blankfeins of this world went back to what they know best. The trick is called innovative banking. In reality, all the Goldman Sachs innovations are for one purpose only: to enrich themselves by ripping off the public. Which is easy to do, as Goldman Sachs executives sooner or later find themselves as heads of the Fed or the SEC, depending on how naive the yokel in the White House happens to be. Robert Rubin, dean of the Goldman Sachs Democrats, served as Bill Clinton’s treasury secretary and was on the board of Citigroup, which pocketed a $300 billion government handout after suffering humongous losses on subprime mortgage investments. Rubin made $115 million for guiding Citigroup through the process of losing all that moolah. Instead of going to jail he resigned with honors and flew off into the sunset in his private jet.
Among the more disgusting people in a group that defies description as far as ugliness is concerned is Richard Fuld, the last CEO of Lehman Brothers. Fuld’s ego had filled the once-respected house to beyond capacity, turning it into a fire hazard of pride and greed. Fuld was a bully and was known to threaten to beat up people. Actually, he’s a very homely, simian-looking Jew who couldn’t punch his way out of a nursery, but such are the joys of Wall Street legends. At his peak at Lehman Brothers, Fuld was the biggest lender on earth, without having anywhere near the capital on hand to protect the house if the loans went bad. He retired with a fortune of upward of a half a billion dollars, five houses, and an art collection that he immediately transferred to his wife’s name in case of lawsuits.
Which brings me to Stevie Cohen, as this particular slob is known among the hedgies. Cohen is worth six billion dollars, which he made during the late 90’s and up to the crash. He is a Wall Street trader and hedge-fund manager. His company is based in Connecticut and goes by the name SAC Capital. I met him before he made it and thought him shady, to say the least. Just before Christmas, the New York Post led with the following headline: “‘Hedge’ honcho a ‘thief.’” Cohen has been accused by his ex-wife of insider trading and is being investigated. As of this writing, there is not much more I can say except that he had already been investigated for insider trading.
Greenspan, Cohen, Blankfein, Rubin, Fuld—the list goes on. If ever you hear of some Anglo-Saxon name taking over Wall Street, make sure to plunge in. But don’t hold your breath.
This article first appeared in the February 2010 issue of Chronicles: A Magazine of American Culture.