Administration Aides Paid Millions By Wall Street

Posted: 16 October 2009 by Editors in National News
Tags: Allen Stanford, bailout, banking, banksters, bonuses, Colin Barr, corporatism, economy, fascism, Gene Sperling, Goldman Sachs, Jeffrey Goldstein, JP Morgan Chase, Lael Brainard, Lee Sachs, libertarian, liberty, Lloyd Blankfein, Obama, Richard Parsons, TARP, Timothy Geithner, US, Vikram Pandit, Wall Street

Advisers to Treasury Secretary Timothy Geithner have “reaped millions working for banks”, Robert Schmidt reports at Bloomberg.

“The cynics, and the lobbyists, and the special interests who’ve turned our government into a game only they can afford to play. They write the checks and you get stuck with the bills, they get the access while you get to write a letter; they think they own this government, but we’re here today to take it back. The time for that politics is over. It’s time to turn the page.” ~then-Senator Barack Obama, announcing his choice to run for president in 2007

Robert Schmidt at Bloomberg reports 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”, adding:

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….

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….

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….

An exception [from Congressional approval includes 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….

“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.

Tom Braithwaite at the Financial Times adds:

Lewis Alexander, another adviser, was chief economist to Citigroup before joining the administration; he was paid $2.4m in the last two years….

Previous releases of disclosure forms revealed the $5.2m paid to Lawrence Summers, chief economic adviser to the White House, by DE Shaw, the hedge fund, in the two years before he joined the administration.

Mr. Geithner’s personal calendar, released under the Freedom of Information Act reveals he had at least 80 conversations with Wall Street bosses in the first six months of this year, Andrew Davis at the London Guardian reports. This included 22 “chats” with Goldman C.E.O. Lloyd Blankfein. Compare this with ten conversations plus meetings with his counterpart in the U.K and JP Morgan Chase C.E.O. Jamie Dimon.

“Mr. Geithner has spoken repeatedly with officials from Citigroup, a company in which the government owns a 34% stake,” Deborah Soloman and Damian Paletta report at The Wall Street Journal. “Mr. Geithner has had almost weekly contact with either [Citigroup Chairman Richard Parsons]—his name appeared 17 times on the calendar—or C.E.O. Vikram Pandit.”

“Critics have said this shows the excessive clout wielded by banks, which have largely fought off attempts to impose limits on bonuses or efforts to curb the multi-billion dollar business of trading in esoteric derivatives,” Mr. Davis reports.

The 2009 bonus pool at Goldman doubled to $23bn with a corporate tax rate of 1%. A subsidiary also just received a $3m earmark to stimulate its balance sheet. Colin Barr reports at CNN that Goldman and Chase, both recipients of “lavish government assistance” will likely “more than double last year’s bottom line”. JP Morgan Chase made a net profit of $3.6bn last quarter, adding $2bn to its reserves—“bringing the total to $31.5bn or 5.3 per cent of total loans“.

UPDATE:

The New York Times reports Goldman profited $3.19bn in the this last quarter.

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