Louise Story and Gretchen Morgenson had a lengthy new story up at the Times yesterday on how Goldman bled AIG to death. The piece details negotiations over payouts on swaps that Goldman had purchased from AIG. Details of the negotiations are interesting, but this paragraph jumped out at me:

In addition, according to two people with knowledge of the positions, a portion of the $11 billion in taxpayer money that went to Société Générale, a French bank that traded with A.I.G., was subsequently transferred to Goldman under a deal the two banks had struck.

It seems that Goldman was even more of a beneficiary of the AIG bailout than we previously thought. Officially, it received more than any other counterparty, but add in the Société payments and headlines that referred to “AIG Trading Partners…” or “AIG Counterparties” would have to be revised to read “Goldman Sachs.”

This is outrageous. When was this arrangement made, and why? Did Goldman use SocGen to hide the extent to which it caused (and benefitted from) the AIG catastrophe? Would the size of its taxpayer-funded bonus pools be threatened by full disclosure of the payments? Like so many other aspects of Goldman’s business, this deserves an investigation.

The student lending reform bill is stalled in the Senate, thanks to banks’ lobbying efforts, according to the Post earlier this week and now the Times:

President Obama called the idea a “no-brainer” last fall, predicting it would take billions of dollars from the profits of private lenders and give it directly to students, and many colleges were already moving to get loans directly from the federal government in anticipation of the next move by Congress.

But an aggressive lobbying campaign by the nation’s biggest student lenders has now put one of the White House’s signature plans in peril, with lenders using sit-downs with lawmakers, town-hall-style meetings and petition drives to plead their case and stay in business.

Since Democrats are needed to block the reform, Sallie Mae has enlisted two of the Capitol’s biggest Democratic heavyweights, Tony Podesta and Jamie Gorelick, to lobby on its behalf. Gorelick, who is quoted in the article, became very wealthy tending the “sewer of corruption” at Fannie Mae.

Read more…

The Washington Post is reporting that AIG is set to pay $100 million in employee bonuses today:

American International Group plans Wednesday to pay another round of employee bonuses, worth about $100 million, said several people familiar with the matter, a year after similar payments at the bailed-out insurance giant infuriated many Americans and inflamed Washington.

The US government owns 80% of AIG. Lots of figures and percentages appear in the Washington Post article, but that one doesn’t. And while pay czar Ken Feinberg’s name appears throughout the piece — he seems to have played some role in approving these bonuses — the names of the three trustees charged with overseeing the government’s 80% stake are nowhere to be found. Search for their names on Google News, and you find no recent articles mentioning the trustees in the context of this decision. Did they not play a role in this decision?

Read more…

With the Geithner “wunderkind” and Summers “socratic genius” brands badly damaged, Obama faces pressure from a broad and growing spectrum to find new front men for his economic policy team.  This was in evidence last week when Paul Volcker and Austan Goolsbee were trucked in from oblivion to champion Obama’s new bank reform agenda.

Volcker and Goolsbee, though they’re only marginally more progressive than Geithner and Summers, present a serious threat to the power network behind Obama’s “bankers bonanza” economic policies.  Whereas Summers and Geithner owe their public lives to Robert Rubin–the man behind the curtain in Obama’s first year–Volcker and Goolsbee owe him relatively little, which is presumably why they were banished in the first place.  Establishing Volcker and Goolsbee more prominently in the White House coterie would present the first major threat to the Rubin axis in the West Wing, which, in addition to Summers and Geithner, includes administration insiders Peter Orszag, Michael Froman and Jason Furman.

Read more…

The Washington Post published a poll on the special election in Massachusetts last week, as part of the Washington Post-Kaiser-Harvard poll series. The poll carried obvious implications for the health care reform debate (as did the election). And like other polls in the series, which are frequently health care-related, it was co-directed by Harvard professor Robert Blendon.

Blendon sits on the board of Assurant, an insurance company. As I’ve noted previously, Blendon consistently fails to disclose the affiliation in his healthcare polling work or in his various bios (here, here, here). It is so hard to find this affiliation noted anywhere — even his lengthy Harvard bio leaves it out — that I get the sense that Blendon feels he has something to hide.

Since Assurant has an obvious and substantial interest in healthcare reform, and Blendon’s polling work for the Washington Post frequently concerns healthcare, shouldn’t the Washington Post notify its readers of this conflict?

Read more…

The four conservative activists arrested for tampering with the phones of Louisiana Senator Mary Landrieu earlier this week have been linked to the Pelican Institute, a conservative New Orleans think tank. Pelican is a relatively new organization, but it appears to have strong ties to members of the state’s Republican elite, most notably Representative Charles Boustany.

Though only one of the tamperers is from Louisiana, Pelican appears to have been the group’s home base there. The apparent ringleader, James O’Keefe — also the activist behind last September’s ACORN videotape — spoke at a Pelican Institute luncheon last week. Another one of the four, Robert Flanagan, is a paid blogger for Pelican (Flanagan is the son of the acting US attorney in Shreveport, Bill Flanagan). Pelican’s founder, Kevin Kane, blogs at BigGovernment, the site where O’Keefe first posted the ACORN video.

TPMMuckraker has found that Pelican “enjoys a prominent voice in Louisiana political circles.” A close look at its board of directors helps explain why this is the case.

Read more…

The front page of the New York Times says it all this morning: “The treasury secretary told a House panel that failure to provide A.I.G. with the $85 billion bailout would have been “catastrophic” for the economy.” Both Paulson and Geithner also defended their actions with the old warning about the imminence of a “second Great Depression.”

As I noted yesterday, Geithner is also telling us that a failed Bernanke confirmation effort would have catastrophic consequences for financial markets. Geithner and other Wall Street policy elites are old hands at this: they’ve used the same rationale for every massive financial bailout of the past generation, from the Mexican bailout to Long Term Capital Management to AIG.

Notably, they’ve used the same excuse to argue against financial regulation. When Brooksley Born wanted to regulate derivatives, Summers, Rubin, and Greenspan told her that she was going to cause a financial crisis. Of course, the opposite was true: they didn’t regulate derivatives, and it caused a massive financial crisis.

Read more…

Ben Bernanke’s supporters are warning that a Senate vote against the Fed chair will send financial markets tumbling.  Tim Geithner recently chimed in by telling Politico that markets would find a no vote “very troubling,” before saying that he was confident Bernanke would be reconfirmed. 

Geithner’s chief mentor, Robert Rubin, deployed the very same argument about Enron. Rubin, then a top executive at Citigroup, made an 11th hour call to the Treasury Department as part of a campaign by Enron and its creditors to stave off a looming ratings downgrade. The call was later criticized as an improper use of the former Treasury Secretary’s influence, but Rubin defended his actions, saying that he thought an Enron collapse would imperil world energy markets.

The financial apocalypse trick has been turned many times by Wall Street’s policy elites, but the Rubin example is especially apt today: the high-level campaign to avert Enron’s ratings downgrade in 2001 appears to have been coordinated by the same Federal Reserve official lobbying for Ben Bernanke’s reappointment.

Read more…

The same lobbyist that sold Washington on Enron is now touting Ben Bernanke. According to Politico, former Enron lobbyist Linda Robertson has been managing Bernanke’s confirmation effort on behalf of the Federal Reserve — coaching him through the process in much the same way she coached Ken Lay and Jeff Skilling through the Washington influence game.

Robertson played a key role in some of Enron’s most scandalous moments in the year prior to its collapse. For starters, she was at the center of negotiations involving the highly secretive energy task force headed by Vice President Dick Cheney.  A review of Enron email shows that Robertson guided Lay through pivotal meetings with Cheney and other officials, and actually authored the Enron memo and talking points that were later integrated into Cheney’s controversial energy plan.

Read more…

The Supreme Court’s decision in Citizens United seems to represent a giant leap backwards for our democracy, after decades of gathering corporate influence in Washington.  It is difficult to find the words to keep pace.  Didn’t corporate elites already own our politicians?  Weren’t left and right already rebelling against the tyrannical center hewed out by mushy, big money interests?  Wasn’t our rhetoric already a bit overblown?

The New York Times managed to kick it up a notch in its editorial this morning, opening with this line:  “With a single, disastrous 5-to-4 ruling, the Supreme Court has thrust politics back to the robber-baron era of the 19th century.”

What now?

Read more…