Larry Summers continues to refuse comment on his disastrous management of Harvard University’s finances, according to a lengthy Bloomberg article out Friday (aptly titled “Harvard swaps are so toxic even Summers won’t explain”).  The former Harvard president’s failed bets on interest rates led to a historic liquidity crisis last fall that forced the school to take on an additional $2.5 billion in debt and implement campus-wide austerity measures.* Kudos to the Bloomberg reporters for continuing to chase this story (which carries national implications given Summers’s role in the White House).

One aspect of the story that has yet to break:  Harvard’s leadership, including key members of its financial team, were severely conflicted by official roles with several of the university’s counterparties on the swaps.

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In response to a couple of questions I’ve received from analysts lately, I wanted to provide a simple set of instructions for profiling investors on LittleSis.

Why Profile Investors?

When prominent investors such as John Paulson make investment decisions, it can have a large impact on the public perception of a given industry.  For example: a recent article on SeekingAlpha.com demonstrated that his investment in the CBG sparked a 15% share increase on June 11th.  Moreover, shareholders with a significant stake in a company often gain the right to give input on key business decisions.

How to Track Investments:

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After an extended period of blog lethargy, I’m making my debut on Eyes on the Ties today in order to announce a LittleSis research project: we’re working to develop a comprehensive list of all the connections between Goldman Sachs executives and influential government officials and lobbyists.

Serendipitously (or perhaps not), Senator Carl Levin has also made an announcement today: namely, that the Senate Permanent Subcommittee on Investigations has subpoenaed Goldman Sachs in order to comb for evidence of fraud during last year’s mortgage-market meltdown. The Daily Kos blog team was the first to pick up the story: Read more…

Our report on Obama’s State Department nominee Bob Hormats is starting to get some press.

As a Goldman Sachs exec, Hormats had some dubious ties to the genocidal regime in Sudan through a Chinese oil deal. In the name of accountability, we published a report exposing his background and listed questions we wanted lawmakers to ask Hormats during the confirmation process.

The Financial Times and Matt Taibbi of Rolling Stone both used our report to expose Hormats’ past in articles today. The story has also been picked up by the Huffington Post, Attackerman, and Open Left.

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While Goldman Sachs‘ managing partners prepare their lists for Fifth Avenue shopping sprees on bonus day, the firm’s public relations department is grappling with an image problem that has some staying power. Goldman’s record profiteering at a time of chronic unemployment and systemic crisis along with Matt Taibbi’s superb article on Goldman’s role in market manipulation and the high-profile arrest of former Goldman programmer Sergey Aleynikov, who allegedly downloaded Goldman code that can be used to manipulate markets (who knew?), have conspired to create a perfect storm of populist backlash directed at the firm.

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Since Friday’s post about Bob Hormats, Obama’s most recent Goldman nominee, I’ve done a bit of research on his record. It looks very bad.

Hormats was one of Wall Street’s top diplomats over the past two decades, which means that he played a starring role in every foreign financial crisis: Mexico, Russia, Thailand, etc. The formula was fairly consistent: before each crisis, as Goldman’s chief international banker, Hormats advised these countries on how to open their markets (deregulation, privatization, etc) and invite foreign flows of capital. This, in turn, created speculative bubbles. Once they burst, Hormats advised the US on the necessary bailout and issued warnings about what Wall Street would do if no bailout came through.

In Hormats’ career as international financial villain, one incident looks especially bad: his role in Goldman’s stock offering for PetroChina, the Chinese oil company linked to Sudan, in 2000.

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Three weeks ago, Matt Taibbi kicked off the latest anti-Goldman Sachs media cycle with a brilliant polemic in Rolling Stone. His opener achieved meme status long before the full article even appeared on the web:

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.

Today, the squid was at it again, albeit meekly. The Obama administration tiptoed out their most recent Goldman nominee late this afternoon — hoping, perhaps, that the Friday evening quiet would offer some cover from the next stage of the media cycle. Bob Hormats, vice chairman at Goldman Sachs international, is Obama’s pick for under secretary of state for economic, energy, and agricultural affairs.

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Two noteworthy stories chronicling the hegemonic position of the Goldman Sachs Group appeared last week. The first was a scoop by The Guardian about an internal announcement regarding the record bonuses that Goldman will pay at the end of 2009, assuming that the company’s year-end profit projections are borne out. The second piece was a 10-page Rolling Stone spread by Matt Taibbi elucidating Goldman’s central role in every major economic bubble since the dawn of bubble economics.

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I want to raise a few points on AIG that don’t seem to be coming up elsewhere, but that need critical attention if we are to understand how this disaster came to pass and who else is implicated.

There have been a few reports that AIG stopped selling credit default swaps – the financial instruments that eventually destroyed the company – in late 2005 (the latest timeline comes from TPM). But asset-backed credit default swaps, which allow investors to short CDOs, were not even invented until early 2005, according to a Dow Jones article published on January 27, 2005. The article was titled “New Derivatives Could Boost Asset-Backed Secondary Market”:

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In earlier posts, we’ve highlighted Robert Rubin’s network of protégés, who have assumed nearly every economic policy post of consequence in the Obama White House. In spite of his abysmal record of institutional leadership – Citigroup entered penny stock territory on Friday and Harvard, where Rubin’s influence as a member of the Corporation is unrivaled, has all but run out of cash – Rubin’s “wise man” brand won over Obama, who moved most of the policy staff of the Rubin-founded Hamilton Project and top Rubin advisers from the Clinton era into key administration posts at Treasury, the OMB and the inner sanctum of the White House.

While Rubin’s role in re-shaping the Democratic Party has been chronicled (and discussed here), less attention has been paid to his adeptness in building a power base of hedge fund capitalists that parallels his political network. Many of the techniques that allowed Rubin to pack the White House with friends – such as deep mentorship of bright-eyed Ivy League recruits fresh out of school and subsequent placement of the recruits in strategic institutions – have served also to place Rubin at the center of an unrivaled web of capital.

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