The set of characters who are publicly promoting or opposing bank reform are not really interested in any financial reforms no matter what they say. The reason is simple. There is a significant amount of money to be made keeping things exactly the way they are today. All of these participants have developed perfect “poker faces.” None become emotional even when they are caught in a lie or when defending their carefully determined strategy.
Senators Thomas Dodd (D) and Richard Shelby (R) were on last week’s Meet the Press. Both acting very professional and directing there responses to host David Gregory, neither confronted the other even though it was apparent from their words that they have significant disagreements on what financial reform should look like. Dodd is not running for re-election because of one major reason. He has taken contributions from Wall Street and was the beneficiary of a specially designed loan from Country Wide Mortgage. The progressive issue-advocacy group Americans United for Change (AUC) reports Shelby had received $5.3 million in contributions from the financial industry since 1998. Of course both men deny these allegations.
Henry Paulson, Secretary of the Treasury in the Bush administration is a former CEO of Goldman Sachs. He saw that his ex employer was protected but Lehman Brothers, a Goldman Sachs competitor, was allowed to go bankrupt. Coincidence? Not likely!
Alan Greenspan, the most famous chairman of the Federal Reserve, previously served as a corporate director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company. He was appointed to that most important job by President Ronald Reagan. In mid-January 2008, hedge fund Paulson & Co. hired Greenspan as an adviser on economic issues and monetary policy. Paulson & Co. is the company that has been implicated in the Goldman Sachs case of allegations related to bets against mortgage derivatives which earned the firm billions of dollars last year and is now front page news.
John Paulson (founder and head of Paulson & Co.), age 54, a Harvard MBA whose personal wealth is estimated at $12 billion by Forbes magazine, is at the heart of the government’s fraud case against Goldman, Sachs & Co. Newsweek magazine describes how he went from obscurity to “place alongside George Soros and Warren Buffett as an oracle of investing.”
Ben Bernanke appears to be one of the few in government that has not been tainted by Wall Street. However, his behavior is unchanged from that of Alan Greenspan. Perhaps he has been infected too.
If you believe this cast of players will change their ways or the way Wall Street functions then you are in a dream world.
The president wins on the appearance front. Nothing will really change.
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