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=<a href="http://www.democracynow.org/2015/10/29/headlines#102910">http://www.democracynow.org/2015/10/29/headlines#102910</a> rev door fed=http://www.huffingtonpost.com/2009/06/02/government-sachs-goldmans_n_210561.htmlNo wonder it's called "Government Sachs."It seems that every few weeks, another Goldman Sachs executive goes to work for a government agency, with bankers landing in positions of power at the Treasury Department, the Federal Reserve, and pulling the levers of the massive trillion-dollar federal bailout.
At the same time, the bank, which announced on Tuesday that it was hiring former Securities and Exchange Commission Chairman Arthur Levitt, has received $10 billion in TARP funds.This dual role - with former Goldman executives directing the financial rescue even as the bank took TARP funds - has aroused concern about potential conflicts of interest and excessive influence.
Goldman Sachs is "a political organization masquerading as an investment bank, and they're sitting at the table with the top people in government," says Goldman critic Christopher Whalen, the managing director of Institutional Risk Analytics, which rates banks and provides customer analytics. He calls Goldman "the most political firm on Wall Street."Examples include former Goldman exec Henry Paulson, who led the Treasury Department when the bailout was first formulated last September, and who appointed former Goldman vice president Neel Kashkhari to oversee the massive $700 billion TARP fund. There is also the current Treasury Secretary Tim Geithner, who installed a circle of former Goldman bankers to help him navigate the country through the financial crisis.
The firm certainly knows how to work the corridors of power: Goldman's employees contributed more - $980,945 - to Barack Obama's presidential campaign than any other company.
And Goldman has more than 30 ex-government officials working as registered lobbyists on staff, including former House Majority Leader Richard Gephardt (D-Mo.) to represent its interests on issues related to TARP, according to Mother Jones.
Both admirers and detractors assert that Goldman's influence has only grown and that it has not always served the best interests of the government.
"People at Goldman are now at a much higher, much more visible level in government," says former Goldman vice president Lisa J. Endlich, who wrote "Goldman Sachs: The Culture Of Success".
Endlich thinks that the bigger issue, beyond Goldman, is the influence of Wall Street in the corridors of power. "They are all from the same world - whether it's Morgan Stanley or Goldman filling Treasury or the Fed with people with very similar world views."
Endlich says that the financial agencies used to be staffed by people from industry and academics, along with bankers. Given the widening gap between the salaries of Wall Street and Main Street in recent decades, the concentration of bankers at federal agencies means that they may be a little out of touch with the concerns of working people and businesses.
"There's a bit of a love affair with Wall Street," says Endlich, explaining that much of that is due to the complexity of financial instruments, from credit-default swaps to derivatives, now prevalent in the financial industry. "It's gotten so complete that we seem to only trust those who have worked in that world."
Whalen says that the firm has been adept at using their influence in Washington, D.C. to serve their own interests. "Getting the info before anyone else does and acting on it," he says, claiming that legendary Goldman chairman Sidney Weinberg used to sit in the office of Time magazine editor Henry Luce to soak up the latest tidbits of information.
Whalen claims that the firm was suffering in November and December, until they started "embedding themselves in this administration... When you saw the stock turn, it showed that they had established themselves sufficiently.. Their political stars were in alignment."
"Liar's Poker" author Michael Lewis claimed that Goldman's influence has a deep impact on the country's fiscal policy, especially during this financial crisis, during an interview with CNN's Fareed Zakaria on June 7:
And it is amazing to me the degree to which, say, Goldman Sachs is intertwined with the Treasury, and how they're -- there don't seem to be any independent voices in the thick of the decision-making. The decision-making is all being done by people who one way or another might expect to make a lot of money from Goldman Sachs in the future.But Endlich asserts that there's a much more benign motives behind Goldman's revolving door: public service. Going back to Weinberg, who took a leave of absence to run FDR's war production board during World War II, she says that the firm has always emphasized taking a greater involvement in the community and contributing to charities.
Recalling her interviews with current New Jersey Governor Jon Corzine, Endlich noted that the firm always admired those who worked in public service. "Once you've reached the pinnacle of the business world, what else are you going to do? It's part of the DNA."
The firm itself likes to tout its legacy of public service - the 2005 annual report noted: "Goldman Sachs has a long tradition of public service. Many of our people have gone on to significant positions in government and the not-for-profit sector and their achievements are a source of pride for all of us."
The firm dismisses Lewis' comments and concerns about undue influence as "conspiracy theory gone mad."
Goldman spokesman Lucas van Praag argues that the firm is actually disadvantaged by having so many alumni in powerful positions. 
"What benefit do we get from all these supposed connections?" he asks, in an interview with Huffington Post. "I would say we were disadvantaged from having so many alumni in important positions. Not only are we criticized - sticks and stones may break my bones but words do hurt, they really do - but we also didn't get a look-in when Bear Stearns was being sold and with Washington Mutual. We were runner-ups in the auction for IndyMac, in the losing group for BankUnited. If all these connections are supposed to swing things our way, there's just one bit missing in the equation."
Van Praag adds that government agencies have bent over backwards to avoid any perception of impropriety, explaining that when the firm's executives would meet with then-Treasury Secretary Paulson, "it was impossible to have a conversation with him without it being chaperoned by the general counsel of Treasury."
Take a look at this relationship map charting the revolving door between Goldman Sachs and the government: <a href="http://www.muckety.com/897792228FFFA019E542A0A86226FE6D.map">http://www.muckety.com/897792228FFFA019E542A0A86226FE6D.map</a>==http://www.alternet.org/economy/how-wall-streets-greedy-tentacles-sank-schools-trapping-them-massive-debts<blockquote style="font-size: 18px; line-height: 25px; background-color: rgb(255, 255, 255);">fliers touted new ballfields, science labs and modern classrooms. They didn’t mention the crushing debt or the investment bank that stood to make millions.                        — <a href="http://www.ocregister.com/articles/bonds-496091-school-bank.html" style="color: rgb(241, 96, 44); text-decoration: none;">Melody Peterson, Orange County Register</a>, February 15, 2013  </blockquote>Remember when Goldman Sachs – <a href="http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405" style="color: rgb(241, 96, 44); text-decoration: none;">dubbed by Matt Taibbi the Vampire Squid</a>– <a href="http://ellenbrown.com/2015/01/06/eu-showdown-greece-takes-on-the-vampire-squid/" style="color: rgb(241, 96, 44); text-decoration: none;">sold derivatives to Greece</a> so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its school districts. Not that Goldman was alone in this; but the unscrupulous practices of the bank once called the <a href="http://www.wsj.com/articles/SB973204735324482552" style="color: rgb(241, 96, 44); text-decoration: none;">undisputed king of the municipal bond business</a> epitomize the culture of greed that has ensnared students and future generations in unrepayable debt.n 2008, <a href="http://articles.latimes.com/2008/nov/11/business/fi-goldman11" style="color: rgb(241, 96, 44); text-decoration: none;">after collecting millions of dollars</a> in fees to help California sell its bonds, Goldman urged its bigger clients to place investment bets against those bonds, in order to profit from a financial crisis that was sparked in the first place by irresponsible Wall Street speculation. Alarmed California officials warned that these short sales would jeopardize the state’s bond rating and drive up interest rates. But that result also served Goldman, which had sold credit default swaps on the bonds, since the price of the swaps rose along with the risk of default.In 2009, the lenders’ lobbying group than proposed and promoted AB1388, a California bill eliminating the debt ceiling requirement on long-term debt for school districts. After it passed, <a href="http://www.ocregister.com/articles/bonds-496091-school-bank.html" style="color: rgb(241, 96, 44); text-decoration: none;">bankers traveled all over the state</a> pushing something called “capital appreciation bonds” (CABs) as a tool to vault over legal debt limits. (Think Greece again.) Also called payday loans for school districts, CABs have now been issued by <a href="http://www.thenewamerican.com/economy/economics/item/14435-capital-appreciation-bonds-delaying-the-inevitable" style="color: rgb(241, 96, 44); text-decoration: none;">more than 400 California districts</a>, some with repayment obligations of <a href="http://www.ocregister.com/articles/bonds-379193-capital-appreciation.html" style="color: rgb(241, 96, 44); text-decoration: none;">up to 20 times the principal advanced</a> (or 2000%).The controversial bonds came under increased scrutiny in August 2012, following a report that San Diego County’s Poway Unified would have to pay $982 million for a $105 million CAB it issued. Goldman Sachs made $1.6 million on a single capital appreciation deal with the San Diego Unified School District.Green Light to ExploitIn a September 2013 op-ed in SFGate.com called “<a href="http://www.sfgate.com/opinion/article/School-bonds-are-a-Wall-Street-scam-4793112.php" style="color: rgb(241, 96, 44); text-decoration: none;">School Bonds Are a Wall Street Scam</a>,” attorney Nanci Nishimura wrote:<blockquote style="font-size: 18px; line-height: 25px; background-color: rgb(255, 255, 255);">. . . AB1388, signed by then-Gov. Arnold Schwarzenegger in 2009, [gave] banks the green light to lure California school boards into issuing bonds to raise quick money to build schools.Unlike conventional bonds that have to be paid off on a regular basis, the bonds approved in AB1388 relaxed regulatory safeguards and allowed them to be paid back 25 to 40 years in the future. The problem is that from the time the bonds are issued until payment is due, interest accrues and compounds at exorbitant rates, requiring a balloon payment in the millions of dollars. . . .Wall Street exploited the school boards’ lack of business acumen and proposed the bonds as blank checks written against taxpayers’ pocketbooks. One school administrator described a Wall Street meeting to discuss the system as like “swimming with the big sharks.”Wall Street has preyed on these school boards because of the millions of dollars in commissions. Banks, financial advisers and credit rating firms have billed California public entities almost $400 million since 2007. [State Treasurer] Lockyer described this as “part of the ‘new’ Wall Street,” which “has done this kind of thing on the private investor side for years, then the housing market and now its public entities.”</blockquote>Gullible school districts agreed to these payday-like loans because they needed the facilities, the voters would not agree to higher taxes, and state educational funding was exhausted. School districts wound up sporting shiny new gymnasiums and auditoriums while they were cutting back on teachers and increasing classroom sizes. (AB1388 covers only long-term capital improvements, not daily operating expenses.) The folly of the bonds was reminiscent of those boondoggles pushed on Third World countries by the World Bank and IMF, trapping them under a mountain of debt that continued to compound decades later.The Federal Reserve <a href="http://ellenbrown.com/2013/12/07/amend-the-fed-we-need-a-central-bank-that-serves-main-street/" style="color: rgb(241, 96, 44); text-decoration: none;">could have made virtually-interest-free loans available to local governments</a>, as it did for banks. But the Fed (whose twelve branches are 100% owned by private banks) declined. As noted by <a href="http://blogs.reuters.com/muniland/2011/06/27/the-global-spiderweb-of-debt/" style="color: rgb(241, 96, 44); text-decoration: none;">Cate Long on Reuters</a>:<blockquote style="font-size: 18px; line-height: 25px; background-color: rgb(255, 255, 255);">The Fed has said that it will not buy muni bonds or lend directly to states or municipal issuers. But be sure if yields rise high enough Merrill Lynch, Goldman Sachs and JP Morgan will be standing ready to “save” these issuers. There is no “lender of last resort” for muniland.</blockquote>Debt for the Next GenerationAmong the hundreds of California school districts signing up for CABs were<a href="http://www.ocregister.com/articles/bonds-379193-capital-appreciation.html" style="color: rgb(241, 96, 44); text-decoration: none;">fifteen in Orange County</a>. The Anaheim-based Savanna School District took on the costliest of these bonds, issuing $239,721 in CABs in 2009 for which it will have to repay $3.6 million by the final maturity date in 2034. That works out to$15 for every $1 borrowed.Santa Ana Unified issued $34.8 million in CABs in 2011. It will have to repay $305.5 million by the maturity date in 2047, or $9.76 for every dollar borrowed.Placentia-Yorba Linda Unified issued $22.1 million in capital appreciation bonds in 2011. It will have to repay $281 million by the maturity date in 2049, or $12.73 for every dollar borrowed.In 2013, <a href="http://www.reuters.com/article/2013/10/03/california-bonds-fitch-idUSL1N0HT1FN20131003" style="color: rgb(241, 96, 44); text-decoration: none;">California finally passed a law</a> limiting debt service on CABs to four times principal, and limiting their maturity to a maximum of 25 years. But the bill is not retroactive. In several decades, the 400 cities that have been drawn into these shark-infested waters could be facing municipal bankruptcy – for capital “improvements” that will by then be obsolete and need to be replaced.Then-State Treasurer Bill Lockyer called the bonds “debt for the next generation.” But <a href="https://darwinbondgraham.wordpress.com/2013/02/08/its-not-the-future-generations-that-pay-back-the-public-debt/" style="color: rgb(241, 96, 44); text-decoration: none;">some economists argue</a> that it is a transfer of wealth, not between generations, but between classes – from the poor to the rich. Capital investments were once funded with property taxes, particularly those paid by wealthy homeowners and corporations. But California’s property tax receipts were <a href="http://web.stanford.edu/group/progressive/cgi-bin/?p=1113" style="color: rgb(241, 96, 44); text-decoration: none;">slashed by Proposition 13</a> and the housing crisis, forcing school costs to be borne by middle-class households and the students themselves.The same kind of funding shift has occurred in college education nationally. Tuition at public universities and colleges was at one time free. But in successive economic downturns, states have made up for shortfalls in educational budgets by raising tuition. By 2012, tuition was covering 44% of the operating expenses of public higher education. According to <a href="http://www.demos.org/publication/great-cost-shift-continues-state-higher-education-funding-after-recession" style="color: rgb(241, 96, 44); text-decoration: none;">a March 2014 report by Demos</a>, 7 out of 10 college seniors now borrow, and their average debt on graduation is over $29,000.  The result nationally is a student debt that has grown to $1.5 trillion.The State that Escaped: North Dakota  ...

credo: 

Goldman Sachs and other the Wall Street banks that were responsible for blowing up our economy have now found a new way to fleece us and put our entire economy at risk.

Under the not-so-watchful eye of the Federal Reserve Bank, these banks have gotten involved in the production and distribution of physical commodities.

The banks’ involvement in these commercial commodities enterprises has created new risks these already reckless “too big to fail” banks can’t manage.

And that doesn’t even include the danger of these banks manipulating the price of commodities.

Last year, for example, the New York Times exposed a Goldman Sachs scheme that has driven up the price of aluminum –- costing American consumers billions. Yes, billions.1

The Federal Reserve is finally soliciting public comments period about whether they should close the loophole that allows the banks to produce and distribute commodities.

Tell the Federal Reserve to get banks out of the physical commodities business.

Send the Fed an aluminum can in the mail to represent the absurdity of banks producing and distributing commodities

Don't delay! The deadline for the Federal Reserve to receive the comments is April 16th.

The Goldman Sachs scheme uncovered by the New York Times is pretty outrageous. According the article:2

Before Goldman bought Metro International [a company whose warehouses store a quarter of the aluminum on the market] three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than tenfold — to more than 16 months, according to industry records.

[…]

Metro International holds nearly 1.5 million tons of aluminum in its Detroit facilities, but industry rules require that all that metal cannot simply sit in a warehouse forever. At least 3,000 tons of that metal must be moved out each day. But nearly all of the metal that Metro moves is not delivered to customers, according to the interviews. Instead, it is shuttled from one warehouse to another.

Because Metro International charges rent each day for the stored metal, the long queues caused by shifting aluminum among its facilities means larger profits for Goldman. And because storage cost is a major component of the “premium” added to the price of all aluminum sold on the spot market, the delays mean higher prices for nearly everyone, even though most of the metal never passes through one of Goldman’s warehouses.

Aluminum industry analysts say that the lengthy delays at Metro International since Goldman took over are a major reason the premium on all aluminum sold in the spot market has doubled since 2010. The result is an additional cost of about $2 for the 35 pounds of aluminum used to manufacture 1,000 beverage cans, investment analysts say, and about $12 for the 200 pounds of aluminum in the average American-made car.

</blockquote>

<p style=" margin: 12px 0px; padding: 0px; line-height: 18px; outline: none; display: block; color: rgb(74, 71, 68); font-size: 13px; font-family: arial, helvetica, sans-serif; text-align: left; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255);">It's not just aluminum. Thanks to lax regulation and oversight Goldman Sachs is now involved in the distribution of uranium yellowcake (the same substance used as a pretext to invade Iraq). And other banks are involved in the production and distribution of electric power and the refinement and distribution of oil, among a whole host of other things.3, 4

Imagine the economic catastrophe we might face if one of the nation’s largest banks involved in oil production were on the hook for the next Deepwater Horizon type of disaster.

Even if a bank had the resources to pay the damages, the lack of confidence in the bank by investors and depositors might be enough to cause it to implode and wreak havoc on our economy.

As the failure of one large bank could drag down other banks and cascade into a major economic calamity.

With respect to Goldman Sachs and the aluminum warehouses, the dangers are less systemic but still deeply troubling.

Because Goldman invests in and trades commodities derivatives (financial instruments that are bets on the future price of commodities), the bank’s involvement in the storage of aluminum gives it the ability manipulate the aluminum market to the benefit of its overall financial position.

As Rolling Stone reporter Matt Taibbi puts it, “It's something akin to letting casino owners who take book on NFL games during the week also coach all the teams on Sundays.” 5