Goldman Chief Lloyd Blankfein is the current CEO and Chairman of Goldman Sachs who replaced Hank Paulson after the May 31, 2006, nomination of Paulson as Secretary of the Treasury. He joined Goldman's commodities trading arm in 1981 and earned a total of $53.4 million in 2006, making him one of the highest paid executives on Wall Street. In 2007, he earned a total compensation of $54 million.
While Treasury Secretary Henry Paulson was considering how to respond to the collapse of Lehman Brothers, little did he know that American International Group, the world's largest insurer, was also on the brink of collapse. When AIG called for help, one of the Wall Street chief executives participating in the meeting was Lloyd C. Blankfein. Few knew that Goldman was AIG.'s largest trading partner, and an AIG collapse would have cost Goldman up to $20 billion, according to six people speaking off the record.
Days later when AIG's collapse became public, David A. Viniar, Goldman's CFO, assured analysts on September 16, 2008, that his firm's exposure was "immaterial". The same day, Government officials who had let Lehman die and were initially against bailing out AIG, coughed up $85 billion for the insurance company, offered it a chance to sell its assets in an orderly fashion and theoretically repay taxpayers. The plan saved AIG's trading partners but decimated its shareholders.
A Goldman spokesman, Lucas van Praag, later disputed the $20 billion Goldman risk, and claimed that Mr. Blankfein participated in the Fed discussions to safeguard the entire financial system, not Goldman's interests, but declined to comment on what Blankfein and Treasury Secretary Paulson talked about during the bailout discussions. A Treasury spokeswoman also declined to comment about the AIG bailout and Goldman's role.
Edward Liddy was on the board of Goldman Sachs from 2003 to 2008, when he resigned to become CEO of AIG. He was selected by Henry Paulson for both roles. When U.S. Treasury Secretary Paulson chose Liddy, the former Allstate Chairman, to head AIG after the government's bailout of the insurance giant, he was turning to an old buddy. Five years earlier, when Paulson ran Goldman Sachs Group Inc., he picked Liddy to join that board too.
Liddy attracted national attention in October 2008 for defending a controversial $440,000 AIG corporate executive retreat at the luxury St. Regis Resort in Monarch Beach, California. Before Congress, Liddy stated that such retreats "are standard practice in our industry." During the U.S. presidential debate on October 7, 2008, candidate Obama mentioned the retreat and said, "The Treasury should demand that money back and those executives should be fired." Obviously, that didn't happen.
Liddy publicly urged employees to return $165m in bonuses and suggested that returning at least part of the bonus was preferable to legal action, in deference to the sanctity of contracts. He called the bonuses "distasteful" before Congress, however, an open resignation letter of Jake DeSantis revealed that Liddy had accelerated more than a quarter of AIG's bonuses by three months, "hardly something that one would do if he truly found the contracts "distasteful.""
Liddy owns 27,129 shares in Goldman Sachs, currently worth just over $3 million. In April 2009 members of Congress called for Liddy to sell these shares, as they create a conflict of interest due to Goldman Sachs' receipt of bailout money. About two-thirds of Liddy's holding was restricted and could not be sold until May 31, 2009. If he sold his shares, let me know. I tried checking and found nothing.
William Dudley, formerly a partner and managing director at Goldman, Sachs & Company, is now 10th president and CEO of the Federal Reserve Bank of New York - hired by then-President Tim Geither - where he is vice chairman and a permanent member of the Federal Open Market Committee (FOMC), the group responsible for formulating the nation's monetary policy. Before that, he was executive VP of the Markets Group at the New York Fed.
E. Gerald Corrigan is currently a partner and managing director in the Office of the Chairman at Goldman Sachs and was appointed chairman of GS Bank USA, the bank holding company of Goldman Sachs, in September 2008. Corrigan joined the New York Federal Reserve Bank in 1968 where he remained for twenty-five years, becoming Vice President in 1976, and serving as a Special Assistant to Federal Reserve Board Chairman, Paul Volcker in Washington, D.C. Like Volcker, he is also a member of the Group of Thirty.
The Group of Thirty was founded in 1978 by Geoffrey Bell at the initiative of the Rockefeller Foundation which also provided initial funding for the body. Its first chairman was Johannes Witteveen, the former managing director of the International Monetary Fund. Its current chairman of trustees is Paul Volcker.
From 1980-1984, Corrigan was President of the Federal Reserve Bank of Minneapolis. From 1985-1993, he was 7th President of the Federal Reserve Bank of New York and Vice-Chairman of the Federal Open Market Committee. President of the Federal Reserve Bank of New York. From 1991 to 1993, he was Chairman of the Basel Committee on Banking Supervision. And, from 1993 to 1995, he was Director of the Council on Foreign Relations .
Gary Gensler was a partner at Goldman Sachs before being brought by Goldman alum Robert Rubin to the Clinton Treasury Department. After Rubin left to take his $20-million-a-year job at Citigroup, Lawrence Summers, his protege and replacement at Treasury, elevated Gensler to be an undersecretary. Gensler then performed as Summers' point man in advocating for deregulation legislation that enabled the current debacle.
According to Robert Scheer, Gensler helped create this financial crisis when he was in the Treasury Department back in the Clinton era, quoting Bernie Sanders, "Mr. Gensler worked with Senator Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of AIG and has resulted in the largest taxpayer bailout in US history."