This article is dedicated to Monty Hall, host of the old TV game show "Let's Make a Deal". The "Monty Hall problem" involving three doors, two goats and a car was deceptively simple, stumping average people and university professors of mathematics alike. In my mind, it is a terrific metaphor for the problem of our modern banking/monetary system - simple, but so deceptive that few really understand it.

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Behind Door Number One we have:

 

Ben Bernanke, Chairman of the Fed, and the ever-cheerful National Public Radio singing "Green Shoots".  Bloomberg TV and all the major media picked it up and have been crooning like drunken barflies on St. Paddies Day for weeks.  I must have heard "green shoots" 47 times during a single viewing of Bloomberg a few weeks ago, until I got sick of it, and turned it off.  This information is useless as an aide to our understanding of the economy.  It is a diversion, a palliative for the fear and pain being suffered by the economically illiterate public of the United States in the current financial crisis and recession.  In terms of "Let's Make a Deal", Door Number One is a goat.

Behind Door Number Two we have:

Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley, formerly Senior Policy Advisor at the International Monetary Fund, and Research Fellow at the Center for Economic Policy and Research (CEPR), and

Kevin H. O'Rourke, Professor of Economics at Trinity College Dublin and CEPR Research Fellow.

Mr. Eichengreen and O'Rourke, in A Tale of Two Depressions, say the data shows world industrial output following a track very much like the first Great Depression, with the US and Poland doing slightly better, Canada, Britain, Germany, and Belgium doing about the same, and France, Italy, Chile, Japan, Sweden, and the rest of the world doing significantly worse.  Don't you wish you had the hindsight of an economist, always able to tell you what happened, never what will happen, except the economy will get better, get worse, or stay the same?  Oh, we have the hindsight alright.  It is the foresight that is missing.  Maybe if research funding existed for detailed studies of how banks, credit, and debt levels cause economic booms and busts, we could see cause and effect.  No such luck, though.  I wonder why.

Without looking at the big picture, the wealthy players, nation-scale economics, and the way modern banking works, there is just no way to understand what is going on.  It's like studying tea leaves at the bottom of a cup and wondering why they jiggle, without noticing when earthquakes take place underfoot.

Now, now just because we cannot see booms clearly or busts coming, nor can 98% of all economists, that does not mean the big banks and bankers in-the-know cannot.  Bloomberg explained how AIG's trading partners squeezed it - Goldman Sachs Group Inc. and Societe Generale SA extracted about $11.4 billion - just before it collapsed and 15 months before the bailout.  Goldman Sachs eventually received about $14 billion from AIG, Societe Generale got $16.5 billion, and Deutsche Bank AG got $8.5 billion, and more than a dozen more banks got a total of about $23.1 billion, including: collateral obtained from AIG before it collapsed, after the rescue, and payments made by Maiden Lane III, a vehicle created by the Fed to retire AIG's many credit-default swaps.

If only we were privy to the information the banks and bankers in-the-know are privy to, then maybe we could have seen this bust coming too and might have pulled our money (if we had any) out of doomed investments just like Goldman Sachs and Societe Generale, and shorted the stock market or real estate and made a killing.  Oh, but we cannot.  That is not just a rich man's game, it is a super-rich man's game.  We are mere peons, and we simply do not have access to the necessary information.  Fed meeting minutes are private.  Not even the US Government is privy to the workings of the so-called "Federal Reserve".  As Dennis Kucinich famously quipped, "The Federal Reserve is no more federal than Federal Express". 

Like Door Number 1, the Door Number 2 information is also useless to us.  Looking backward does us no good.  Only being able to look ahead will help us.  But, we are not captains of industry, nor do we get a glimpse of the pilot's charts.  Eichengreen and O'Rourke are fine fellows, but in terms of "Let's Make a Deal", Door Number 2 is also a goat.

Behind Door Number Three we have:

the Grand Prize according to my trusty pocket guide to Sherlock Holmes.  OK, I was kidding about the BRAND NEW CAR.  Surely, the US Government must be behind Door Number 3, in control of the economy, looking out for the public interest.  We do not need to look at the Fed meeting minutes when Uncle Sam is in our corner.  We need only refer again to the Bloomberg-AIG article (linked above), which quoted William Poole, former president of the St. Louis Fed, "It's not the responsibility of any private firm to determine what the public interest is -- that's why we have a government."  I feel better already, knowing that Washington must be behind Door Number Three. We don't need no stinking private banking cartel.  The US Treasury Department ... THAT is Federal.

Or is it?  What if the US Treasury Department, like the Fed, is "no more Federal than Federal Express"?  Ooh, that's crazy talk: mentally defective, tin-foil hat, paranoid.  Or is it?  Obama, my main man, he wouldn't let the bankers in the back, would he Jack?  No way Jose.  Not a chance, Lance.  Get out of town, Brown.  Well ... it wouldn't hurt to do a little digging to erase all doubt, so let's digress for a little while, and take a look at a few Goldman Sachs Federal Reserve - US Treasury connections, starting with the top US Government financial post, the Secretary of the Treasury

Here are Henry Paulson (L) and Robert Rubin (R) at Davos, 2009.

Henry Paulson was Chairman and CEO of Goldman Sachs, 74th US Treasury Secretary, and a member of the International Monetary Fund Board of Governors.  Currently, Tim Geithner is Treasury Secretary, and in case you didn't know, Geither and Ben Bernanke are IMF BOG members.  Paulson himself was recruited by a former Goldman Sachs banker, former White House Chief of Staff Josh Bolten.  Paulson surrounded himself at Treasury with people he was comfortable with, and he was comfortable with people from Goldman Sachs: Neel Kashkari, Dan Jester, Steve Shafran, Robert Steel, etc.  Small world isn't it?

Max Keiser accused Goldman Sachs of being the principal architect of the biggest financial crisis ever known and accused Paulson of lying through his teeth outrageously when he said "... we were not doing anything for the banks, just to help the banks, this was about the American people, about credit and credit availability..."  Should we believe Paulson or Keiser?  Paulson's Government position lent him an aura of power and authority in the minds of many credulous Americans, but the facts favor Keiser.

Robert Rubin worked 26 years at Goldman Sachs, was Vice Chairman and Co-Chief Operating Officer (1987-1990), Co-Chairman and Co-Senior Partner (1990-1992), was 71st US Treasury Secretary, and during eight years post-Government work at Citigroup, including a month-long stint as Chairman in 2007, he received more than $126 million in cash and stock. 

Paulson, Rubin, and current Treasury Secretary Geithner were knee deep in recent Government efforts to bailout Citigroup.  In the Citigroup bailout, announced late on a Sunday night, November 23, 2008, the Government indemnified the bank against potential losses on $306 billion in toxic assets. The bailout came days after Paulson made comments suggesting he would leave any future bailouts to the Obama administration.  Tim Geithner, Citigroup's lead regulator, only withdrew from direct involvement with Rubin, Citigroup leaders, and the bailout planning after his name was leaked as Obama's nominee for Treasury Secretary.  But, Citigroup's stock plunged the week before, and Rubin called Paulson to say the Government had to do something.  On Monday morning after the bailout announcement, Citigroup's stock soared.

The rule there was typical of every aspect of this financial crisis.  The people who caused the crisis remained in charge and shielded from financial harm.  If it was illegal, it would clearly be a conspiracy, but since our system allows such odious conduct, it is more accurate to describe it as oligarchy or fascism, both of which are abhorrent to the American way of thinking about our political traditions, but neither of which are illegal.

Here is another familiar face, Laurence Summers.

Summers was 71st  US Secretary Treasury.  He made $2.7 million in speaking fees from the likes of Citigroup and Goldman Sachs, on top of his 2008 salary of $5.2 million, for his one-day-a-week job with hedge fund, D. E. Shaw.  According to the NY Times, "The reporter Louise Story wrote that Summers had done consulting work for another hedge fund, Taconic Capital Advisors, from 2004 to 2006, while still president of Harvard."  He is now Director of the White House's National Economic Council and President Obama's chief economic adviser.

Not everyone worked or works for Goldman Sachs.  Who have we here?

Our current US Treasury Secretary and current US member of the IMF Board of Governors, Tim Geithner, and former US Treasury Secretary and alternate member of the IMF Board of Governors, Ben Bernanke, are not Goldman alumni.  At least, THEY are not directly beholden to Goldman Sachs.  But, where do they stand in the whole money-power picture?  A little over a year ago, A. James Memmott wrote:

"He's [Geithner] now an insider himself, knee deep in the unfolding economic crisis, who has worked closely with former New York Fed chief Gerald Corrigan, former U.S. Fed chief Alan Greenspan and current Treasury Secretary Henry Paulson and head of the Federal Reserve Ben Bernanke.

Geithner's first job was with Kissinger Associates, where he worked with the former secretary of state.  From there, he went to the U.S. Treasury Department, where he rose to become an aide to Lawrence Summers and Robert Rubin, treasury secretaries under Bill Clinton.  He assisted these leaders in putting together bailouts, not of companies but of nations, including Mexico and Indonesia.

During the late 1990s, then the chairman of the Federal Reserve, Alan Greenspan also noticed Geithner.  "That whole period was one long crisis," Greenspan told Portfolio. "(Geithner showed) a general understanding of the nature of what the problems were and what was required to right the system."

Geithner's circle of advisers and mentors was expanded in 2003 when he became head of the New York Fed, the most powerful of the government's 12 regional banks.  When Bear Stearns, an investment bank, began to bleed money earlier this year as a result of the collapse of the sub-prime mortgage industry, the New York Fed took on damage-control duties. 

Geithner served as the point man in the talks that led to the Federal Reserve's loan of $29 billion to assist J.P. Morgan Chase & Co. in its buyout of the assets of Bear Sterns.  Whether or not the Fed did the right thing is reflected in the title of Weiss' profile of Geithner, "The Man Who Saved (or Got Suckered by) Wall Street."

That profile and profiles in other publications depict Geithner as extraordinary well-connected.  His informal group of advisers includes E. Gerald Corrigan, a managing director of Goldman Sachs and a former New York Fed president; Treasury Secretary Henry Paulson; John Thain, the CEO of Merrill Lynch; and Paul Volcker, the former Fed chairman; and Peter Peterson, the former U.S. secretary of commerce.

Let's look at Geithner's Peter Peterson connection a little closer.

Peter Peterson was Chairman of the Council on Foreign Relations until retiring on June 30, 2007, after being named chairman emeritus. He is the Senior Chairman of the private equity firm, the Blackstone Group.  In 2008, Peterson was ranked 149th on the "Forbes 400 Richest Americans" with a net worth of $2.8 Billion.

Investment banker Roger Altman left his position as a managing director of Shearson Lehman Brothers to join Peterson at Blackstone in 1987. In 1992, Altman left Blackstone to join the Clinton Administration as Deputy Treasury Secretary. After leaving politics, Altman founded investment banking and private equity firm, Evercore Partners. 

A. James Memmott continued:

James "Jamie" L. Dimon, the CEO and chairman of J.P. Morgan Chase, is a Geithner ally and a member of the board of the New York Fed.  This connection has raised some eyebrows, for it meant that in solving the Bear Stearns mess Geithner approved a $29 billion loan to a company run by a member of his board.  But Geithner argued that J.P. Morgan met the Fed's criteria, as it was "a sound institution" that could pay back the money. Bear Stearns did not meet this test."

In March, Geithner was questioned by Congresswoman Maxine Waters about the appearance of conflict of interest by Goldman Sachs insiders:

"I am just asking the questions," Waters said, "because the talk is...that this small group of decision makers at the center of it is Goldman Sachs and that's what's causing a lot of the distrust, because people are thinking or believing that Goldman Sachs, because of the connections, have had a lot to do with the decisions that are being made."

During that questioning, Geithner denied that Goldman Sachs played a role in the failure of Lehman Brothers, apparently forgetting that the decision to let them fail came out of meetings of regulators and bankers led by Hank Paulson.

Geithner also retorted: "I think it's deeply unfair to the people who are part of these decisions to suggest that they were making judgments that in their view were not in the best interest of the American people."  Someone in the audience, please find a transcript of William Poole's interview last week, email it to Geithner, and remind him about the difference between the fiduciary responsibility of a private firm and the responsibility of the US Government.

Goldman Sachs alumni do seem to hold a disproportionate number of top Government and Federal Reserve positions and positions with exceptional Government access, a fact noticed by the New York Times as well.  Neel Kashkari, Reuben Jeffrey, Dan Jester, Steve Shafran, Edward C. Forst, Robert K. Steel, Stephen Friedman, Lloyd Blankfein, William Dudley, E. Gerald Corrigan, Gary Gensler, Mark Patterson, Josh Bolton, AIG's Liddy, are all Goldman Sachs alumni. 

Neel Kashkari, who runs TARP, was a Vice President at Goldman Sachs in San Francisco. In July 2006, he was appointed "special assistant" to the US Treasury Secretary by Treasury Secretary Hank Paulson.  In Summer, 2008, he was appointed assistant secretary for international economics.  On October 6, 2008, Paulson promoted Kashkari to interim head of the new Office of Financial Stability. Overseen by the treasury secretary, he was in charge of creating and implementing the United States government's $700 billion financial stabilization program

Reuben Jeffrey, worked for Goldman Sachs from 1983-1997, was Managing Partner of Goldman Sachs's European Financial Institutions Group, London, 1992, and Managing Partner of the Goldman Sachs, Paris, 1997.  In 2008, he was appointed interim chief investment officer in the $700 billion financial rescue plan.  Jeffrey is currently the Under Secretary of State for economic affairs, advises the Secretary of State on international economic policy, and he is the State Department's Coordinator for International Energy Affairs.

Do you suppose it would have helped a high rolling investment banking house such as Goldman Sachs to know in advance precisely where $700 billion was going?  Tsk, tsk, Geithner would say. How deeply unfair it would be to the people who are part of these decisions to suggest that they would tell anyone in advance what they were planning.  That would be selfish and not in the best interest of the American people. 

We can trust all these former bankers now in Government service to play by the rules, and say mum's the word, can't we, including former Goldman executive and advisor to the biggest banks, Kendrick Wilson, whose job it is to keep bank chiefs informed of possible Treasury plans?  Or would we be chumps to believe these big shot bankers are all naïve little novice poker players like Mary in A Big Hand for the Little Lady.

Dan Jester, a former strategic officer for Goldman, has been involved in most of Treasury's recent initiatives, especially the government takeover of the mortgage giants Fannie Mae and Freddie Mac.  Mr. Jester was central in the effort to inject capital into banks, a list that included Goldman.

Steve Shafran, worked in Goldman's private equity business in Asia and retired in 2000.  He became involved in Treasury's initiative to guarantee money market funds, among other things.

Edward Forst joined Goldman in 2004 and served as the global head of Goldman's investment management division.  He became a Goldman partner in 1998, Paulson's first year leading the firm.  He left Goldman Sachs to become Harvard's first executive vice president for a brief three weeks, before being tapped by Paulson to help draft the $700-billion bailout plan.

Robert Steel is a nearly 30 year veteran and former vice chairman of Goldman Sachs.  After retirement, he assumed the position of advisory director and then senior director in December 2004.  In 2005-2006, Steel served on the board of directors of Barclays Plc. 

Steel was appointed Under Secretary for Domestic Finance at the US Treasury on October 10, 2006 and served until July 9, 2008. He was the principal adviser to the secretary on matters of domestic finance and led the department's activities regarding the U.S. financial system, fiscal policy and operations, governmental assets and liabilities, and related economic matters.  In March of 2007, Steel testified before the U.S. House Financial Services Committee on reform of the housing Government Sponsored Enterprises (GSEs), including Fannie Mae and Freddie Mac. He said that the regulatory system for these institutions "neither has the tools, nor the stature, to deal effectively with the current size, complexity, and importance of these enterprises." He also testified that if GSEs are able to accomplish their mission, the risks must be managed and supervised. "Otherwise there may be a threat to their solvency, and importantly to the stability of other financial institutions and the strength of our economy ..."

In early 2007, Steel oversaw the creation of the Blueprint on Financial Services Regulation as part of an initiative to increase America's capital market competitiveness.  The Blueprint called for the creation of three new regulators: a Market Stability Regulator to focus on the financial sector as a whole; a Prudential Regulator to focus on the safety and soundness of major financial institutions; and a Business Conduct Regulator to focus on protecting consumers and investors.  According to the proposal, the Business Conduct Regulator would have been made up of a combined Securities and Exchange Commission and Commodity Futures Trading Commission.  As economic conditions worsened, Steel was one of the architects of the federal government's response.

Was Robert Steel one of the good guys sounding the alarm bell, simply trying to shore up a rotten system, or was he a financial industry architect seeking to concentrate financial power?  He left Government service before the big market crash in 2008 and returned to banking.  On July 9, 2008, Robert Steel was named president and CEO of Wachovia.  After an initial deal with Citigroup for $1/share fell through, Steel and the Wachovia board agreed to merge with Wells Fargo for $7/share, making Wells Fargo the second-largest retail brokerage in the United States.  In January 2009, The Wall Street Journal reported that the Securities and Exchange Commission was investigating claims Steel made about the future of the bank before it started talks about a potential merger. The article stated, "[w]hether Mr. Steel misled investors and violated securities laws will depend on what Mr. Steel knew at the time of his comments."  Following the merger, Steel was invited to join the board of Wells Fargo and currently serves on the firm's credit and finance committees.

Stephen Friedman joined Goldman Sachs in 1966, holding numerous executive roles including Co-Chief Operating Officer from 1987 to 1990, Co-Chairman from 1990 to 1992, and the sole Chairman from 1992 to 1994; he still serves on the company board.  From 1998 to 2002, he was a senior principal of Marsh & McLennan Capital Corp. In 1999, Bill Clinton appointed him to the President's Foreign Intelligence Advisory Board, and in 2005, Bush named him Chairman of the Board.  From 2002 to 2005, he was United States Assistant to the President for Economic Policy and Director of the National Economic Council.  Friedman has been Chairman of the Intelligence Oversight Board, an independent body that assesses the state of national intelligence, since January 2006.  In January, 2008, Friedman was appointed Director and Chairman of the Board of the Federal Reserve Bank of New York by the Federal Reserve Board of Governors, headed by Federal Reserve Chairman Ben Bernanke.

Friedman spent 30 years at Goldman and had close ties to Robert Rubin and Henry Paulson.  Timothy Geithner was president of the New York Fed when Friedman headed its board. While he remained with Goldman, he was also Chairman of the New York Federal Reserve Bank and had a large holding of Goldman stock even as the NY Federal Reserve Bank shaped Washington's response to the financial crisis.

The first Government bailout buoyed Goldman Sachs and other Wall Street firms.  Goldman received speedy approval to become a bank holding company in September, 2008, and a $10 billion capital injection soon after.  Friedman continued to stay on as NY Fed Co-Chair even after Goldman became a bank holding company, eventually being granted a waiver to continue serving on the board until the end of 2009 in what would otherwise have been a violation of Federal Reserve policy.  The kicker is that the Fed dithered for about 2½ months before granting the waiver.  While it was weighing the request, Friedman bought 37,300 more Goldman shares in December, 2008.  (The source Wall Street Journal article is here, but it requires a paid subscription.)

Friedman spent 30 years at Goldman and has close ties to the core group of Goldman alumnae who held sway in the Treasury Department, including former Treasury secretary Robert Rubin and Bush Treasury Secretary Henry Paulson.  Obama Treasury Secretary Timothy Geithner was president of the New York Fed when Friedman headed its board.

Friedman resigned from the Board of the NY Fed in May, 2009, amid questions about the stock purchases in Goldman Sachs made after Goldman became a bank holding company.  According to Wall Street Journal on May 8, 2009, Goldman shares purchased in December 2008 and January 2009, gave Mr. Friedman a $3 million paper gain in May 2009 after the stock rallied.  It's bad enough that Friedman owned Goldman shares while involved in policy discussions that would affect the bank. The fact that he went and bought more shares is breathtaking.  The ethically challenged banker could not admit he had done anything wrong.  In his resignation letter he complained "... my public service motivated continuation on the reserve bank board is being mischaracterized as improper."

Friedman is also Chairman Emeritus of the Board of Columbia University, Chairman Emeritus of the Executive Committee of the Brookings Institution, and a member of the Council on Foreign Relations.  Have you ever wondered why the elite universities never study how the Fed and the mega-banks cause the "business-cycle" in the economy? Do you think that Columbia would be friendly to potential professors of economics capable of determining what is wrong with our current banking/monetary system, what is wrong with the enmeshment of the financial industry and Government, and able to envision practical alternatives?  Plan on sending your son or daughter to Columbia?  Good luck with that.

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."

"The explosion of toxic assets [credit default swaps and other derivatives] is a direct result of the laws pushed through by Rubin and his followers, and in the decade since, we have had a twenty-fold increase, to more than $530 trillion, in the value of those newfangled financial instruments, which Warren Buffett in February 2003 correctly termed "financial weapons of mass destruction.""

Gensler's reward was to be named by President Obama to head the Commodity Futures Trading Commission.  Scheer noted that one member of the Clinton administration, Brooksley Born, when she was head of the CFTC, warned about the proliferation of derivatives, but she was treated by the rest of Clinton's economic team as the enemy.  They drove her from government and pushed through the Commodity Futures Modernization Act, which summarily exempted derivatives from regulation.  Ironically, Gensler was being rewarded for being wrong with the old job of the person who got it right, Brooksley Born.

Mark Patterson was a former lobbyist for Goldman Sachs.  Despite Treasury Secretary Geithner having just outlined rules in January, 2009, to keep lobbyists away from the decision process for the allocation of the TARP money, Geithner named Mark Patterson as his top aide, Treasury Chief of Staff, the same day.  Patterson, who had worked behind the scenes for ex-Senate Majority Leader Tom Daschle (D-S.D.) and former Sen. Daniel Patrick Moynihan (D-N.Y.) came under fire immediately for his former lobbyist role. On January 21, 2009, President Obama signed an Executive Order banning the hiring of a lobbyist to work in an issue area in which they have lobbied over the past two years.  Doesn't matter.  An ex-Goldman lobbyist now Geithner's right-hand man.

Josh Bolton was Executive Director, Legal & Government Affairs, for Goldman Sachs International in London, 1994-1999.  From March, 1999, through November, 2000, Bolten was Policy Director of the Bush-Cheney presidential campaign.  From January, 2001, through June, 2003, he was Assistant to the President and Deputy Chief of Staff for Policy at the White House.  He joined President Bush's Cabinet on June 30, 2003, as Director of the Office of Management and Budget and was named Chief of Staff on March 28, 2006.  During the GW Bush Administration, Bolten was General Counsel to the US Trade Representative for three years and Deputy Assistant to the President for Legislative Affairs for one year.

Before joining Goldman Sachs, from 1985-1989, Bolton was International Trade Counsel to the US Senate Finance Committee. Earlier, Mr. Bolten was in a private law practice with O.Melveny & Myers, and worked in the legal office of the US State Department. He also served as Executive Assistant to the Director of the Kissinger Commission on Central America.

The UK paper, The Independent, wrote in "How Goldman Sachs Took Over the World":

"... Goldman Sachs employees have given more money to Barack Obama's campaign for president than workers of any other employer in the US. "Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government," Brooks noted grimly. "Over the next few they might just take over the whole darn thing.""

Is it any wonder that despite the "worst financial crisis since the Great Depression", Goldman Sachs has come off smelling like a rose and is on pace for record bonuses, the Guardian newspaper reported, citing insiders at Goldman who said a surge in projected profit can be attributed to a lack of competition and increased revenue from trading foreign currency, bonds and fixed-income products.  Goldman received $10 billion from the $700 billion TARP, and was so profitable, they repaid it a few weeks ago.  CEO Lloyd Blankfein reminded lawmakers that Goldman is obligated to "ensure that compensation reflects the true performance of the firm and motivates proper behavior."  We all know what "proper behavior" for a private firm is by now, right?

Authors Bio:

Merchant marine experience on ocean research and oil exploration vessels in my youth. Ex-mechanical engineer, oil exploration equipment industry, commercial and military aerospace industries, SCUBA diving and respiratory protective breathing apparatus industries. Sport skin diver, spear fisher, scuba diver, fisherman, boat owner, football player, tennis player, husband, father, math teacher. Ex-Republican, not a fan of the Democratic Party either. Not very impressed with the reasoning ability of Progressives either, who seem gullible and incapable of envisioning the negative consequences of trying to create Utopia by law, but have a soft spot for them anyway because their heart is often in the right place. Long time interests include: political philosophy, ethics, economics, banking and monetary systems, criminology, the Second Amendment and gun control.