October 10, 2010
Their Man in Washington

More news from the swill kings who caused the present depression. (Don’t tell me this isn’t a depression; I have eyes.)

However, while Paulson has been criticized, unfairly or not, because $12.9 billion of the bailout money went to Goldman, he’s drawn little scrutiny for what he did in his first 18 months in office, during the final frenzied stages of the housing bubble.

In his eight years as Goldman’s chief executive, Paulson had presided over the firm’s plunge into the business of buying up subprime mortgages to marginal borrowers and then repackaging them into securities, overseeing the firm’s huge positions in what became a fraud-infested market.

During Paulson’s first 15 months as the treasury secretary and chief presidential economic adviser, Goldman unloaded more than $30 billion in dicey residential mortgage securities to pension funds, foreign banks and other investors and became the only major Wall Street firm to dramatically cut its losses and exit the housing market safely. Goldman also racked up billions of dollars in profits by secretly betting on a downturn in home mortgage securities.

“No one was better positioned . . . than Mr. Paulson to understand exactly what the implications of his moving against the (housing) bubble would have been for Goldman Sachs, because he knew what the Goldman Sachs positions were,” said William Black, a former senior thrift regulator who delivered the harshest criticism of the former secretary.

Paulson “knew that if he acted the way he should, that would have burst the bubble. Then Goldman Sachs would have been left with a very substantial loss, and that would have been the end of bonuses at Goldman Sachs.



Posted by Jerome Doolittle at October 10, 2010 10:39 AM
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I wonder how things would have turned out, had Bush not fired Paul O'Neill as Treasury secretary.

Posted by: JoyfulA on October 11, 2010 6:37 AM

Thanks so much for covering this.

I've been saying that Paulson was personally implicated in the Goldman Sachs/AIG mayhem from the first (check my blog if you don't believe me), and have been awaiting the proof for two years to finally hit the MSM.

As if anyone is now interested, huh?

Again, thanks for covering this signal criminality bringing the world-changing financial catastrophe bailouts paid for by the people at the bottom of the pyramid who continue to be misled by most of the reporting.


Posted by: Suzan on October 11, 2010 11:39 AM
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