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All of it made possible by his close ties to Democrats and the world of Goldman “Government” Sachs.
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We may never know the details of how that decision was made. But given its importance it is reasonable to assume that Corzine’s former colleague at Goldman, Mr. Dudley, was deeply involved. Receiving Primary Dealer status gave MF Global a level of prestige and the opportunity for profits in a U.S. Treasury market that has been extraordinarily busy in the past couple of years.
We may also never know the degree to which getting Primary Dealer status increased MF’s risk-taking and thus hurt its shareholders and customers, but the N.Y. Fed decision smells of another favor done by one Goldman Sachs Democrat for another at eventual great expense to the investing public. Not only did MF apparently lose about a billion dollars of customer funds, but Corzine also incinerated another billion dollars of shareholder value during his tenure at MF, as the company’s share price dropped from more than 8 dollars to under 8 cents. Thanks to Jon Corzine, MF Global stock certificates are worth more as a curiosity or wallpaper than as investment.
THE BIGGER PICTURE HERE, however, is not just Corzine-Gensler-Dudley, but rather the cozy relationship between Goldman Sachs and the Democratic Party. The “mainstream” media, Democratic Party leadership, major unions, and the Occupy Wall Street movement routinely describe the GOP as a tool of Wall Street. But the numbers say something very different, especially about the Street’s most prominent investment bank.
In the aggregate, political contributions by the Security and Investment industry from 1990 until today have been split roughly 50/50 between Democrats and Republicans. But the big hitter is always Goldman Sachs. Indeed, in OpenSecrets.org’s “Top All-Time Donors, 1989-2012” list, only one corporation (AT&T) has given more total money to candidates and parties than Goldman Sachs has. (In the top 20 donors, only three are companies; the rest are unions, industry associations, and political action committees.)
The year 2010 was the first since before 1990 (when the data begins) in which Goldman and its employees donated more to Republicans than to Democrats—though they clearly were uncomfortable with the change as 2010 showed the lowest political contributions by the firm since 1998. In the key 2008 race, Goldman gave more than three times as much to Democrats as to Republicans—and gave almost 60 percent more in total than the second biggest donor firm in the investment sector. To be sure, 2008 was obviously going to be a Democrat landslide and it is normal behavior by firms of all sorts to donate more to expected winners. Still, Goldman’s pro-Democrat bias was unshakeable for 20 years.
Liberal media outlets make little or no mention of this nation’s biggest example of crony capitalism: the revolving door between Goldman Sachs and the U.S. government. Again, it’s not just Corzine, Gensler, and Dudley. Former Treasury Secretaries Henry Paulson and Robert Rubin are both ex-Goldman. Neel Kashkari, a former vice president at Goldman, was hired by Paulson into the Treasury Department in 2006 and ended up managing the government’s $700 billion TARP (bank bailout) fund. Although Paulson is a registered Republican and has given more than $100,000 to Republican candidates and campaigns, his actions while Treasury Secretary seemed, as Robert Novak put it in 2007, those of “less a true Republican secretary than a transition to the next Democratic Treasury.”
Paulson selected Eric Mindich, a former Goldman partner and a long-time major donor to Democratic candidates for the U.S. Senate (and who recently contributed $35,800 to the Obama Victory Fund 2012), to head a critical financial markets committee for the Bush administration. Paulson also hired Robert K. Steel, a former Goldman Sachs vice-chairman, to be undersecretary for Domestic Finance. Steel’s range of political donations crosses the political spectrum, from Chuck Schumer to John McCain, from the National Republican Senatorial Committee to John Edwards. Steel also donated to, you guessed it, Jon Corzine. In other words—and this in no way makes him unique—Steel is more interested in buying influence than in funding candidates of a particular set of principles. With Goldman Sachs Republicans like Paulson and Steel, who needs Democrats?
A 2009 Mother Jones report notes that the revolving door moves influence in both directions:
Goldman Sachs, which has more than 30 ex-government officials registered to lobby on its behalf, tapped one-time House Majority Leader Richard Gephardt (D-Mo.) to lobby his former colleagues in Congress on issues related to the Treasury Department’s Troubled Assets Relief Program. Goldman, which paid Gephardt’s firm $70,000 in the last quarter of 2008, received $10 billion in TARP funds. (As a counterparty to AIG’s disastrous credit default swaps, Goldman pocketed an additional $12.9 billion in bailout money given to the insurance firm.) Other insiders lobbying for Goldman include former SEC commissioner Richard Roberts and Faryar Shirzad, once a top economic aide to President George W. Bush.
It’s no wonder that many critics of the firm call it “Government Sachs.”
JON CORZINE WAS subpoenaed by the House Agriculture Committee because he had refused its invitation to testify voluntarily. It’s an ignominious downfall for a man who clearly thought himself a Master of the Universe and whose net worth is estimated to have plunged from about $350 million a decade ago to about $50 million now—before whatever liabilities and costs ensue from the MF Global debacle.
The ever-less-mainstream media avoided covering the story for as long as possible. Can you imagine the air time MF Global’s collapse would be receiving if Jon Corzine were a Republican? As the Media Research Center reported, in their brief initial coverage of MF’s bankruptcy filing, “the morning shows of the Big Three networks omitted the party affiliation of Jon Corzine as they reported on the federal investigation into his brokerage firm, something that even the liberal New York Times gave in their coverage of the story. ABC’s Good Morning America also failed to include Corzine’s name during their news brief on the investigation.”
Eventually, Democratic members of Congress realized that they couldn’t cover for Corzine despite his close ties to Barack Obama—who, like Biden, campaigned for Corzine in 2009 prior to Corzine’s becoming the first major victim of the public’s ongoing revolt against Democrats. When Democrats in Congress started asking hard questions, the media decided they had clearance to cover the story. So, in December, ABC, CBS, and NPR each reported on Corzine’s testimony—without mentioning the word “Democrat.”
Again, the real story isn’t just Jon Corzine. It’s the corrupting influence of Government Sachs, especially among Democrats. The world of people who understand the operations of financial firms well enough to run or regulate them is small. It is unsurprising that there is movement between such firms and important finance-related areas of government. What is surprising and dangerous is the excessive political influence of a single firm, especially—but not only—when the political party it has financed runs the executive branch of our federal government. MF Global’s collapse at the hands of Jon Corzine and his well-placed Goldman-Democrat cronies is just the latest example of the damage such influence can inflict on American taxpayers and investors.
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