As Goldman Sachs alumni play a key role in stewarding the nation’s economy, it’s worth recalling that the late economist John Kenneth Galbraith blamed Goldman Sachs for helping to cause the Great Depression. In his book, The Great Crash, 1929, Galbraith,  a key figure in President John F. Kennedy’s administration, devoted an entire chapter he titled “In Goldman, Sachs, We Trust,” to detailing the “large-scale corporate thimblerigging” that Goldman and other Wall Street firms practiced in the 1920s.

Thimbleriggers or not, supremely self-assured Goldman Sachs alumni at the highest levels of the Bush administration are now pulling the levers of power in the nation’s capital, confident that they know the way out of the current market turbulence.

Their power is likely to grow no matter who’s in charge in Washington. Commentator David Brooks may not have been joking when he observed this summer: “over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government. Over the next few, they might just take over the whole darn thing.”

It might seem reasonable to trust ex-Goldman executives because they helped build what is undeniably a spectacularly successful company. Goldman is on Fortune magazine’s 2008 list of the “Global 500” largest corporations (by revenues), which ranks it as #1 in the securities industry, #20 stateside, and #61 internationally.

But are Goldman veterans the nation’s salvation, or are they pushing the same kinds of disastrous interventionist policies that prolonged the agony of the Great Depression? Steve Milloy, portfolio manager for the Free Enterprise Action Fund, argues that Goldman alumni are working from within the Bush administration to clean up the toxic economic mess they helped to create. “It’s government by Goldman Sachs and for Goldman Sachs,” he said.

With their determination to command the financial tides, these overachieving bankers believe that they are uniquely qualified to steer the U.S. economy between the Scylla of dollar devaluation and the Charybdis of negative economic growth.

THE FINGERPRINTS of Goldman Sachs, which still managed to beat analysts’ projections and earn a hefty $845 million profit in the last quarter, are all over what are probably the most politically controversial economic policies of our time: the $700 billion Wall Street bailout, the financial affirmative action law known as the Community Reinvestment Act (CRA), and carbon emissions trading — all Big Government solutions.

But more on those policy boondoggles in a moment.

The Goldman brand has bipartisan appeal. The bank has produced Treasury secretaries for both Republican and Democratic administrations, including the current secretary, Henry Paulson, and the Clinton administration’s Robert Rubin. A Goldman veteran, Joshua Bolten, now serves as President George W. Bush’s chief of staff.

The politics of the company, founded in 1869, have long skewed left.

Goldman promotes its interests relentlessly. It has given even more money to political candidates than the famously deep-pocketed Association of Trial Lawyers of America (recently renamed American Association for Justice, with apologies to George Orwell) and is the fourth-largest political donor overall. The bank shelled out $29,588,362 over the past 20 years, mostly to Democrats, according to the Center for Responsive Politics. ABC News reported Sept. 26 that since 1989 Goldman employees have spent more than $43 million dollars on lobbying and campaign contributions to cultivate friends in Washington.

Goldman Sachs also has a history of caving in to left-wing pressure groups, such as Jesse Jackson’s Citizenship Education Fund and the extremist Rainforest Action Network (RAN). Its corporate foundation’s donations go exclusively to the left, according to a study that appeared in the August 2006 Foundation Watch.

In 2004 the Goldman Sachs Foundation gave $35.5 million to liberal non-profit groups, mostly to environmental organizations such as the Nature Conservancy and the Wildlife Conservation Society. There were no recorded contributions to conservative or free market public policy organizations.

Goldman alumni designed the recently enacted “Mother of All Bailouts.” Treasury Secretary Henry Paulson, who ran Goldman Sachs from 1999 to 2006, handpicked fellow Goldman veteran Neel Kashkari to oversee Treasury’s planned acquisition of $700 billion in distressed mortgage-related assets. Goldman, of course, will receive a chunk of that $700 billion, the Wall Street Journal reported Oct. 14.

GOLDMAN ALUMNUS Robert Rubin presided over the Clinton administration’s effort to put the Carter-era Community Reinvestment Act on steroids. The CRA punished lenders if they limited lending to wealthier, more creditworthy markets, a practice called “redlining.” As President Clinton’s Treasury Secretary, Rubin led the administration’s push to force risky subprime loans on lenders and to aggregate those subprime mortgages for sale as mortgage-backed securities.

Although liberals like to claim the CRA is in no way responsible for the current market troubles because it didn’t apply to all lenders, that’s nonsense on stilts. The CRA encouraged all lenders to loosen underwriting standards “in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults,” according to University of Texas economist Stanley Liebowitz.

As late as 2004, Rubin was vigorously defending the CRA, arguing against a proposed relaxation of the rules by the Federal Deposit Insurance Corporation. “These new rules may be the first step in an effort — long pursued by some in Congress — to dismantle the act, piece by piece,” he wrote.

Rubin even dressed up the law in fiscally conservative garb for the New York Times, bragging that since the CRA was created it “has prompted banks to channel more than $1 trillion into reinvestment projects — without requiring a single dollar of Congressional spending.”

The CRA that Rubin so strongly supported also encouraged activists such as Neighborhood Assistance Corporation of America (NACA) CEO Bruce Marks, a self-described “bank terrorist,” to agitate by giving them the power to make trouble for banks that failed to lend enough money to so-called underserved communities.

Community groups like NACA, National Urban League, National Community Reinvestment Coalition, ACORN, National Council of La Raza, and the Greenlining Institute have used the CRA to shake down banks for billions, and possibly, trillions of dollars in loans by holding up bank mergers and expansions.

The left-wing National Urban League, headed by former New Orleans mayor Marc Morial, is now demanding that Paulson refute recent statements by CRA critics that subprime mortgages provided to minorities led to the financial crisis and a $700 billion federal bailout of Wall Street. “It’s an effort to shift the climate away from deregulation and the lack of oversight,” Morial said.

In 2000 when Paulson ran Goldman Sachs, the company’s charitable foundation gave the CRA enthusiasts at the National Urban League $50,000. My guess is Paulson will take the Urban League’s calls

GOLDMAN SACHS ALSO AIMS to profit from stricter environmental regulation, as Fred Lucas wrote in his October 2008 Foundation Watch profile of the most powerful company in Washington. When Paulson headed Goldman, the company released a position paper endorsing global warming alarmism and carbon trading. “Voluntary action alone cannot solve the climate change problem,” it declared.

Paulson came under fire while he was at the helm of Goldman for donating 680,000 acres of land owned by his company in Chile’s Tierra del Fuego to the Wildlife Conservation Society. Paulson had a conflict because when he transferred the Goldman-owned land, he was chairman of the Nature Conservancy at the same time.

And it was Paulson who persuaded the president to drop his threat to veto the housing bailout bill this summer even though it provided for a $5 billion “slush fund” for radical nonprofits. That taxpayer money will go to housing subsidies, financial counseling, and mortgage restructuring programs, some of which are bound to end up under the control of political advocacy groups such as ACORN, the National Council of La Raza, and California’s Greenlining Institute.

Goldman has also endorsed mandatory government limits on carbon emissions and would probably reap huge profits from the cap-and-trade emissions control policy that both Barack Obama and John McCain have endorsed. With its eye on potentially lucrative carbon trading, in 2006 Goldman paid $23 million to purchase a 10% interest in the Chicago Climate Exchange, the only U.S. exchange that conducts trading in carbon offsets.

Experts say the U.S. carbon emissions market could be worth $1 trillion annually by 2020, but trading in carbon offsets won’t generate much profit unless the federal government forces corporations to participate in the trading scheme. It’s in the interests of Goldman, which as of 2007 had committed at least $1 billion to “carbon assets” alternative energy projects, to lobby hard for carbon controls.

So is it any surprise then that environmentalist Paulson did not object when Senate Finance Committee chairman Max Baucus (D-Montana) inserted carbon tax-related provisions in the final version of the bailout bill? Section 116 of the legislation provides preferential tax treatment for publicly-traded partnerships when they trade so-called carbon offsets, and Section 117 provides for a “carbon audit of the tax code.”

The measure, signed into law Oct. 3, appears to be an attempt by global warming activists to lay the foundation for an economy-killing carbon tax just like the “cap-and-tax” system that is now destroying European industry.

And Goldman will clean up no matter what happens to the U.S. economy.