With the SEC now charging Goldman Sachs with a billion dollar fraud, I hope CEO Lloyd Blankfein and his colleagues will end the sanctimony and indignation that has characterized their response to recent criticism of the firm, some of it coming from these quarters. The SEC charges come a day after reports surfaced that Goldman director Rajat Guptatold is under investigation for his possible role in the separate Galleon insider trading case.
We do not subscribe to the wilder conspiracy theories about Goldman, but we do have serious concerns in two areas:
1) Goldman Sachs exercizes undue influence on the government through a network of former Goldman executives who have rotated in and out of powerful government posts.
2) Goldman Sachs is one of the most profitable firms in the country. Yet, its executives and the company itself bankroll and promote of host of anti-business causes.
Neither of these things is necessarily illegal, but they do have negative consequences for the rest of society. It is up to the rest of us to expose and contain the resulting damage.
I do not make a blanket indictment of everyone who works or has worked at Goldman, but lets consider former Goldman CEO Henry Paulson, to whom both of the above applies.
NLPC tangled with Paulson when he was Goldman CEO. We even accused him of a conflict of interest at the annual meeting because of his involvement with environmental groups, who were also recipients of Goldman support.
When he was nominated by President Bush to be Treasury Secretary, NLPC and a handful of other free-market groups opposed confirmation. I got some funny looks and a couple of angry phone calls from people I know. I can’t say that I predicted the financial crisis, or Paulson’s response to it. But I can say that I had a real bad feeling about where his ultimate loyalties were.
Of course, Paulson’s response to the crisis was to tell Congress to pass a bill allocating $750 billion for the purchase of troubled assets or Western Civilization would fall off a cliff. Only days later in October 2008, Paulson was spending the money for a different purpose, taking equity positions in banks after summoning bank CEOs to a Washington, DC conference room to tell them they had a new partner.
Even before Paulson left office, the TARP became a political slush fund and taxpayer funds were extended to auto companies.
We will continue to press our case against Goldman. At the May 7 annual meeting we are sponsoring a shareholder proposal challenging Goldman’s embrace of faulty global warming science.