I’d like to wish Goldman Sachs’ Lloyd Blankfein a happy retirement. God and I both appreciate — and understand — what he really did.
If you didn’t catch the sarcasm in that last line, you need a refresher course on Goldman. And you need a reminder about some of the columns I’ve done on the firm, which was, and still is, so well connected politically that Washington likely has to ask its permission to do anything.
Blankfein, who announced the other day that he will be retiring as chief executive on Sept. 30, was widely quoted in 2009 as saying that he and his firm were “doing God’s work.”
And, by God, making a lot of money in the process.
I’ve never met Blankfein, although I did once challenge him to a few rounds of boxing, which he didn’t accept. Blankfein explained the “God” reference by saying that Goldman was raising money for companies, which made economies better, which made the world a better place.
Ya know, he was doing work that God would approve of. That’s an awesome responsibility. I’m sure he would have done it for free.
But I’ve always suspected that Blankfein wasn’t telling us all that he did. Specifically, Blankfein never addressed — at least publicly — what he and former Treasury Secretary Hank Paulson, who led Goldman immediately prior to Blankfein, did when the financial markets were collapsing in 2007 and 2008.
Right in the middle of the financial catastrophe that has become known as the Great Recession, Blankfein and Paulson exchanged many phone calls. Back then, I got hold of Paulson’s phone logs and discovered that he and Blankfein spoke almost as much as the Treasury boss spoke with Ben Bernanke, who was then the head of the Federal Reserve.
Remember, Goldman is a public company that trades on the financial markets.
Paulson was a government official — appointed, not elected — who had lots of privileged information that a Wall Street firm like Goldman could use to make loads of money.
And, it just so happens that the financial markets rallied vigorously right after the phone calls between Paulson and Blankein.
God, of course, would have approved because nobody wanted to see the entire US financial system collapse — which is what the scaremongers were warning and how Bernanke was able to get his emergency quantitative easing scheme — used to lower interest rates — approved by the Fed.
Along the way, God also granted Goldman Sachs a US government bailout that Goldman to this day denies it really needed.
Other firms weren’t so lucky. God wasn’t on their side. Kidder, Peabody & Co. and Bear Stearns executives lost tons of money.
Bear Stearns’ head Jimmy Cayne (who I know but haven’t seen in years) once joked that he was probably the only person who lost $1 billion and was still standing.
Bear Stearns, which wasn’t bailed out by taxpayers, succumbed because it owned too many securities that were connected with subprime mortgages. Cayne obviously didn’t have the connections to God — or Washington — that Blankfein had or I bet his firm’s problem would have been fixed by taxpayers.
With Blankfein retiring and not taking a job in Washington, Goldman will be left a little light on DC influence. Sure, Treasury Secretary Steven Mnuchin worked at Goldman, but that was a long time ago. And besides, President Trump isn’t likely to let Goldman walk all over him.
Besides, Trump is probably also getting his signals directly from God, too.