What deal did Donald Trump make with Goldman Sachs?
January 12, 2017
Wall Street On Parade (January 9) details the boggling Goldman Sachs presence on Trump’s team. My comments will follow the list of names.
“Trump nominated Steven Mnuchin, a 17-year veteran of Goldman Sachs to be his Treasury Secretary.”
“Stephen Bannon, another former Goldman Sachs banker, was named by Trump as his Chief Strategist in the White House.”
“The sitting President of Goldman Sachs, Gary Cohn, has been named by Trump as Director of the National Economic Council, which, according to its website, coordinates ‘policy-making for domestic and international economic issues’.”
“…Trump nominated a Goldman Sachs outside lawyer, Jay Clayton of Sullivan & Cromwell, to serve as Wall Street’s top cop as Chairman of the Securities and Exchange Commission.”
“…Clayton’s wife currently works as a Vice President at Goldman Sachs.”
“According to Politico, Goldman Sachs partner, Dina Powell, President of the Goldman Sachs Foundation, is Ivanka’s ‘top adviser on policy and staffing’.”
“Then there is Erin Walsh who had worked at Goldman Sachs since 2010 as an Executive Director and head of its Office of Corporate Engagement for Asia Pacific…Walsh is now part of Trump’s transition landing team for the State Department and is engaged in prepping the just retired CEO of ExxonMobil, Rex Tillerson, for his Senate confirmation hearing this week to become the Secretary of the Department of State, according to Politico.”
“And there is yet another former Goldman Sachs banker, Anthony Scaramucci, who sits on Trump’s transition team.”
The first question is: would a Trump-Goldman deal benefit Trump in a personal way? Wall Street On Parade offers possible clues.
“Now the Dow Jones company, MarketWatch, has reported that Trump’s debt is held by more than 150 Wall Street firms. The New York Times has reported that Goldman Sachs Mortgage Company holds a loan on an office tower at 1290 Avenue of the Americas, a building that is 30 percent owned by Donald Trump.”
“Some of the Trump debt held by Wall Street firms, according to media reports, includes Donald Trump’s personal guarantee in the event of a default. The true owners of other Trump debt are shielded behind secretive Limited Liability Corporations…”
If Trump is in trouble with those loans, if he’s in danger of not being able to make his payments, then that fact could form the basis of a Goldman Sachs deal. Trump gets loan protection, Goldman gets a number of influential (and self-serving) seats at the big table in Trump’s administration.
Beyond this, Goldman Sachs is…I’ll let Matt Taibbi describe them. From his classic 2010 Rolling Stone article:
“The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis , which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who’s Who of Goldman Sachs graduates.”
“By now, most of us know the major players. As George Bush’s last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton’s former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There’s John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multi-billion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain’s sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing. There’s Joshua Bolten, Bush’s chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman…”
“The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts…”
So, Goldman Sachs wants to keep on doing what it has been doing. On the other hand, Trump wants a rising stock market—a symbolic signal that the economy is strong. Understanding that the market is manipulated by insiders, Trump would know where to go to make a deal.
Goldman gives him rising market numbers, and Trump gives them what they want. How much of what they want?
Another area where Goldman could provide help: assembling the funding for a major part of what appears to be an FDR New-Deal project to rebuild America’s infrastructure, putting large numbers of unemployed people back to work. The cost? At least a trillion dollars. Convincing Congress to back this plan—and also support Trump’s tax cuts—could run into a serious roadblock. The money has to come from somewhere.
It might be useful to analyze the ominous levels of public debt accumulated by state governments. The debt is floated on bond issues, and someone has to underwrite and guarantee those issues. Banks like Goldman Sachs are in that business. Trump may have approached Goldman with the premise that, by creating whole swaths of new jobs across the country, the states’ tax revenues will rise, and therefore the payback on Goldman’s investments will become more secure.
It seems certain that Trump is leaning heavily on Goldman to run interference for him. He is walking a risk-laden path.
Partnering with a vampire squid doesn’t inspire confidence.
Since I began writing and speaking about Trump (archive here), I’ve emphasized that his millions of supporters—who actually want more freedom and more of what America should stand for—have to hold his feet to the fire when he takes a direction that spells trouble and runs counter to his announced aims.
He is doing that now.
ALSO SEE: Zerohedge
Steven Mnuchin Donated To One Democrat In 2016 – The Woman Who Declined To Prosecute His Bank
Wednesday’s post, Donald Trump Has an Enormous and Very Dangerous Wall Street Blind Spot, highlighted the fact that the bank run by Trump’s Treasury Secretary nominee, Steven Mnuchin, was given a pass by California attorney general Kamala Harris, despite the discovery of over a thousand legal violations. Kamala Harris has since been (s)elected to the U.S. Senate.
Let’s recap some of what we learned:
In the memo, the leaders of the state attorney general’s Consumer Law Section said they had “uncovered evidence suggestive of widespread misconduct” in a yearlong investigation. In a detailed 22-page request, they identified over a thousand legal violations in the small subsection of OneWest loans they were able to examine, and they recommended that Attorney General Kamala Harris file a civil enforcement action against the Pasadena-based bank. They even wrote up a sample legal complaint, seeking injunctive relief and millions of dollars in penalties.
But Harris’s office, without any explanation, declined to prosecute the case.
Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, warned: “Given Mr. Mnuchin’s history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury Department would work for Americans who are still waiting for the economic recovery to show up in their communities.”
The consistent violations of California foreclosure processes outlined in the memo would indicate that Mnuchin’s bank didn’t merely act callously, but did so with blatant disregard for the law.
According to the memo, OneWest also obstructed the investigation by ordering third parties to refuse to comply with state subpoenas.
The memo also raises questions about then-California Attorney General Kamala Harris, who was sworn in as a U.S. senator on Tuesday, and who will soon have to vote on Mnuchin’s appointment.
Why did her office close the case, deciding not to “conduct a full investigation of a national bank’s misconduct and provide a public accounting of what happened,” as her own investigators had urged?
In the days since this story broke, there’s been a lot of well deserved scrutiny pointed in the direction of Ms. Harris, yet she’s failed to provide a satisfactory answer as to why her office failed to prosecute. Which got me thinking about another paragraph from the above article:
Harris’s prodigious fundraising also raises questions about how attentive she is to the needs of campaign contributors. Prior to signing on with Trump, Mnuchin donated to members of both parties. He gave $2,000 to Harris’ Senate campaign in February 2016. Among the investors in OneWest Bank was major Democratic donor George Soros, who maxed out to Harris’ campaign in 2015.
Did he really “donate to members of both parties.” Technically, yes, but it appears Kamala Harris was the only Democrat he donated to in 2016. Which raises all sorts of obvious questions. As the Sacramento Bee noted last month in its article, Kamala Harris Won Over Many Californians, Steve Mnuchin Included:
Donald Trump, promising to drain the swamp, picked former Goldman Sachs executive and Hollywood financier Steven Mnuchin to be his Treasury secretary, fitting because Mnuchin helped fatten Trump’s campaign treasury as his campaign finance chairman. Mnuchin donated $592,600 to Republicans in 2016, including $430,000 to Trump, Federal Election Commission records show. A onetime Hillary Clinton donor, Mnuchin gave one donation this year to a Democrat, $2,000 to help elect Attorney General Kamala Harris to the U.S. Senate.
Well isn’t that interesting. Mnuchin gives one donation to a Democrat, and it just so happens to be the woman who inexplicably protected his bank from prosecution. Click here to see his 2016 donations.
While $2,000 is a small amount of money, the entire thing stinks. Kamala Harris should resign from her Senate seat immediately unless she can provide a reasonable explanation of why she let OneWest off the hook. Likewise, Steven Mnuchin should be replaced by Trump as Treasury Secretary nominee. Both are swamp creatures, and we should demand better than these two.