In this Real News Network segment, Bill Black describes why elite banksters will have a free hand if Trump gets his appointees through. Although Black focuses here on just departed Goldmanite Gary Cohn, the Democrats ought to put up a pitched battle over another Goldman alum, Steve Mnuchin, Trump’s Treasury Secretary nominee. Mnuchin is unqualified (the areas he worked in at Goldman would have given him little in the way of exposure to regulatory and compliance matters) and has been a predatory mortgage servicing profiteer. p
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SHARMINI PERIES: Welcome to The Real News Network. I’m Sharmini Peries coming to you from Baltimore. In an early holiday present to Wall Street, President-elect Trump appointed the president of Goldman Sachs, Gary Cohn, to head up the National Economic Council. This is a non-cabinet position, but it is key in coordinating the administration’s economic policies. President Bill Clinton created the role and put the NEC on par with the National Security Council in terms of stature to help reassure Wall Street and bond markets about his administration’s economic measures. Trump’s pick, Gary Cohn, is a life-long Goldman Sachs guy and is the third member of the Trump Administration to come from Goldman Sachs — the other two are Steve Mnuchin for Secretary of Treasury, and Steve Bannon who is Senior White House Advisor.
Joining us now from Bloomington, Minnesota, to take a closer look at this, is Bill Black. Bill is an Associate Professor of Economics and Law at the University of Missouri, Kansas City. He’s a white collar criminologist and former financial regulator and author of The Best Way to Rob a Bank is to Own One. Thanks for joining us, Bill.
BILL BLACK: Good to be here.
SHARMINI PERES: So, Bill, with this third appointment of people from Goldman Sachs it looks like the Trump Administration will be more heavily influenced by Goldman Sachs and Wall Street than he alluded to during his campaign. In fact, he criticized Hillary Clinton for being the Wall Street candidate. Bill, what do you make of all of this?
BILL BLACK: Well, he not only criticized her for being the Wall Street candidate, he ran an ad in which he said he was running against Wall Street. And the picture he flashed in the ad was the CEO, Lloyd Blankfein of Goldman Sachs, who was supposed epitomize everything that was wrong. So, as you know, I hang out and teach primarily in Kansas City, Missouri, and the then-president of the Federal Reserve, a very blunt-spoken guy, and a Conservative, told a small group of us — on the record — that for the last 30 years, whatever party’s in power has held an auction and auctioned off to the highest bidder on Wall Street, the position of Treasury Secretary. And that for the last 20 years overwhelmingly the winner of that auction is Goldman Sachs. So Goldman Sachs, again, has been chosen to run Treasury.
Now the National Economic Council and Trump, in appointing Gary Cohn, said that he would be his principal economic advisor. So, not the Chair of the Council of Economic Advisors, who is someone who actually knows economics. As you said, like so many bad ideas, this one came from Bill Clinton — the creation of the NEC — but largely because he didn’t much like getting advice from people who actually knew economics, and who were professors and such. So he wanted somebody who didn’t particularly know much about economics, but had the right politics and that, of course, was Bob Rubin who had been President and CEO of Goldman Sachs, as well. And then Bush II got, as his head of the NEC, a Goldman Sachs guy. So this really keeps it in the family.
Now we know that when Trump said he was going to drain the swamp, it was so that he could make it easier so they could get all the creepy-crawly things and give them the most prominent position in his new administration. So as a white collar criminologist, I’ll say that this is going to be the most criminogenic environment since the days of Harding. And white collar crime and scandal and corruption is just going to have a field day. But it’s not going to be a day, it’s going to be a minimum of four years.
SHARMINI PERIES: And you thought you were having fun with the last administration, I can’t wait to see what you take up with this one. Now, you were speaking about family keeping it close and now we know that the person that brought Cohn to Trump is his son-in-law Jared Kushner — and who, I must add, is a real estate magnate himself. And so, with all of these connections, one of the reasons that he was brought to Trump’s attention was because of his public/private partnership proposal that he had written up. What’s in that, what’s so scary about it, Bill?
BILL BLACK: Oh, well, nothing scary if you’re the private part. laughs It’s guaranteed enormous amounts of money where the government fronts the money and you get the profits. It’s completely outrageous. It’s a really bad way to do stimulus. And, again, these people are picked, not because they know anything about economics. In fact, any C heads often don’t know particularly about economics. Even Larry Summers, who was Obama’s first NEC head was not picked because of his knowledge of economics, but because, of course, he was Rubin’s protégé. So this is more, it’ll be great for Goldman’s customers. By the way, Gary Cohn, as a result of — and you have to love the euphemism — “beginning public service,” will be able to sell his Goldman shares and have them tax-deferred, the gain. And the gain, if he sells right now, is going to be an estimated 209 million bucks. So everybody’s gonna win — except, of course, the public.
SHARMINI PERIES: And tell us a little bit more about Goldman Sachs and their role in economic catastrophes. What’s their history and, I mean, not only in this Trump Administration, they advise heads of states of all over the world.
BILL BLACK: Oh, they do it all. First, people will probably want to know that Blankfein — and he said this seriously — was doing “God’s work.” laughs So they have a really close identification with anything that makes them wealth, they think is something that God wanted and that they’re actually helping God by making themselves fabulously wealthy. Goldman Sachs is one of the remaining big three investment banks in the United States. It is one that, as you say, is infamous for advising governments to do all kinds of bad transactions that are really good for Goldman, really good for other private clients, and really, really, really bad for the public sector. They’re the ones who helped Greece do the scam to understate dramatically its debt levels so that it could qualify for the euro. We’ve seen how that worked out. But it’s also informally referred to as Government Sachs because it really encourages its senior executives to go in to really senior levels of the government — the kind of things that create policy and can make Goldman Sachs and its clients immensely wealthy.
But you always have to worry with Goldman Sachs. Goldman Sachs is also one — many of the entities did this — but Goldman Sachs is the one that’s most infamous for setting up a toxic waste fund, telling investors that it picked the bonds because they were good bonds, when actually Goldman Sachs and another Paulson — not the Paulson that used to run Goldman Sachs and then became Treasury Secretary under Bush II — but the other Paulson, the one that did the big short, the really big short. And they were, in fact, picking the fund so that it was filled with the most toxic crud and then Goldman and Paulson were betting for the sure thing, which is that this was going to lose money and encouraging other Goldman customers to come in saying, “We’ve created this portfolio of really good stuff that you want to be invested in.” And when they were called on this in the Senate investigation, they said, “Oh, we don’t see any problem with doing that. We’re not here for our customers.” laughs “We’re here for Goldman Sachs. Everybody should know that we’re rapacious.” And, of course, Matt Taibbi has summed it up so colorfully and accurately in labeling Goldman Sachs “The Vampire Squid” that exists simply to thrust its feeding tube into any pile of rotting assets to extract the value and further rip off the public and enrich the Goldman partners. Which, all you can say is, “They done it again.”
SHARMINI PERIES: All right, Bill, very scary times. I thank you so much for joining us and please come back real soon. I’m sure we’ll have more news to unravel.
BILL BLACK: Oh, the Vampire Squid has many more acts.
SHARMINI PERIES: All right. Thank you for joining us on The Real News Network.
Categories and memes: It’s only a “crime” if some legislation says it is, and some detective enforcer sees it, interprets the often unclear and always pervertable language to apply, and is brave enough to flag it to some prosecuting entity, who, like the detective has just done, after triangulating his or her career potentials, may decide to go to a grand jury or write out an “information” which then goes through a vetting process by the political authority overseeing that function, and then gets filed and has to survive the assault of “silk stocking” and “white shoe” ( http://www.ivy-style.com/how-the-white-shoe-law-firm-got-its-name.html) lawyers and all the deferrals of prosecution and other “alternatives” like “big settlements” in lieu of jail time or the “Chinese Solution” for certain kinds of non-Privilieged corruption and theft, on and on and on… “There are no ‘rights’ in the absence of effective remedies (or crimes, in the absence of “law” on the books and effective enforcement.”
So will there be corruption? Will it be Yuuuuuge? Seems inevitable. But will that amount to “white collar crime” in anything but the wishful thinking and Hope-iness in the Outlands beyond the air-locked Imperial Capitol, where the Wealth originates (other than “fiat money,” of course)?
We got “moderate terrorists,” maybe time to resurrect the category of “moderate graft where the mopes are not bled white and not outright killed by the predators. But then the whole “political economy” is based on “MORE IS NEVER ENO:UGH!”, now, isn’t it? No “Lagom” (http://www.lexiophiles.com/english/what-“lagom”-really-means) for the great mass of humanity…
Thanks for the explanations of both “white shoe” and “lagom”. I have often wondered about “white shoe law firms”, and now I know! “Lagom” is new to me, although I was already aware of similar Aristotelian, Buddhist, and Confucian concepts.
“…moderate graft where the mopes are not bled white and not outright killed by the predators.”
I think that’s what Trump is going for. Sadly I think it would still be an improvement over the current state.
Looks like Trump really is a Manchurian Candidate FOR Goldman Sachs after all!
I believe it is more complicated than that DT.
We are in a tough spot.
Money rules our political dynamic because of legalized bribery, AKA PACS and other deep pocketed campaign contributors. Of course campaign contributors have a fairly low $ limit, so they give to pacs as well.
How to get around that? Create a “Foundation” and you’re good to go.
Remember it was Clinton that allowed the concentration of media.
That’s part of our tough spot too.
This blog is reaping the consequences of that policy.
Free equal political airtime as part of the FCC licensing could be part of the solution. Perhaps some low cost licensing to other voices would help as well. Break up the MSM. Take $ out of politics, ban PACs.
Thus, the insidious nature of Citizens United. SCOTUS knows not justice nor about humanity. We should be hanging Ayn Rand in effigy.
So True -Knot Galt.
Always remember, our government is an Admiralty – Equity type of construct.
That’s why the Supreme’s cited the legal word “PERSON.”
That’s also why OBI said there were 57 “States”.
There are, if you include DC and the territories.
Both were correct under that construct, but LAW is supposed to Trump it, excuse the pun.
I do apologize for not saying what is obvious to me, but perhaps not to all… here it is…
At this point in time, the only viable counter force to the traditional REP-DEM dualism, is a billionaire like Trump. Let’s give him a chance, he is not even in office yet. If we become more vigilant we might help him steer the ship of state toward a better course. Then it will be the post baby boomers, dare I say deplorable Gen X. They will need more than a chance. Tough odds friends. “There is nothing new under the sun” they say. That might change this go round.
Can you dig it?
The Warriors – Can You Dig It
Everyone, please keep digging for the truth, and we shall be free at last.
just observing faces, Cohn looks like a fully formed financial killer – his image would make a good gargoyle; Mnuchin looks naive and vacuous and like he hasn’t really ever fledged his greed. It is not surprising to learn that Sec.Treasury has been up for grabs for 30 years – those same 30 years that the country went to hell in a hand basket. The question for us all should be, How do we rise above these hideous welfare queens?
Steven Mnuchin and Lanny Breuer, Obama’s former Assistant Attorney General for the Criminal Division, resemble each other so closely that they could be brothers. Breuer was famous for his diligent avoidance of any enforcement of laws against white collar crime, and I suspect that Mnuchin will be similarly friendly to the giant banks and their executives.
Never judge a book by its cover Susan.
Even the Riffs were wrong, but got it right in the end, when it counted.
Under Obama white collar crime did very well too: Health care rigging (18% GDP); Forex rigging; Libor rigging; silver market rigging; bank money laundering for drug cartels; multi-billion dollar “pay to play” schemes in the State Department; free weapons deals for terrorists; Quantitative Easing for the rich; bank assisted tax evasion; banks embezzling from customers’ accounts; bailout to mortgage fraudsters; endless wars to protect oil corporations and weapon manufacture corporations; etc.
Also, under Obama US citizens lost most of their few remaining civil liberties: 100% population warrant-less surveillance; Habeas Corpus extinguished; Posse Comitatus extinguished (National Defense Authorization Act); Assassination of US citizens without charges or a warrant (Al-Awlaki, Khan, Mohammed) ; militarization of local police; elimination of peaceful dissent (Occupy, Ferguson, Standing Rock, etc.); government criminality whistle blower prosecution (Snowden, Manning, McCarthy, Crane, Strickland, Tye;); etc. It is hard to believe it could get worse under Trump.
…but we are assured that the Obama Administration has been “notably free of scandal!” So what’s “true?”
The whole financial world has come into full toxic flowering. Thus begins the decay and/or dissolution of public institutions, the rise of the cult of billionaires, the ruination of the environment through the plundering of resources and, of course, the acceptance of full government corruption. Wow!
Yeah no kidding. JEHR might have been living under a rock for the past 40 years. Each president and congress has been worse than the previous one since at least the 70s.
Headline needs correcting:
We do have the most exceptional Government money can buy.
Thanks for the catch. And let’s also keep in mind that as bad as Trump is, Hillary would have been worse. I see that as the real tragedy here; the “lesser evil” has already sunk to the level where we’re supporting the guy who probably won’t get us all blown away in a nuclear war.
“Soft” graft? That allowable under certain interpretations of laws and the sense of responsibilities of those who enforce them.
Oh, and tribalism of the wealthy elites…and those who aspire to be wealthy.
This was to have been a reply to JTMcPhee at 11:28am.
BTW, I had never paid much attention to Donald Trump, but, living in NJ, I had a contractor (The Carpenter Who Walked on Water, to distinguish him from Bozo Brothers and Ted the Terrible…) who told me about the number of his friends, small contractors who Trump refused to pay for all the work completed, playing little games and finally just daring them to sue him. He had his coterie of smart lawyers and the contractors would be bled even drier than his cheating had left them.
This is how Trump treated the “little people” back in his casino building days and it seems to be how he will treat them as president.
I could hope that Trump will not take us into ever more wars, but, given his appointments, I don’t hold out much hope for that.
With Riebus as his Chief of Staff he seems to indicate he will be a total creature of the established Repubs.
I wonder when his voters will notice and how they will react.
Given that his voters already believed so much nonsense about him looking out for them, they will be easily persuaded that the reaming and filleting is either good for them or all the fault of Obama. I foresee very little cognitive dissonance, as said problem requires cognition.
Naw, you’re projecting there. Trump’s voters no perfectly well that he’s a slimeball who’ll probably stab them in the back. They supported him because they had nothing else to lose–and he’s still a lot better than Hillary, one of the filthiest and most vile creatures ever to crawl out of the pits of Hell and present itself as a presidential candidate. Democrats could have nominated Homer Simpson and won the presidency this time around, but they had to go with Hillary. Well, great. Enjoy President Trump.
I’m a great admirer of Bill Black, but if he seemed straight-up-angry instead of amused-angry I think he would be more effective. To be fair, I don’t know if that would be “allowed”.
When one has little hope, bemused humor is often the only possibility. :(
This country is consumed by Greed.
There will be no rest until all the greedy little bodies are dead and decomposing under their multi-million dollar headstones.
And then the leaders of “the revolution” will set up their own little systems of extraction, and the cycle starts again. (c.f., the French Revolution)
Beneath Heaven, Eternal Silence
Who then will be the famed richest man in the cemetery?
Warren G. Harding. Ha!!!!!!
What year did White Collar Crime have a bad year in the USA ? I know Jeff Skilling went to gaol but he was a Former Banker. I am unaware of anyone of Skilling’s seniority that has gone to gaol having scammed and embezzled in the Monolithic Banking System having found Obama to have a Nelson’s blind eye approach
Skilling worked in what amounted to a bank trainee position before he went to business school. He was a former McKinsey partner.
There were a lot of prosecutions for accounting fraud in 2002 and 2003, such as WorlCom. See: