February 28, 2009

WHO’S IN BED WITH WALL STREET?

Perhaps the “deregulation” he refers to is the unregulated market of credit-default swaps. This was a derivative security that banks and investors used to insure against credit defaults. He should know that former Secretary of the Treasury Robert Rubin, described by President Clinton as the greatest treasury secretary since Alexander Hamilton, pushed his Citigroup bank to pursue these instruments and aggressively invest in sub-prime mortgages. Today, Citigroup is on the verge of bankruptcy. Prior to Citigroup, Mr. Rubin was with Goldman Sachs. (Former Treasury Secretary Paulson was also with Goldman Sachs. Wonder if they knew each other.)

Is there a connection between the Democratic Party, New York state and Wall Street? There are two U.S. senators from New York, and one was Hillary Clinton. The other is Chuck Schumer. When you are a senator from New York and the financial capital of the world is located in your home state, you must develop a cozy relationship with Wall Street. You don’t oppose your banker friends because your political success is tied to Wall Street. So you sort of develop a two-faced persona. You deride Wall Street in front of the cameras, but you have wine and cheese with them while in Manhattan.

Plus this: “About the same time, Democratic Sen. Chris Dodd received a below-market interest rate for one of his mortgages.” Really? Why didn’t that make the news?