A FINANCE HOUSE ALMOST PART OF GOVERNMENT: Friends in high places

By: 
Ibrahim A. Warde
Date Published: 
September, 2010
Publication: 
Le Monde diplomatique
Language: 

Former Goldman Sachs chief executive officer Robert Rubin led the National Economic Council created by President Bill Clinton (1993-95) before becoming his treasury secretary. He contributed to "reassuring" the financial community by becoming a cheerleader for deregulation. During George W Bush's administration, two other Goldman Sachs CEOs also played major political roles – in both parties. Hank Paulson was treasury secretary between 2006 and 2009, and in that capacity was the principal architect of the massive government rescue of the banking sector. Jon Corzine became the Democratic senator from New Jersey in 2000, after spending $62m of his own money in what became the most expensive senatorial campaign in history. He later became governor of New Jersey between 2006 and 2010.

Lesser-known Goldman Sachs figures also played a significant role during the recent political meltdown. Neel Kashkari was a protégé of Hank Paulson at Goldman Sachs, before following him at the Treasury Department where, at 35, he was put in charge of TARP (Troubled Asset Relief Program) where he distributed $700bn to financial institutions seeking government funds. And former CEO Stephen Friedman wore three hats at the time of the financial crisis: member of the Goldman Sachs board of directors; chairman of the presidential commission on intelligence; and president of the Federal Reserve Bank of New York, the agency in charge of regulating Goldman Sachs.

The media has often referred to Goldman Sachs as "The Firm" or even "Government Sachs". The incestuous relationship between government and finance is not limited to the United States. In Italy, Romano Prodi and Mario Draghi, respectively prime minister and central bank president, came from Goldman Sachs. Its former London director general, the Nigerian Olusegun Aganga is today the "economic czar" of his government. Sometimes top executives are hired by Goldman Sachs following a distinguished political career. One example is Peter Sutherland, formerly Irish Attorney General, European Commissioner for competition and director general of the General Agreement on Tariffs and Trade (GATT), who is now president of Goldman Sachs International in London.

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