Most Americans would think that something unpleasant should happen to a person who commits treason. Within one month in 2008 Treasury Secretary Hank Paulson (former Goldman Sachs CEO) committed two acts of treason One involving a meeting in Russia in late June with the Goldman Sachs board of directors. Another when he willfully lied to reporters by saying that Fannie Mae and Freddie Mac must remain shareholder owned. He repeated this days later by stating a soon to be concluded examination of their books will instill investor confidence. Other parties personally received quite different information - the accurate information on what would be happening with the GSEs.
The position of Secretary of the Treasury obviously calls for a person with high moral principles. This individual is behind only the Federal Reserve Chairman as far as impact on the economy. In a correctly functioning society, a Treasury Secretary would never - under any circumstances - meet with a group of private bankers to give inside information. If the Secretary is too dishonorable to realize it himself, it must be mandated through legislation. But Paulson (who does not even meet the foremost criteria for the office as described above) did it not just once, but at least twice. And there's no reason to suspect it didn't happen on other occasions. I don't know how he defined his job, but these actions were certainly incompatible with any reasonable expectations. The Treasury Secretary position does not exist to alert demonic bankers of market moving measures in advance of the general investing public. To the detriment of the public. If this stuff is not the acts of a traitor, I don't know what is.
As a little background, Paulson - while CEO at Goldman - successfully used his authority and influence to strongly promote the easing of capital requirements so Wall Street banks could use more leverage. Right then, it might have been a good idea not to appoint a serial gambler to the job since this opened up the doors to a profound problem which still has not been reigned in. Paulson, Robert Rubin and Larry Summers pushed the concept of deregulation and convinced stupid people that the financial sector is self governing. That it acts in its own best interests, therefore will self correct any imbalances, and can ultimately be trusted to do the right thing automatically without unnecessary oversight. So George W. Bush instead nominated him and he was overwhelmingly confirmed in 2006. I would love to have seen him take his oath of office.
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By the end of June of 2008 Paulson was in office for about two years doing who-knows-what when he decided it would be a good idea to meet with the board of directors of his former company over in Moscow. He gave them the heads up on a major speech he was about to deliver. He also expressed his concerns about Lehman Brothers probably blowing up. What kind of non-traitor would come up with such an idea? This is telling his old company how to prepare. How to maneuver to the winning side. This is beyond poor judgment - this is flat out treason. Undeniably so.
Goldman Sachs was made privy to nonpublic information. And not for any purpose whatsoever other than to allow them to profit from it. A Treasury Secretary cannot do such things. Purposely violating one's oath of office is just cause for immediate termination proceedings - with further charges to follow. Why did this not happen?
But tipping Goldman Sachs off was not enough. On 7/13/08 Paulson told reporters that Fannie Mae and Freddie Mac must remain shareholder owned. As a result, the normal investing public starting bidding up the shares. On 7/21/08 he conned normal investors again by assuring reporters that an upcoming announcement on the GSEs would reassure everyone. Again the shares were bid up. Before he actually did this on the morning of 7/21, he had already scheduled an afternoon meeting the same day with a group of hedge fund managers. A bunch of these were Goldman Sachs-types. Paulson thought it would be a good idea to actually tell this particular group the truth. He described to them a scenario under which the GSEs would enter into receivership and their stock would become worthless. As has since been covered, at least one hedge fund manger contacted legal counsel who told him not to act as the information was in violation of any number of standards. Again, Paulson misled the public, who soon would get creamed on their GSE stock, while hedge fund managers potentially could reap millions shorting it. Again, why has Paulson not been charged with treason? Beyond that, if Eric Holder's Department of Justice and other regulators were not so corrupted, why on earth would it be so difficult to thoroughly examine trading records from 7/21 through the conservatorship announcement? It's only a period of about two months. Hey, maybe it's because Congressmen and other in-the-know federal employees also traded on the hidden news. Who knows? But it's basic stuff.
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Henry J. Paulson engaged in other questionable behavior outside of the above. Really questionable.
- He became phone buddies with NY Fed chief Timothy Geithner, Goldman's Lloyd Blankfein and Morgan Stanley's John Mack. As it turned out, this behavior happened to correspond with the instantaneous approval on 9/21/08 for Goldman and Morgan Stanley to join all the other TBTFs as a bank holding company to gain access to Fed emergency funds and favorable terms on any money desired.
- He bullied and coerced Congress to pass TARP, then turned around and used a substantial portion of the funds in a manner not described. On 10/13/08 he committed funds (cut checks) to nine banks totaling $125 billion. This was the infamous weekend when he called them all to the NY Fed and (supposedly) compelled them all to accept the money so that no one would know which banks really needed it. But the amounts varied. J.P. Morgan, Wells Fargo and Citigroup led the parade with $25 billion each. Then came Bank Of America with $15 billion - followed by Merrill Lynch, Goldman Sachs and Morgan Stanley at $10 billion. Bank of NY Mellon got a puny $3 billion, while State Street brought up the rear with a mere $2 billion. Contemplating the relative amounts certainly tells a tale. And what about all the smaller banks out there? The ones that fund Main Street small business expansion? I guess they're not considered part of the crucial Financial Sector.
- He had his hands all over the AIG counterparty bailout. Under his plan Goldman Sachs (shock!) benefited the most. He misled everybody by saying that AIG's liabilities must be covered to the tune of 100 cents on the dollar to protect the public. $182 billion worth. This was followed by Goldman executives probably perjuring themselves in front of Congress when testifying that monies were received solely to make their customer accounts whole. It was later found that Goldman Sachs profited by $2.9 billion on their own proprietary trades. Can one seriously believe ex-Goldman CEO Paulson had no idea about the firm's personal exposure?
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Hank Paulson was no public servant. He was planted as the second Goldman Sachs'er out of three to serve Wall Street as Treasury Secretary. Revelations about his phone log history show an alarming amount of calls with the Wall Street titans. When you combine this with the series of steps taken in behalf of the parties who had created the crisis, you do have to wonder who serves whom. And keep in mind that the TBTFs rather quickly got back on firm footing to keep the bonuses flowing.
Look up the definitions of treason and traitor. They both involve violation or betrayal of trust and allegiance to one's country. An appointed official betrayed his trust by serving parties who have proven dangerous to the nation at the expense of the general population - this is one of the purest examples of treasonous activity by a traitor I can think of.
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