BernieHund: The Political Watchdog

Until two years ago, Henry Paulson, Secretary of the Treasury, was the Chairman and CEO of Goldman Sachs. Today Paulson is on the verge of having solitary control over the bailout of America’s financial institutions.

Of particular interest according to the NYT

Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night, a move that will fundamentally alter the landscape of Wall Street.

The move alters one of the models of modern Wall Street, the independent investment bank, soon after the federal government unveiled the biggest market intervention since the New Deal. It heralds new regulations and supervision of previously lightly regulated investment banks, as well as an end to the outsize paychecks that helped shape the image of the chest-thumping Wall Street banker.

It is also the latest signal by the Federal Reserve that it will not let Goldman or Morgan fail. The move comes after the bankruptcy of Lehman Brothers and the near collapses of Bear Stearns and Merrill Lynch.

Let’s not talk conflict of interest, but let’s not forget the no-bid contracts Dick Cheney’s Halliburton received once Dick became the VP. It doesn’t hurt to have a close tie to those in the administration. And, let’s not kid ourselves Halliburton has ripped the country at every turn… in Iraq and in New Orleans following Katrina.

Goldman Sachs has positioned itself to receive full benefit of the bailout. And, it’s just hard to believe that its former chief executive won’t look upon it with a fond eye.

Under the plan, the secretary would have a credit line of $700 billion from the taxpayers — more than the Pentagon’s annual budget — to go into any financial institution and buy, hold and ultimately sell mortgage-related assets. In a sense, that would make Washington and not New York the nation’s financial capital. The powers would be for two years, but that could be extended: Mr. Paulson has said the troubles with mortgage loans will most likely last years.

Additionally:

In its statement, Goldman said that it would become the nation’s fourth-largest bank holding company, with its small existing deposit-taking units to be rolled into GS Bank USA. Morgan Stanley will convert its Utah industrial bank into a deposit-taking national bank, to be called Morgan Stanley Bank.

Could it be possible that Goldman Sachs… GS Bank USA… could become the nation’s largest bank soon?

And, let us not forget that Henry Paulson was chief executive at Goldman Sachs while all these derivatives (so-called securities) were being traded and sold.