As the 2009 New Jersey governor's race comes to a conclusion and President Obama flies in to save the day for Jon Corzine one has to wonder just how long it will take residents of the state to figure out how the state and national Democrats have sold out to Wall Street. Standing in the middle of that sellout by the Democrats
is their governor, the former CEO of Goldman Sachs, who helped guide and oversee the greatest case of financial deregulation in our nation's history.
Jersey residents are disgusted by the performance of Corzine since he got elected four years ago and for good reason as many of his political promises in the campaign were forgotten once he got elected, much like the promises of Obama last year. There is a lot more in common between Obama and Corzine than just the failed promises as both of them were products of the Goldman machine.
Corzine likes to preface appearances with claims of his hostile separation from Goldman back in 1999, before he ran for US Senator and then Governor. It is the only way he can position himself as a reformed Wall Street leader. It also keeps the media from digging into his real record and his real relationship with Goldman and other Wall Street powerhouses. If we could all but have such a hostile separation from our employer.
If Corzine were truly cast out by Goldman in 1999 as CEO then why did he earn over $400 million when Goldman Sachs went public, a move that Corzine directed when he was at Goldman? The governor was co-chairman at Goldman from 1994-1999 along with Hank Paulsen, yes the same guy who was Bush Treasury Secretary, and who masterminded the bailout of Wall Street along with a host of former Goldman people.
Under the Paulsen/Corzine regime Corzine participated in the great Democratic deregulation of Wall Street, the last acts of the Clinton Administration that threw open the doors for Wall Street to bring about the historic dot.com collapse, the Enron bankruptcy, the sub-prime housing mortgage collapse, the oil price spiral and the worldwide economic collapse that followed?
The Clinton White House was dominated by former Goldman executives like Rahm Emanuel and Robert Rubin whose team at the Treasury Department included Larry Summers and Timothy Geithner. All of these players are Obama's closest economic advisors. Rubin, who was Treasury Secretary started the attack leading to massive financial deregulation before handing the ball off to Summers who succeeded him as Clinton's last Treasury Secretary.
Between them, Alan Greenspan (Chairman of the Federal Reserve Bank) and industry leaders such as Goldman (Paulsen and Corzine) the drastic deregulation measure, the Financial Services Modernization Act, was finally approved in 1999 which eliminated the New Deal barriers against mergers of commercial and investment banks as well as insurance companies and stockbrokers. Standing at his side as President Bill Clinton signed the legislation, Summers heralded it as “a major step forward to the 21st century”—and what a wonderful century it’s proving to be.
It was also Summers who worked in cahoots with Enron and banking lobbyists from Goldman and others who backed Republican Sen. Phil Gramm’s Commodity Futures Modernization Act also adopted in 1999 which banned any effective government regulation of the newly unleashed derivatives market. The result was not only a temporary boon to Enron, which soon collapsed under its unbridled greed, but also to the entire Wall Street financial community.
The only opposition from within the Clinton administration came from Brooksley E. Born who, as head of the Commodity Futures Trading Commission, in 1998 dared defy Summers and Rubin, as well as Greenspan, in proposing regulating the derivatives market. In frequent appearances before Congress, she warned that the burgeoning derivatives trading “threatens our economy without any federal agency knowing about it.”
In reward for her prescience, Born, a highly regarded legal expert on derivatives, was treated to scornful attacks from the old boys’ network, led by Rubin, Summers and Greenspan, who questioned her competency and insisted it was she who threatened the stability of the financial market. The boys in the White House and their allies on Wall Street including Goldman made quick work of her.
Thanks to this group of Goldman executives and their protégées the greatest deregulation of the financial markets since the Great depression was completed and the door opened to the swaps and derivatives markets to be exploited by Goldman and others. The result, the dot.com boom busted wiping out billions of dollars in investments, Enron energy collapsed wiping out the pensions of thousands of people. The sub-prime housing mortgage market collapsed putting the national economy on edge and oil prices spiraled into the stratosphere.
By October of one year ago the world economy faced collapse, bail out programs were given to all the culprits, and only Goldman Sachs standing alone was able to make record profits from each of the bubbles that collapsed over the past decade. That is the Corzine legacy of his tenure at Goldman Sachs. That is the tragic truth the media seems unable to address.
As for the Obama connection to Goldman, look no further than his chief of staff Rahm Emanuel, Obama's dependency on Goldman since he first ran for US Senate, and the vast number of Goldman people and protégées that surround him in the White House. Oh yes, Goldman still stands alone since they got Obama elected as their investment in the inexperienced president resulted in billions of dollars in new revenue, more billions in bonuses and even more billions in increased stock value.
Now Corzine truly cashed in on his hostile departure from Goldman which gave him $400million when his plan to take Goldman public worked and he has been making money off Goldman and Wall Street ever since through his Goldman and J P Morgan pension, investments, Goldman stock and private fund partnerships with other Goldman associates. So much money that he financed his own Senate and governor's races while setting spending records on both. So much that he refused to put his holdings in a blind trust like most responsible public officials so he could retain control over them while governor.
Can the Golden team of Obama and Corzine once more pull the wool over our eyes and strengthen the stranglehold by Wall Street over our politicians or is it time we finally wake up and say enough is enough? No more politicians bought and paid for by special interests! No more empty promises! It is time politicians accept responsibility for the mess you created and the mess you supported. In the words of a recent candidate for president, it is time for CHANGE WE BELIEVE IN and YES WE CAN make it happen. You have two other good choices, why settle for less?
Note: The author lived in New Jersey for 16 years (1982 - 1998) and during that time saw a great deal of progress in changing the image of the state from being the brunt of negative jokes to being a leader in quality of living and many other issues of national importance. He also served with Governor Tom Kean 1982-89 in the NJ Energy, Housing & Community Development and Treasury Departments.