December 26, 2011
Ex-Goldman Sachs CEO Hank Paulson was Treasury Secretary before and during the financial crisis in 2008. In that position, he was the most influential person on getting President George W. Bush to go along with using taxpayer money to bail out his friends on Wall Street. Now we know that he also used illegal means to save his pals a lot of money and to even make many them richer.
Paulson held a meeting with his closest friends to discuss his plans. “Around the conference room table were a dozen or so hedge-fund managers and other Wall Street executives — at least five of them alumni of Goldman Sachs Group Inc., of which Paulson was chief executive officer and chairman from 1999 to 2006”. He discussed “a possible scenario for placing Fannie and Freddie into ‘conservatorship’”.
The “conservatorship” would practically destroy any value of the stock held by anyone, which included Goldman Sachs and probably certain individuals within the company. “Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock.”
How bad is this? One fund manager said “he was shocked that Paulson would furnish such specific information — to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.”
“After the meeting, this manager consulted a lawyer, who told him to cease trading immediately in the Frannies, lest he later be accused of – here’s the rub – insider trading.”
Paulson will never face charges on this illegal activity, let alone go to jail.
today, tomorrow and forever.
™