America's Ten Most Corrupt Capitalists
Source Dave Anderson
Date 10/05/15/15:44
By Zach Carter
America's Ten Most Corrupt Capitalists

and top policymakers in Washington are often the same
people. A lot of them get rich by playing for both teams.
May 13, 2010 |

The financial crisis has unveiled a new set of public
villains-corrupt corporate capitalists who leveraged their
connections in government for their own personal profit.
During the Clinton and Bush administrations, many of these
schemers were worshiped as geniuses, heroes or icons of
American progress. But today we know these opportunists for
what they are: Deregulatory hacks hellbent on making a
profit at any cost. Without further ado, here are the 10
most corrupt capitalists in the U.S. economy.

1. Robert Rubin

Where to start with a man like Robert Rubin? A Goldman Sachs
chairman who wormed his way into the Treasury Secretary post
under President Bill Clinton, Rubin presided over one of the
most radical deregulatory eras in the history of finance.
Rubin's influence within the Democratic Party marked the
final stage in the Democrats' transformation from the
concerned citizens who fought Wall Street and won during the
1930s to a coalition of Republican-lite financial elites.

Rubin's most stunning deregulatory accomplishment in office
was also his greatest act of corruption. Rubin helped repeal
Glass-Steagall, the Depression-era law that banned
economically essential banks from gambling with taxpayer
money in the securities markets. In 1998, Citibank inked a
merger with the Travelers Insurance group. The deal was
illegal under Glass-Steagall, but with Rubin's help, the law
was repealed in 1999, and the Citi-Travelers merger
approved, creating too-big-to-fail behemoth Citigroup.

That same year, Rubin left the government to work for Citi,
where he made $120 million as the company piled up risk
after crazy risk. In 2008, the company collapsed
spectacularly, necessitating a $45 billion direct government
bailout, and hundreds of billions more in other government
guarantees. Rubin is now attempting to rebuild his disgraced
public image by warning about the dangers of government
spending and Social Security. Bob, if you're worried about
the deficit, the problem isn't old people trying to get by,
it's corrupt bankers running amok.

2. Alan Greenspan

The officially apolitical, independent Federal Reserve
chairman backed all of Rubin's favorite deregulatory plans,
and helped crush an effort by Brooksley Born to regulate
derivatives in 1998, after the hedge fund Long-Term Capital
Management went bust. By the time Greenspan left office in
2006, the derivatives market had ballooned into a
multi-trillion dollar casino, and Greenspan wanted his cut.
He took a job with bond kings PIMCO and then with the hedge
fund Paulson & Co.-yeah, that Paulson and Co., the one that
colluded with Goldman Sachs to sabotage the company's own
clients with unregulated derivatives.

Incidentally, this isn't the first time Greenspan has been a
close associate of alleged fraudsters. Back in the 1980s,
Greenspan went to bat for politically connected Savings &
Loan titan Charles Keating, urging regulators to exempt his
bank from a key rule. Keating later went to jail for fraud,
after, among other things, putting out a hit on regulator
William Black. ("Get Black - kill him dead.") Nice friends
you've got, Alan.

3. Larry Summers

During the 1990s, Larry Summers was a top Treasury official
tasked with overseeing the economic rehabilitation of Russia
after the fall of the Soviet Union. This project, was, of
course, a complete disaster that resulted in decades of
horrific poverty. But that didn't stop top advisers to the
program, notably Harvard economist Andrei Shleifer, from
getting massively rich by investing his own money in Russian
projects while advising both the Treasury and the Russian
government. This is called "fraud," and a federal judge
slapped both Shleifer and Harvard itself with hefty fines
for their looting of the Russian economy. But somehow, after
defrauding two governments while working for Summers,
Shleifer managed to keep his job at Harvard, even after
courts ruled against him.

That's because after the Clinton administration, Summers
became president of Harvard, where he protected Shleifer.
This wasn't the only crazy thing Summers did at Harvard-he
also ran the school like a giant hedge fund, which went very
well until markets crashed in 2008. By then, of course,
Summers had left Harvard for a real hedge fund, D.E. Shaw,
where he raked in $5.2 million working part-time. The next
year, he joined the the Obama administration as the
president's top economic adviser. Interestingly, the Wall
Street reform bill currently circulating through Congress
essentially leaves hedge funds untouched.

4. Phil and Wendy Gramm

Summers, Rubin and Greenspan weren't the only people who
thought it was a good idea to let banks gamble in the
derivatives casinos. In 2000, Republican Senator from Texas
Phil Gramm pushed through the Commodity Futures
Modernization Act, which not only banned federal regulation
of these toxic poker chips, it also banned states from
enforcing anti-gambling laws against derivatives trading.
The bill was lobbied for heavily by energy/finance hybrid
Enron, which would later implode under fraudulent
derivatives trades. In 2000, when Phil Gramm pushed the bill
through, his wife Wendy Gramm was serving on Enron's board
of directors, where she made millions before the company
went belly-up.

When Phil Gramm left the Senate, he took a job peddling
political influence at Swiss banking giant UBS as vice
chairman. Since Gramm's arrival, UBS has been embroiled in
just about every scandal you can think of, from securities
fraud to tax fraud to diamond smuggling. Interestingly, both
UBS shareholders and their executives have gotten off rather
lightly for these acts. The only person jailed thus far has
been the tax fraud whistleblower. Looks like Phil's earning
his keep.

5. Jamie Dimon

J.P. Morgan Chase CEO Jamie Dimon has done a lot of scummy
things as head of one of the world's most powerful banks,
but his most grotesque act of corruption actually took place
at the Federal Reserve. At each of the Fed's 12 regional
offices, the board of directors is staffed by officials from
the region's top banks. So while it's certainly galling that
the CEO of J.P. Morgan would be on the board of the New York
Fed, one of J.P. Morgan's regulators, it's not all that

But it is quite uncommon for a banker to be negotiating a
bailout package for his bank with the New York Fed, while
simultaneously serving on the New York Fed board. That's
what happened in March 2008, when J.P. Morgan agreed to buy
up Bear Stearns, on the condition that the Fed kick in $29
billion to cushion the company from any losses. Dimon-- CEO
of J.P. Morgan and board member of the New York Fed-- was
negotiating with Timothy Geithner, who was president of the
New York Fed-- about how much money the New York Fed was
going to give J.P. Morgan. On Wall Street, that's called
being a savvy businessman. Everywhere else, it's called a
conflict of interest.

6. Stephen Friedman

The New York Fed is just full of corruption. Consider the
case of Stephen Friedman (expertly presented by Greg
Kaufmann for the Nation). As the financial crisis exploded
in the fall of 2008, Friedman was serving both as chairman
of the New York Fed and on the board of directors at Goldman
Sachs. The Fed stepped in to prevent AIG from collapsing in
September 2008, and by November, the New York Fed had
decided to pay all of AIG's counterparties 100 cents on the
dollar for AIG's bets-even though these companies would have
taken dramatic losses in bankruptcy. The public wouldn't
learn which banks received this money until March 2009, but
Friedman bought 52,600 shares of Goldman stock in December
2008 and January 2009, more than doubling his holdings.

As it turns out, Goldman was the top beneficiary of the AIG
bailout, to the tune of $12.9 billion. Friedman made
millions on the Goldman stock purchase, and is yet to
disclose what he knew about where the AIG money was going,
or when he knew it. Either way, it's pretty bad-if he knew
Goldman benefited from the bailout, then he belongs in jail.
If he didn't know, then what exactly was he doing as
chairman of the New York Fed, or on Goldman's board?

7. Robert Steel

Like better-known corruptocrats Robert Rubin and Henry
Paulson, Steel joined the Treasury after spending several
years as a top executive with Goldman Sachs. Steel joined
the Treasury in 2006 as Under Secretary for Domestic
Finance, and proceeded to do, well, nothing much until
financial markets went into free-fall in 2008. When Wachovia
ousted CEO Ken Thompson, the company named Steel as its new
CEO. Steel promptly bought one million Wachovia shares to
demonstrate his commitment to the firm, but by September,
Wachovia was in dire straits. The FDIC wanted to put the
company through receivership-shutting it down and wiping out
its shareholders.

But Steel's buddies at Treasury and the Fed intervened, and
instead of closing Wachovia, they arranged a merger with
Wells Fargo at $7 a share-saving Steel himself $7 million.
He now serves on Wells Fargo's board of directors.

8. Henry Paulson

His time at Goldman Sachs made Henry Paulson one of the
richest men in the world. Under Paulson's leadership,
Goldman transformed from a private company ruled by client
relationships into a public company operating as a giant
global casino. As Treasury Secretary during the height of
the financial crisis, Paulson personally approved a direct
$10 billion capital injection into his former firm.

But even before that bailout, Paulson had been playing fast
and loose with ethics rules. In June 2008, Paulson held a
secret meeting in Moscow with Goldman's board of directors,
where they discussed economic prognostications, market
conditions and Treasury rescue plans. Not okay, Hank.

9. Warren Buffett

Warren Buffett used to be a reasonable guy, blasting the
rich for waging "class warfare" against the rest of us and
deriding derivatives as "financial weapons of mass
destruction." These days, he's just another financier crony,
lobbying Congress against Wall Street reform, and demanding
a light touch on-get this-derivatives! Buffet even went so
far as to buy the support of Sen. Ben Nelson, D-Nebraska,
for a filibuster on reform. Buffett has also been an
outspoken defender of Goldman Sachs against the recent SEC
fraud allegations, allegations that stem from fancy products
called "synthetic collateralized debt obligations"-the
financial weapons of mass destruction Buffett once

See, it just so happens that both Buffet's reputation and
his bottom line are tied to an investment he made in Goldman
Sachs in 2008, when he put $10 billion of his money into the
bank. Buffett has acknowledged that he only made the deal
because he believed Goldman would be bailed out by the U.S.
government. Which, in fact, turned out to be the case,
multiple times. When the government rescued AIG, the $12.9
billion it funneled to Goldman was to cover derivatives bets
Goldman had placed with the mega-insurer. Buffett was right
about derivatives-they are WMD so far as the real economy is
concerned. But they've enabled Warren Buffett to get even
richer with taxpayer help, and now he's fighting to make
sure we don't shut down his own casino.

10. Goldman Sachs

No company exemplifies the revolving door between Wall
Street and Washington more than Goldman Sachs. The four
people on this list are some of the worst offenders, but
Goldman's D.C. army has includes many other top officials in
this administration and the last.

White House:

Joshua Bolton, chief of staff for George W. Bush, was a
Goldman man


Current New York Fed President William Dudley is a Goldman

Current Commodity Futures Trading Commission Chairman Gary
Gensler has been a responsible regulator under Obama, but he
was a deregulatory hawk during the Clinton years, and worked
at Goldman for nearly two decades before that.

A top aide to Timothy Geithner, Gene Sperling, is a Goldman

Current Treasury Undersecretary Robert Hormats is a Goldman

Current Treasury Chief of Staff Mark Patterson is a former
Goldman lobbyist

Former SEC Chairman Arthur Levitt is now a Goldman adviser

Neel Kashkari, Henry Paulson's deputy on TARP, was a Goldman

COO of the SEC Enforcement Division Adam Storch is a Goldman


Former Sen. John Corzine, D-N.J., was Goldman's CEO before
Henry Paulson

Rep. Jim Himes, D-Conn., was a Goldman Vice President before
he ran for Congress

Former House Minority Leader Dick Gephardt, D-Mo., now
lobbies for Goldman

And the list goes on.

Zach Carter is an economics editor at
AlterNet and a fellow at Campaign for America's Future. He
writes a weekly blog on the economy for the Media Consortium
and his work has appeared in the Nation, Mother Jones, the
American Prospect and Salon.

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