By Chris Carey, Bailout Sleuth

California Oaks State Bank, which received $3.3 million in TARP aid early last year, is being acquired by California United Bank in a deal valued at $17.3 million.

The deal is expected to close in the fourth quarter, California Oaks officials said in a statement.

John Nerland, president and chief executive of California Oaks, told BailoutSleuth that the deal is subject to the bank returning the taxpayer money it received through the Troubled Asset Relief Program. “We have not applied for payback as of yet, but it on the list of things to do.”

California United Bank has four branches in Los Angeles County. The move will help it expand westward to Ventura County, where California Oaks’ two branches are located.

Half the acqusition will be paid in cash, with the remainder to be paid in California United common stock.

“The combination is expected to create one of the largest banks headquartered in the San Fernando Valley and presents significant prospects for our communities and shareholders,” California United’s president and CEO, David Rainer, said in a statement.

Earlier this year, California Oaks announced plans to sell up to 8 million shares of common stock at a target price of $12.50 per share.

It had planned to use some of that money to help it exit TARP, increase its asset portfolio, and acquire the assets of failed banks. Those amibitous plans were unusual because they came as the bank was suffering losses and heavy nonperforming loans.

But on Aug. 5, California Oaks announced that it was shelving those plans. Bank offiicials said the offering was put on hold because they could not find enough investors willing to abide by a requirement that at least a third of the newly issued stock be held for at least three years.

California Oaks is barely profitable. It recently announced that it had net income of $8,456 in the first half of 2010, compared to $64,384 in the first half of 2009.

Still, the bank is growing. Its total assets of $136.7 million are up 7.7 percent from a year ago, and total deposits of $114 million are up 23 percent from a year ago.

More articles from the Bailout Sleuth….

By Karl Denninger, The Market Ticker

I love this guy….

McCain was poorly positioned to counter Isaacs arguments because McCain had proposed the same accounting gimmicks Isaac was proposing. The defeat of TARP I embarrassed McCain and Senator Obamas lead over Senator McCain in the polls increased substantially.

Right.  McCain was and still is today all for accounting fraud.  In the summer of 2008 I had several "conversations" (more like talking to a brick wall) with his campaign manager Kevin Daucher, some of them in writing and thus documented.  I pointed out at the time that McCain had to get in front of this or he was going to lose.  I went so far as to attend (as a private, concerned citizen, not as a lobbyist or corporate "hack") one of his campaign events in Washington DC, at which time Tom Ridge told me while smiling for my picture with him that he, and thus I presume the McCain campaign, was fully aware of the scams – in somewhat-"sideways" language.

Senator Obama, as a candidate, and his administration after the election did not take a public position on covering up the losses. The Chamber of Commerce and bank lobbyists made the cover up of bank losses their top regulatory goal. Their strategy was to get Congress to extort the Financial Accounting Standards Board (FASB) to force a change in the accounting rules so that banks did not have to recognize loan losses. House Financial Services Capital Markets Subcommittee Chairman Paul Kanjorski (D., Pa.) held a hearing in March 2008. The hearing was a bipartisan assault on FASB. Kanjorski demanded the prompt adoption of the cover up. Otherwise, he promised the prompt passage of legislation to remove the FASBs power to set accounting rules.

Exactly.  Gee, we’ve documented that here too.  Kanjorski is a traitor to his oath to uphold the Constitution, which incidentally demands equality before the law.  This duty is something that CONgress conveniently forgets whenever it thinks it can find a "free lunch", especially when the consequences of not doing so are that it’s 20-year history of suborning fraud would otherwise come crashing down upon their heads.

Instead of holding oversight hearings that exposed the Bush and Obama administrations evasion of the PCA and demanded compliance, prominent members of Congress encouraged it. House Financial Services Chairman Barney Frank (D., Ma.) said:

"This is important for all regulators. We need to give you some discretion in how you react to these things. I am asking everyone — the Office of the Comptroller of the Currency and others — if anything in the existing legislation deprives you of discretion in how you react … I insist that you tell us."

Fraud is fraud.  PCA is black-letter law.  Evading it by lying is still fraudulent activity.  Whether you make it "legal" ex-post-facto (as was done in 2009 by Kanjorski’s threats) or not is immaterial.  A thing is either wrong or it is not.  In this case it’s not only wrong, it’s crippling our economy and financial system.

The premise of this scam was that if we just "overlooked" the problem the banks would "earn their way out."  This was bogus from the start, because the underlying problem isn’t just the BS accounting, it’s the fact that the BS accounting allowed leverage (debt) to be cranked to unsustainable levels.  You can’t fix this without taking that leverage out, and yet doing so requires recognition that the alleged "assets" aren’t worth what they are claimed at.

We see the depths of this every Friday when banks are closed and magically when the FDIC swoops in we have an institution that allegedly had more assets than liabilities is deemed insolvent and millions of dollars of losses are absorbed by the FDIC.  How is this possible?  There is only one way: The "assets" are being reported at FICTITIOUS values – we always know what the liabilities (in the case of a bank, these are the deposits) are to the penny!

For a banker, whats not to love about the right not to recognize even massive losses on assets? He gets to keep his job, reputation, and obtain bonuses for blowing up the bank. For a senior regulator whose failures allowed the bankers to cause the epidemic of mortgage fraud (FBI 2004), the mother of all bubbles, and the Great Recession a cover up is ideal. Bank failures are supposed to lead to investigations by the Inspector General and can lead to embarrassing congressional oversight hearings.

Even worse than congressional hearings are 20-year dates with a guy named "Bubba."  Mr. Wall Street no like that – most of them aren’t gay, for openers, not to mention that the caviar, blow, limousines and expensive hookers they’re accustomed to aren’t available in prison.

There’s only one small problem with all the lies about asset valuations: The fundamental truth about those values doesn’t change no matter how much you lie about it.  Therefore, those who are lying have two choices: either go under anyway, or start stealing literally everything in sight down to the carpet on the floor, fencing it to keep ahead of ever-increasing cash-flow demands that can’t be met by these impaired assets.

This is the black-hole vortex into which our economy is now spiraling.  It is, in fact, the precise same mistake that was made by FDR.  Instead of forcing those who did the evil things to admit their insolvency and be resolved, wiping out the imprudent (including those who invested in them) we are instead caught in the vortex and are unable to truly recover in our economy and markets.

Last time we "got out of it" by destroying the production facilities of essentially the entire developed world (except us, of course.)  This time such a "fix" would entail irradiating that entire developed world, and thus one would hope that nobody is that dumb.  Of course with the record we’ve seen thus far of "intelligence" coming out of DC…..

We’re headed for at best a Japan-style scenario and at worst something akin to the 1930s – if we’re lucky.  We have dramatically increased the pain level that has to be absorbed by blowing $4.5 trillion in the last three years for one purpose above all others – covering up the fraud and scams through government spending. 

It won’t work, as is now being documented as sector-by-sector fails as soon as the government tit stops dispensing "free" (really borrowed from China) milk.  Housing is just the most-recent example; as soon as the "tax credit" expired home sales cratered – right into the summer selling season, prompting panicked Administration Officials to start muttering about "re-enacting" the homebuyer handout.

While Washington continues to play this game it might want to gaze toward the East, where there are rumors that the Chinese have taken a huge loss on their foreign bond holdings, and their Central Banker is rumored to have defected (to the US!) – a rumor that, thus far, I give little credibility to.

Of course should he suddenly be found to have suffered a "heart attack"…….

More articles from the Market Ticker….

By Chris Carey, Bailout Sleuth

Federal
prosecutors have
filed charges against the owner of a Minnesota company that allegedly duped
banks out of nearly $80 million by selling them excessive participations in
many of the same loans.

Corey
N. Johnston, the owner and operator of First United Funding LLC, is charged
with bank fraud as well as filing false income tax reports.

Two
of Johnston’s 17 alleged victims, The National
Bank, of Bettendorf, Iowa, and Bank
Forward of Jamestown, N.D., are subsidiaries of companies that got taxpayer
aid through the Troubled Asset Relief Program.

National
Bancshares Inc, parent company of The National Bank, sold nearly $24.7 million
in preferred stock to the Treasury Department
on Feb. 24, 2009.  Security State
Bank Holding Co., which owns Bank Forward, got a little more than $10.75
million in TARP money on May 1, 2009. 
Neither has repaid any of the principal, although both have made their
required dividend payments.   

Based
on the timeline in the fraud case, one of The National Bank’s ill-fated deals
came after it received its government assistance.

The U.S. Attorney’s Office for the District
of Minnesota charged that, between 2005 and 2009, Johnston blatantly
oversold participations in large commercial and personal loans arranged by First
United Funding.  Johnston is
accused of “selling more than 100 percent participation in at least ten
different loans that FUF had made with third parties.”

In
other words, Johnston allegedly sold and resold the same loans, to the point
that the total dollar value of the participations held by the banks was several
times the original value of the loans.

Prosecutors
say Johnston used the proceeds from the duplicative loan sales  to pay principal and interest to the
banks that he had earlier courted, buying time and perpetuating the Ponzi scheme.
The indictment also claims that Johnston diverted funds for his and his family’s
personal benefit.

Both
TARP banks were allegedly duped in a plan for a project known as “White Out Way
Investments.” According to court documents, the original White Out Way loan was
sold for $7 million to Western National
Bank of Midland, Texas, in January 2008. Johnston sold another 100 percent
participation to The National Bank for $7 million. He also placed a $2 million
participation with Bank Forward, and sold additional interests to three other
banks. All in all, Johnston allegedly received $23.65 million from the six
banks for their participations in the single $7 million White Out Way Loan.

A
second scheme evolved in March of 2009, around what came to be known as the JM
Land II Loan.  Western National was
again the first to buy full participation, for $8 million. The National Bank purchased what it thought was full participation for $8 million, raising
its stake in First United Funding’s deals to $15 million. 

Although
Bank Forward did not buy into the second scheme, Johnston still managed to
solicit $38.65 million in participations from eight banks for the JM Land II
Loan.

The U.S.
Attorney asserted that Johnston received $79.95 million in combined excess
participations from these two schemes and at least eight other loans.

The alleged
fraud began to unravel for Johnston in October 2009, when Community First Bank
of Wisconsin, which held partial participations in both the White Way Out Loan
and the JM Land II Loan, filed an emergency motion
for a restraining order. The federal judge in Minnesota who granted the order also
appointed a local management group as receiver for First United
Funding. 

The FBI’s Minneapolis Bureau became fully involved in the
case by mid-November 2009 when Western National Bank, $25 million deep in First
United’s loan participations, began to speak to federal agents through the bank’s
attorneys.  The case was also
investigated by the Internal
Revenue Service-Criminal Investigation Division and the Federal Deposit Insurance Corporation.

According to the FBI press
release, Johnson could receive thirty years in prison for bank fraud and an
additional three years on the false income tax charge.

More articles from the Bailout Sleuth….

By Chris Carey, Bailout Sleuth

Nine banks that received TARP aid through the Capital Purchase Program were sanctioned by the Federal Deposit Insurance Corp. in July for violating bank standards, according to the agency’s monthly release of enforcement actions today.

The banks include:

• CB&S Bank, Inc., Russellville, Ala.

(CBS Banc-Corp)

• Metro United Bank, San Diego, Calif.

(MetroCorp Bancshares Inc.)

• TIB Bank, Naples, Fla.

(TIB Financial Corp)

• Pinnacle Bank, Orange City, Fla.

(Pinnacle Bank Holding Co.)

• First Bank and Trust, New Orleans, La.

(First Trust Corp.)

• Main Street Bank, Kingwood, Tex.

(MS Financial Inc.)

• Cascade Bank, Everett, Wash.

(Cascade Financial Corp)

• West Bank, West Des Moines, Iowa

(West Bancorporation)

• Tri-State Bank of Memphis, Memphis, Tenn.

To see the full list of FDIC enforcement actions in July, and for links to copies of the action, click here.

Metro United Bank is a subsidiary of Texas-based MetroCorp Bancshares, which accepted $45 million in taxpayer aid in January 2009. That holding company accepted more aid than any other on the July enforcement list.

In terms of deposits, TIB Bank is the largest bank on the list, with $1.34 billion. In terms of assets, Cascade Bank is the largest, with $1.68 billion. TIB Bank got a $37 million TARP investment in December 2008; Cascade got $39 million in November of that year.

Earlier this summer, TIB Bank entered into a deal with North American Financial Holdings, Inc. which would give the company 99 percent ownership of TIB’s common stock. That should aid its recapitalization efforts.

North American Financial, a new institution led by former Bank of America Corp. executives, earlier this year took over three failed banks in Florida, as BailoutSleuth has previously reported.

Two directors on the board of Cascade Bank’s parent company resigned following the FDIC’s cease and desist order. The directors cited irreconciable differences with the bank’s chief executive officer and other board members, as well as the “unreasonable and untenable conditions” imposed by the order, as their reason for resigning.

The bank reported net operating losses of $55.6 million through June 30 of this year, compared to losses of $26.6 million at this point a year ago.

West Bank and Tri-State Bank of Memphis were given relatively small fines for violating banking standards and were not subject to heightened restrictions.

The other seven banks, however, werl issued cease-and-desist orders that called for them to make significant changes, such as getting their boards of directors more involved in company oversight; increasing capital ratios; restricting growth; addressing problem loans and developing liquidity plans.

The FDIC specifically said that two of the banks — Metro United Bank and Main Street Bank — must retain qualified CEOs. 

A total of 30 banks received cease-and-desist orders in July.

BailoutSleuth reported earlier this year on the high rate of enforcement action against banks and bank holding companies that got taxpayer money through the Troubled Asset Relief Program.

Supporters of TARP say that the enforcement record does not necessarily mean that the banks were unhealthy at the time of the CPP loan, as enforcement action is just one component of determining a bank’s viability, and a bank’s condition may have deteriorated in the months since it received aid.

But critics say that the growing number of penalties against TARP banks may indicate that Treasury should have shown greater scrutiny when determining who would receive aid.

Three of the TARP banks on the latest enforcement list got their TARP aid in March 2009. CBS Banc-Corp received $24.3 million that month, while Main Street Bank’s parent company got $7.72 million and Pinnacle Bank’s parent got $4.39 million.

First Trust Corp., which owns First Bank and Trust in New Orleans, got $18 million in June 2009.

More articles from the Bailout Sleuth….

by Bruce Webb

I am not going to harp on the sexism or ageism in Simpson’s ’310 million tits’ comment generally, if you happen to have just gotten back on the Inter-Spatial Shuttle from Alpha Centauri this evening and don’t catch the reference a Google search on that turns up 125,000 hits, and I daresay the first 25,000 of them relevant. I want to examine what it, and some other developments inside and outside the Obama Deficit Commission reveal about a new openness in class warfare.

What Simpson’s comments revealed more broadly was a profound contempt for the lower 98%, those who might end up reliant in whole or even in part on Social Security. Because ’310 million’ takes in everybody, in Simpson’s world anyone who ever did, is, or will ever rely on Social Security is just a Randite ‘parasite’ or at best ‘dependent farm animal’ and you can bet it is a long time since Simpson read Timothy 1:18: “For the scripture saith, Thou shalt not muzzle the ox that treadeth out the corn. And, The labourer is worthy of his reward.” and clearly he glossed over the even more famous admonition “Honor thy Father and they Mother”. For Simpson workers are suckling pigs and seniors are ‘Greedy Geezers’.

Naturally the Simpson remarks sparked large and heated discussions in the blogosphere including my old, old stomping grounds at dKos including one by commenter bink Time for Obama to Shut Down the SS Commission which sparked a long and ongoing comment thread with some vigorous participation by me. In the course of that conversation some people pushed back in defending Obama by noting that it wasn’t formally just a Social Security Commission, instead it was focused on deficit reduction generally and was formally known as the Fiscal Responsibility and Reform Commission, and that moreover both current commissioners and people around Peter G Peterson, who clearly was the inspiration for applying the BRAC Commission model to deficit reduction, were on record supporting defense cuts and tax increases, meaning that nobody was really in the tank, and that everything was on the table. But how does the Commission seem to be defining ‘defense cuts’ and ‘tax increases’ and how does that relate to Simpson’s open contempt for the ‘lesser people’ sucking away at those ’310 million tits’. Well some discussion under the fold.

First as to defense cuts. Given the requirement for a 14-4 minimum vote for any recommendation to come out of the Commission major cuts in defense acquisition were never likely to make the cut, the six Republican Congressional members should have been enough to prevent anymore than tinkering on that front. But seemingly to make sure Obama named Republican David Cote, CEO of major defense contractor Honeywell, and he, understanding that nothing could be seen to be a total sacred cow, came up with an ingenious idea to have defense cuts while avoiding cancellation of current and future weapons program cuts: you just stick it to the troops. I’ll let TPM take it up from here: Source: Debt Commission Fights Over Freezing Military Pay, Slashing Benefits

A source familiar with the proceedings of the working group on discretionary spending tells TPM that some commissioners, including one military contractor, would prefer to save money by freezing military pay and scaling back benefits, rather than by eliminating waste in defense contracting.
The source said that different members of the commission come down on different sides of the issue. The discussion group is led by Sen. Tom Coburn (R-OK), whose primary aim is trimming fat on the contractor side, but, according to the source, David Cote, the Honeywell CEO who was appointed to the panel by President Obama, is pushing to find savings elsewhere.

“Coburn raised concerns about all of the cost overruns and redundant weapons system,” the source told TPM. “Cote made excuses for it all.”

According to the source, Cote and other members, including the commission’s co-chair Alan Simpson, are focusing instead on “freezing military pay, making military people pay for their health care.”

So Simpson’s ’310 million’ was not just a misquote, it not only includes all those working civilians whose retirement will be based on Social Security, it also includes all those military people relying on military retirement. And since retirement pay is formulaically based on final military pay, the Commission can save $100s of billion off the back end, to say nothing of requiring service persons and retirees to kick in more for their health care. And all without taking a penny from the bottom line of Honeywell or Raytheon. But plenty of ‘shared sacrifice’ for the lower 98%.

Now as to tax cuts, also alleged to be on the table. Do you think Commission sponsor Peterson is generously offering to have the exemption for ‘carried interest’ for Hedge fund billionaires to be on the table? I don’t think so, his cofounder at Blackstone suggested that any attempt to address that would be the equivalent of Hitler invading Poland. Schwarzman: A ‘Fat Cat’ Speaks Back and I think it is safe to think it is still speaking for his old partner (and obviously still huge investor) Peterson. And Peterson has been on record for a few decades for eliminating the corporate income tax and doesn’t seem to have changed his stripes. In an op-ed last month in the WSJ (where else) Tax Aversion Syndrome and Our Deficit Future: We’ve run out of painless options. Higher taxes and reduced entitlement benefits for the well-off are the only solutions. he spells that out. (And note the clever word play-the ‘higher taxes’ on the left side of the conjunction don’t actually apply to the ‘higher off’ on the right side, only the benefit reduction)

Some have tax aversion syndrome—they have never met a tax increase they didn’t do everything in their power to block. While I believe that spending cuts must play a lead role in any solution to our long-term structural deficits, the sheer magnitude of the imbalances requires revenue increases.

Ideally, the country should raise as much government revenue as possible from a progressive consumption tax. Such a tax can be designed so that it won’t overly burden lower-income families but will raise significant revenues and increase our savings rate.

However, given political realities, it is not likely that we could enact a progressive consumption tax that would raise sufficient revenues to meet our needs. Therefore, I would initiate such a tax in conjunction with a simplified income tax (that would have far fewer corporate and individual credits and deductions)—thereby allowing for lower individual and corporate income tax rates.

Meaning that for Peterson ‘shared sacrifice’ means retaining current reduced rates on capital gains, means testing the middle class for Social Security, slapping on a broad ‘progressive’ consumption tax on everyone. And you can bet ‘progressive’ doesn’t mean a huge luxury tax on yachts.

So the translation of “Everything is on the Table” seems to be: across the board benefit cuts to Social Security, additional means testing on the middle class, cutting military pay and shifting more of the cost of medical care to soldiers and retirees, and ‘progressive’ consumption tax. Meanwhile I guess the top 2% and even more the top 0.001% just keep producing along supporting us 310 million sucking parasites. (0.001% of the population is roughly 3100 individuals and maybe 1000 households and should handily include all those with 9 digit (multi-multi millionaire) and 10 digit (billionaire) net worth and 310 million – 0.001% still equals 310 million, Simpson was not indicting everyone, just you me and everyone we know).

We can couple this with troubling statements out of the Obama Administration touting the success of TARP, the stimulus bill, and HAMP even though TARP hasn’t led to a loosening in credit to small business, the stimulus is turning around profits while not actaully reducing unemployment, and HAMP only seems to have allowed some extra months of mortgage payment extraction from homeowners who are now in large numbers re-entering default. But it is all good for the banks and the bonuses of the top 2%.

Somebody is playing a dangerous game here, surely they can’t be so far in the bubble that they want to add active unrest among the left to the ongoing tea party anger emanating from the right. If the Obama Administration allows the Catfood Commission to define ‘shared sacrifice’ in he way this post suggests they are preparing to, that nice smooth road to re-election in 2012 may shape up to be a lot rockier than they intended. Even Reagan didn’t run explicitly on a platform of “Screw the Middle Class” and nobody back then dared openly come out and admit that in practice ‘Trickle Down’ meant ‘Golden Shower’. Why the Democratic Party is attempting a merger with the Plutocratic Party is beyond me.

Read more….

The Daily Reckoning

They just don’t make earnings like they used to. In many industries, the quality of earnings has deteriorated in recent quarters.

Banks are among the worst offenders. On the downside of the biggest credit cycle in history, many banks are slowing the pace at which they’re provisioning for credit losses. Some banks are even reversing their loan-loss reserves and adding these accounting adjustments to their net profits.

These accounting games produce shams, not profits.

Banks need loan-loss reserves because they know that many of their loans will go sour…especially on the downside of the biggest credit cycle in history. So if it turns out that we’re not, in fact, past the peak of credit losses in the banking system, many banks will have to once again rebuild loss reserves, which would reduce – or completely wipe out – the earnings they would report in future quarters.

Bullish banking analysts are certain we’ve seen the worst of earnings performance in the banking system. But these are the same analysts who believed the bubble environment of 2005-2007 was normal, and that bank earnings would continue to grow indefinitely.

Another area to look for lower-quality earnings is any company with plant, equipment, and inventories. Lately, many of these companies have been reducing their capital expenditures to levels far below depreciation and amortization expense. This tactic temporarily boosts free cash flow, but does so at the expense of future earnings. Companies with shrinking asset bases eventually deliver shrinking earnings power, while also risking the erosion of their competitive position. As asset bases shrink, depreciation and amortization expense will also shrink, which temporarily boosts pretax income. I’ve seen several examples of this phenomenon in recent earnings reports.

Sharp swings in inventory can also push earnings up and down. Overbuilding of inventory sows the seeds of future earnings disappointment. During the late 2008/early 2009 liquidation of excess inventories, many companies suffered a squeeze in gross margins in a fire sale environment.

This phenomenon changed by the middle of 2009. Many companies had taken inventory liquidation too far. After the worst of the financial panic had passed, bottlenecks started clogging up the supply chain. This trend became very noticeable in the tech sector late last year. By late 2009, shortages in printer components had become so acute that companies like Lexmark (NYSE:LXK) were able to increase their pricing power. Since then, however, the tech supply chain has rebuilt inventories – in many cases, at a rate that exceeds sales growth. And Lexmark’s pricing power has declined.

Fred Hickey noted this phenomenon in the Aug. 4 issue of his newsletter, The High-Tech Strategist. Hickey suspects that inventories are overbuilt in many areas of the technology supply chain. After panicking about not having enough inventories when components were in shortage, many companies appear to have overdone it:

I think you can see how this could all go wrong quickly. Component suppliers are ramping capacities. Distributors are building inventories. Contract manufacturers are scrambling to increase inventories. The product suppliers themselves are adding to their inventories. Then, as has been intimated several times above, end product demand begins to ease (from Europe, from US consumers, etc.). Then all [heck] breaks loose, up and down the supply chain.

“Days sales in inventory” – or “inventory days” – measures the number of days required to sell the inventory balance at the end of the accounting period. A falling trend indicates shortages, while a rising trend indicates the possibility of gluts.

Recently, inventory days in many technology supply companies are on the rise. And I suspect that inventory days will rise again for most of these companies in the third quarter, because with the leading economic indicators turning down sharply in recent weeks, sales will likely grow more slowly than inventories.

In fact, inventory days for the entire US economy, as compiled by the US Census Bureau, is also on the rise. These trends highlight the folly of government stimulus programs. The programs send phony signals up and down the supply chain for manufactured goods. It’s a fool’s errand to try to restore the economic conditions we saw during the 2004-07 credit bubble.

The government squandered hundreds of billions of dollars propping up zombie banks that could have easily been recapitalized by cutting away the claims of shareholders and junior creditors in bankruptcy, and setting up a legal framework to tame and wind down over-the-counter derivatives – all without a penny of public funds. Policymakers had the entire spring and summer of 2008 to prepare such a plan in the months after Bear Stearns blew up in March 2008. Instead, US taxpayers got “TARPed” in order to bail out reckless bank shareholders and bondholders.

The banks are still standing…but they are mostly standing still. The big banks are still more interested in repairing their balance sheets than they are in lending to businesses. Meanwhile, those few corporations that possess sizeable amounts of cash are also standing still. They are sitting on their cash because they don’t know what else to do.

All of this standing around adds up to sluggish economic growth…and no real earnings growth.

Thus, the stock market is expensive if you adjust for the widespread accounting gimmickry we’ve seen in recent quarters. So the next time you hear that the market is “cheap” – and you’ll hear it frequently in the mainstream financial press – remain skeptical about the quality of earnings in the P/E ratio.

The market isn’t cheap unless you believe that accounting games produce real wealth.

Dan Amoss,
for The Daily Reckoning Australia

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More articles from The Daily Reckoning….

“The Congressional Budget Office (CBO) projected Friday the total cost of Troubled Asset Relief Program (TARP) over its lifetime would be $66bn. This is down from the $109bn lifetime cost projected in March. Outlays for Fannie Mae and Freddie Mac will fall from $96bn in 2009 to $41bn this year, the CBO estimates, mostly because the two entities are expected to recognize fewer losses on their mortgage investments and guarantees.”

Read more….

By Chris Carey, Bailout Sleuth

Eight participants in TARP’s Capital
Purchase Program have exchanged their Treasury
aid for lower-cost funding through the government’s newly instituted Community
Development Capital Initiative (CDCI).

The initiative allows
pre-approved banks and thrifts to exchange their 5 percent Capital Purchase funding for 2 percent CDCI funding, and
in some cases allows the institutions to tap even more money at the lower
rate.  Credit unions — which were not
allowed to apply for earlier Troubled Asset Relief Program initiatives — also may apply for the new program.

The CDCI was unveiled on
February 3, but the first transactions related to the program did not
materialize until July 30.  The aim
of the newer program is to “invest lower-cost capital in Community Development
Financial Institutions (CDFIs) that lend to small business in the country’s
hardest-hit communities.”  Participation requires the Treasury’s certification that the
bank, thrift or credit union targets more than 60 percent of its small business
lending and other economic development activities to “underserved communities.”

On July 30, Guaranty Capital Corp.  of Belzoni, Miss., and University Financial Corp. of St.
Paul, Minn., became the first to exchange their 5 percent government funding for lower-rate
capital.  Guaranty Capital traded
its $14 million CPP aid for the same amount of CDCI funding.  University Financial Corp. not only
swapped its $11.9 million in CPP funds, but received an additional $22.1
million at the 2 percent rate.  

One week later, Southern
Bancorp of Arkadelphia, Ark., followed University Financial’s lead, swapping
$11 million in CPP monies while receiving an additional $22.8 million in TARP
funding.  The entirety of the
Treasury’s investment in Southern–more than $33.8 million–now stands at the 2 percent
rate.

Under the terms of TARP’s
Capital Purchase Program, the 5 percent dividend jumps to 9 percent after five
years.  The CDCI program, however,
does not require the recipient to pay more than a 2 percent dividend for the
first eight years.  After that time,
the dividend would rise to 9 percent until payoff.

On August 13, 2010, five more banks
swapped their TARP funding dollar-for-dollar to the CDCI program.  Premier Bancorp of Wilmette, Ill;
Citizens Bancshares Corp., of Atlanta;
 PGB Holdings Inc., of Chicago, First American International of Brooklyn, N.Y.,
and Tri-State Bank of Memphis, Tenn.,
traded a total of about $37 million in initial TARP funding for the same amount
of CDCI money.

To date the Treasury has
invested nearly $107 million in eight institutions under the newer terms.

More articles from the Bailout Sleuth….

Zero Hedge

From The Daily Capitalist

This is an article I wrote for a newspaper that is a reprise of my reasoning why I think we are headed for stagflation. The article will appear next week, but it will be familiar stuff for Daily Capitalist readers.

*****

The Fed voted two weeks ago to print money as much money as they think is necessary to fight deflation, economic decline, and rising unemployment. It is a major policy change little noticed by the media.

There has been a lot of noise in the media lately about deflation. While a few of us have been forecasting deflation and a decline in the economy for some time (your truly since December, 2009), it is as if most economists had just discovered it.

The reason for all this concern is the weak economic data coming in:

• Jobless claims jumped to a 9-month high which forecasts rising unemployment.
• Consumer spending is softening.
• Disposable income is flattening.
• New manufacturing orders are declining and inventories are rising.
• Durable goods orders are falling.
• Credit continues to shrink, both for consumers and businesses.
• GDP was revised downward for Q2.
• The Consumer Confidence Index took a big slide.
• Commercial and industrial real estate is still declining.
• Home sales continue to decline.
• Some of the leading indicator indices are falling, such as the ECRI and the Consumer Metrics institute.

There are two more data points that really have the Fed concerned. One is that the Consumer Price Index is very low. While you would think that low rates of inflation are good, the Fed wants inflation.

The other thing that bothers the Fed is that money supply is declining and has been doing so since last December. They think that we may be heading for deflation.

What does all this mean? It means that everything the Fed and the federal government have done to revive the economy has failed. From massive fiscal stimulus (spending $787 trillion on mostly wasteful projects), to the TARP bailouts of Big Money, to zero interest rate policy (“ZIRP”), to gimmicks such as Cash for [your industry here], they have failed to stimulate the economy.<!–more–>

With all the bad data coming in, it is no wonder that the Fed, as reported in the minutes of its June, 2010 meeting, was so pessimistic:

Participants generally anticipated that, in light of the severity of the economic downturn, it would take some time for the economy to converge fully to its longer-run path as characterized by sustainable rates of output growth, unemployment, and inflation consistent with participants’ interpretation of the Federal Reserve’s dual objectives; most expected the convergence process to take no more than five to six years.

They are saying that they think it could take 5 or 6 years from 2008 for things to turn around.

What they overlook is that it is the Fed’s manipulation of the money supply that is the cause of our boom-bust cycles: they are the problem, not the solution. And that is why their policies are failing.

Which gets us back to the inflation-deflation issue. It is an axiom of faith with the economists who control Fed and government policy that the economy needs a little bit of inflation to grow. They think that all the Fed has to do is step on the money pedal and the new money stimulates the economy, money supply grows evidencing healthy business lending, prices rise modestly, employment rises, and the economy grows.

The only problem with that idea is that it isn’t working.

Why have they failed?

It all has to do with the banks, mostly the regional and local banks that finance about one-half of our economy. These banks have two problems. First, as a result of the crash, their balance sheets are clogged up with (mostly) bad commercial real estate loans. Bad loans tie up a lot of capital that banks would otherwise lend out. Second, because of the economic decline, business customers aren’t borrowing. And it’s not just because banks have tightened lending standards; businesses see weak demand plus, with all the new laws passed, they are very uncertain about the future.

The Fed saw the plight of banks and they lowered the interest rate (the Fed Funds rate) to zero on money banks borrow from the Fed to make loans. They have also massively increased the pool of money available to banks to tap into (money base).

But, if banks aren’t lending and borrowers are reluctant to borrow, the new money never gets lent out, and the giant pool of new money just sits at the Fed as banks’ reserves.

Since the money is not being lent out, which is their main tool to increase money supply, money supply is now declining, and that is deflation. This is why the Fed is very concerned with a potential “deflationary spiral,” a phenomenon that occurred during the Great Depression.

What can the Fed do? They can’t lower the Federal Funds rate because it is already as low as it can go. And this hasn’t worked anyway.

This is what the big change in Fed policy was all about.

There was a huge internal fight at the Fed between the anti-deflationists and the anti-inflationists, and the anti-deflationists won. The Fed decided they would fight deflation through “quantitative easing” or “QE.”

With QE, another tool the Fed has to increase money supply, the Fed buys Treasury debt (bills, notes, and bonds) from its primary dealers and prints money to pay for it. This puts money directly into the economy.

It’s not as if this is something new. From last year through April of this year, the Fed bought $1.25 trillion of debt issued by Fannie Mae and Freddie Mac. They also bought about $700 million of Treasury debt. This put $2 trillion of new money into the economy. This apparently wasn’t enough.

The second important thing they announced is that they will replace their Fannie/Freddie paper with Treasury debt. This seems harmless at first because the Fed is not increasing its total debt holdings—yet.

They announced this with a seemingly innocuous statement: that they would keep their current level of debt at about $2 trillion. In Fed-speak this means they are clearly worried about the sinking economy, and that they will print as much fiat money as they think is necessary to increase the money supply to induce inflation.

In economic terms, buying Treasury debt is called “monetizing” debt. In plain English it means that the government prints money to pay for its debts. This policy has been the downfall of many governments who destroy their currency through hyperinflation.

More articles from Zero Hedge….

By Larry Rubinoff, GoldmanSachs666

Editor’s Note: Thanks to a reader who left this link in his comment to the previous  post.  You can view the original post in FDL by clicking the title below.  Thank you also to Fflambeau for putting this research together and publishing it for all to see.  It is something all Americans must see.

While it may seem impossible to many Americans that somehow a firm like Goldman Sachs can actually have internal influence in our everyday government – the truth is they do and have.  This “revolving door” is a pattern that has been around for quite some time.  What we never knew and still don’t know is exactly how much influence and “power” do these people coming from Goldman Sachs really have.  What are their connections to organizations like the Bilderberg’s who meet openly but in secret?  And the biggest question of all is how much control do the “real” owners of our Federal Reserve have over our government and what are their ties to Goldman Sachs?  

What we have here is a possible conspiracy theory that has floated around for years but never has been able to be proven true or false.  One reason being that no one can get inside our Federal Reserve to get an open transparent look at them.  No one has been able to EVER determine who the “true” owners of the Federal Reserve are.  Oh, it is said that the Fed is owned by a consortium of banks.  A partially true statement perhaps – but which ones?  No one has ever been able to prove and the Fed has NEVER disclosed the true ownership.

I believe it is important that we learn this information.  After all, is not our Republic a free and open society?  If it is then information like this must be forthcoming to the public.  Rep. Ron Paul (R -TX) has been lobbying Congress for an audit of the Fed and he is gaining support but not enough to actually gain access.  It is amazing to me that the very agency private company that controls each and every dollar we have, can print more on demand but has no oversight from the people can remain this mysterious.  It then begs the question of Goldman Sachs, another private company, as to how much power and control it truly has with no oversight of the people.  Has GS become a quasi government agency such as the Fed?

Here now, the update to the list of Goldmanites with ties to the current administration.

An Updated List of Goldman Sachs Ties to the Obama Government Including Elena Kagan

By: fflambeau Saturday May 8, 2010
 
I. Introduction.
This essay shows the pervasive influence of Goldman Sachs and its units (like the Goldman-Robert Rubin-funded Hamilton Project embedded in the Brookings Institution) in the Obama government. These names are in addition to those compiled on an older such list and published here at FDL. In the future, I will combine the names here and those on the earlier article but I urge readers to look at the earlier list too (links below). Combined, this is the largest and most comprehensive list of such ties yet published.

For readability and clarity, I have NOT included many of the details and links that are found in the earlier article so as to make this one less repetitive and easier to read. So, if you want more documentation, please look at my earlier diary here at Firedoglake called “A List of Goldman Sachs People in the Obama Government: Names Attached To The Giant Squid’s Tentacles” published on April 27, 2010.

Note too that I have intentionally used the words, “Obama government” rather than “Obama administration” because some of these connections are not technically within his administration. These would include ambassadorial appointments and Supreme Court appointments (like that anticipated for Elena Kagan). This also includes lobbyists like Dick Gephardt who has multiple connections/input to Obama and to Goldman Sachs and the Hamilton Project.

In a similar vein, I use a broader definition than just Goldman Sachs (GS) because GS has funded, along with its ex-leader Robert Rubin, a right-leaning think tank called the Hamilton Project and embedded it within the Brookings Institution. Some of its activities thus also spill over into Brookings Institution projects which doubtlessly was one of the clever reasons Rubin and GS did this, along with providing their essentially neo-con/neo-liberal think tank with camouflage. This has worked beautifully for GS and Rubin as most writers–even critical ones like Matt Taibbi–seem unaware of the important doings of the Hamilton Project. The Hamilton Project has 32 people sitting on its Advisory Council and many have ties to Goldman Sachs, Rubin and the Obama government. Of the first four Directors of the Hamilton Project, three work in the Obama administration. Meanwhile, the most recent Director of the Hamilton Project came from academia and from a position as economic adviser to the Obama administration to Hamilton in the sort of “revolving door” that Washington is famous for.

The Hamilton Project (named after Alexander Hamilton whose most famous dictum was “The People are a Great Beast”) is essentially pushing for cuts in entitlements (like social security), outsourcing American jobs, and for more NAFTA-type agreements. This is essentially the game plan for the Obama administration, not surprising since Barack Obama was the inaugural speaker at the Hamilton Project (and Joe Biden spoke there just weeks ago).

NOTE: This diary and its predecessor are the result of a lot of painstaking work. I am sure there are other Goldies out there in the Obama administration who I have missed. If so, PLEASE let me know by dropping their name in a comment below.
II. Additional Names of Goldies serving with Obama.

Enough background information, let’s reveal the Goldies with connections/jobs within the Obama government (or with “revolving door” status). For your convenience, I’ve listed the new names to the list separately and in the first section, led off by Elena Kagan because the buzz is that she is Obama’s pick to the Supreme Court.

NEW GOLDIES REVEALED (with respect to prior article):

KAGAN, ELENA.
Kagan was appointed by Obama to serve as the Solicitor General. The Solicitor General, often called the 10th Supreme Court Justice, is the person who argues the U.S. government side of cases before the court. Buzz has it that she is also Obama’s next pick to the Supreme Court, perhaps as early as this Monday.

At any rate, she’s already in the Obama government as Solicitor General. She also has ties to Goldman Sachs. From 2005 to 2008, according to USA Today and other sources, Kagan served as a member of the Research Advisory Council of the Goldman Sachs Global Markets Institute. Matt Kelley of USA Today wrote in his article, “Possible Supreme Court Pick Had Ties to Goldman Sachs” that Kagan received $10,000 from Goldman Sachs for her services in 2008, per federal disclosure forms. But since she was doing the same thing in 2005, 2006, and 2006, it would appear that she pulled in $40,000 from Goldman Sachs for what appears to be sitting in on one day sessions looking at big issues affecting the global economy. $40,000 grand for so little time is a nice gig if you can get it (and she likely got expenses too) for so little time. It’s not a huge amount but it is enough to affect a player’s mind.

Here are some questions that Senators on the Judiciary Committee might want to ask of Kagan:
1) Can you produce all the paperwork/receipts related to your ties to Goldman Sachs?
2) Did you report the GS payments as income on your income tax returns (lots of people in the Obama administration (like Timothy Geithner) or wanting to be (like Tom Daschle) seem to have trouble filling out proper IRS forms.

3) Will you recuse yourself in any cases brought before you at the Supreme Court (if confirmed) that have any connection, no matter how remote, to Goldman Sachs or its entities?
4) As Solicitor General of the United States, have you handled (defined largely) any cases relating to Goldman Sachs or its entities?

Have you given advice on any such cases?

5) Have you had any dealings with The Hamilton Project? This includes speeches given there, conferences attended, papers published etc.

BERKOWITZ, HOWARD P.
Here is a murky connection (but an important one) between Obama and Goldman Sachs. Berkowitz serves as the Chairman, Board of Directors of the Washington Institute for Near East Policy (WINAP). It is an important Washington think tank that gives input to Obama. It was established by the American Israel Public Affairs Committee (AIPAC) in 1985, according to Wikipedia. People affiliated with WINAP are a virtual Who’s Who of foreign policy including Henry Kissinger, Warren Christopher, Lawrence Eagleburger, and Richard Perle.
Berkowitz also is Managing Director of BlackRock and sits on the Advisory Council of the Goldman Sachs funded Hamilton Project. 

BlackRock is a global investmentment management firm with over $3.35 trillion under management. There is a virtual revolving door of hiring and acquisitions between BlackRock and Goldman Sachs as reported here.

DUDLEY, WILLIAM C.
Dudley, according to the Federal Reserve Bank of New York web site:

became the 10th president and chief executive officer of the Federal Reserve Bank of New York on January 27, 2009. In that capacity, he serves as the vice chairman and a permanent member of the Federal Open Market Committee (FOMC), the group responsible for formulating the nation’s monetary policy.
Mr. Dudley was a partner and managing director at Goldman, Sachs & Company and was the firm’s chief U.S. economist for a decade. Earlier in his career at Goldman Sachs, he had a variety of roles including a stint when he was responsible for the firm’s foreign exchange forecasts. Prior to joining Goldman Sachs in 1986, he was a vice president at the former Morgan Guaranty Trust Company. Mr. Dudley was an economist at the Federal Reserve Board from 1981 to 1983.

Dudley seems to have Geithner’s old job, passed from one Goldie to the next.

EFFRON, BLAIR W.
Effron is a money man. As a bundler for the 2008 Obama campaign, he raised more than $100,000. According to this web site he also was a “Mega Donor” to Obama in 2008, giving more than $28,500 though committees supporting Obama. His wife is also a major contributor, giving tens of thousands of dollars.

Effron is a founding partner of Centerview Partners LLC. Their web site indicates he has executed over $400 billion in transactions.

Effron is also on the Advisory Council of the Goldman Sachs/Robert Rubin funded Hamilton Project.

FROMAN, Michael.
Froman (born August 20, 1962) is deputy assistant to the president and deputy national security adviser for international economic affairs, a position to be held jointly at the National Security Council and the National Economic Council. His responsibilities will include serving as the White House liaison to the G7, G8 and G20 summits of economic powers.[

He's on my prior list but his name was misspelled there (as Frohman). Froman's days with Obama go back to Harvard Law School. Froman appears to be the original link between Robert Rubin/Goldman Sachs and Obama.

From Wikipedia:

>Froman received a bachelor's degree in Public and International Affairs from the Woodrow Wilson School of Princeton University in 1985, a doctorate in International Relations from Oxford University and a law degree from Harvard Law School where he was a classmate of Barack Obama[2][3], and also an associate of Obama’s on the Harvard Law Review.[4]
…
After Harvard, Froman had lost touch with Barack Obama until Froman heard of Obama’s Senate run. Froman volunteered at that point to help, began raising funds for the candidate, and introduced the candidate to Robert Rubin, whom Froman had followed from the Treasury Department to Citigroup [Froman served as Rubin's Chief of Staff] after the Clinton administration.[4] Before moving to the Obama administration, Froman most recently was a managing director of Citigroup’s Citi Alternative Investments Institutional Clients Group, where he was head of infrastructure and sustainable development [5]. He also served on 12-member advisory board of the Obama campaign’s transition team.[1]

this source provides new information indicating Frohman, who was Mr. Goldman Sach’s former Chief of Staff, as an “informal adviser” to Obama. They spell his name as Froman, Michael.

FUDGE, ANNE.
Obama just appointed Fudge to his budget deficit reduction committee (whose real goal, like that of the Hamilton Project, is to cut entitlements). Fudge has been the public relations craftsman for some of America’s largest corporations. She sits, according to the Washington Post, as a Trustee of the Brookings Institution within which the Hamilton Project is embedded.

GEPHARDT, RICHARD (aka “DICK”) A.
Gephardt is one of the movers and shakers in the Democratic party and served as the Democratic Majority Leader of the House from 1989 to 1995. While he doesn’t have an “official position” in the Obama administration his name was floated as a possible VP to Obama in 2008. Like so many ex-politicians, Gephardt has set up a consulting firm that has its fingers in just about every pie in the Obama government. Gephardt, for instance, advised the Obama administration, according to the New York Times, that universal health coverage could not pass in 2009 and urged Obama to “defer that goal.” That’s what the people Gephardt takes money from wanted and that’s also what Obama did.

Here’s more from The New York Times:

One old friend links Mr. Gephardt’s assessment to his lucrative new career as a lobbyist. “He’s advising a lot of big corporations,” said Tom Buffenbarger, president of the machinists’ union.

Wikipedia says that:

Dick Gephardt started Gephardt Group in January 2005 and is currently its President and CEO. Gephardt Group is a multi-disciplined consulting firm focused on helping clients improve Labor Relations, develop Political and Public Policy Strategies and enhance Business Results by gaining access to new markets or partners.[15]

According to Wikipedia:

is also an active consultant for Goldman Sachs.

Gephardt also sits on the Advisory Council of the Hamilton Project funded by Robert Rubin and Goldman Sachs.

MURPHY, PHILLIP.
Obama appointed Murphy to serve as his Ambassador to Germany. In the 1990’s, Murphy, who worked for decades with Goldman Sachs, served as GS’s head of its German offices. From 1997-1999, Murphy served as President of Goldman Sachs, Asia (during the Asian economic crisis). In all, according to Wikipedia, Murphy spent 23 years at Goldman Sachs including as a Senior Director of the firm in 2003 before retiring from GS in 2006.

GRANOFF, MICHAEL D.
Granoff is a money man, and contributed lots of bucks as a “mega donor” to the Obama campaign. At least $28,500 according to Public Citizen.

Granoff is President, CEO and Founder of Pomona Capital, a venture capital group.
Granoff is also one of the 19 members of the Goldman Sachs-Robert Rubin funded Hamilton Project.

LIDDY, EDWARD MICHAEL.
Liddy was, until recently, the CEO of AIG which, during the Obama administration, was essentially taken over by the government. He served in high positions at Goldman Sachs including : Board Member (Chairman, 1990-94; Director, 2003-2008). He was picked to the Goldman board by none other than Hank Paulson, former head of Goldman Sachs who was Bush’s Treasury Secretary who with Obama’s Treasury Secretary (Geithner) fashioned TARP.
Wikipedia reports:

Liddy garnered national headlines in October 2008 for defending a controversial $440,000 AIG retreat for top-performing insurance salesmen at the luxury St. Regis Resort in Monarch Beach, California. The retreat, which was held shortly after the U.S. government rescued AIG from insolvency with $84 billion in loans, included $200,000 for rooms, $150,000 for meals and $23,000 for the spa. In testimony before the U.S. House Oversight Committee, Liddy stated that such retreats “are standard practice in our industry.”[11] During the U.S. presidential debate on October 7, 2008, Democratic presidential nominee Sen. Barack Obama mentioned the retreat and said, “The Treasury should demand that money back and those executives should be fired.”[12]

But that’s not what happened. Instead, Barack Obama as President kept Mr. Liddy on while AIG was essentially in receivership under the Obama administration.
How about this for a conflict of interest, again as reported by Wikipedia:

Liddy owns 27,129 shares in Goldman Sachs, at the time worth just over $3 million.[18] In April 2009 members of Congress called for Liddy to sell these shares, as they create a conflict of interest due to Goldman Sachs’ receipt of bailout money.[19] About two-thirds of Liddy’s holding is restricted and cannot be sold until May 31.[18]

Liddy announced on May 21, 2009 that he would resign as AIG Chairman and CEO when replacements were found, suggesting that the two roles be split.[20] Liddy was not paid for his time at AIG.[21] On August 3, 2009, Robert Benmosche was named President and CEO of AIG.[7]

NIEDERAUER, DUNCAN.
Niederauer is CEO of the New York Stock Exchange. While a private entity, it is heavily regulated by the government and has close government ties. Niederauer, for instance, is a frequent speaker at Federal Reserve events:

New York Stock Exchange Euronext CEO Duncan L. Niederauer delivered the keynote address today at the fourth annual global summit on financial literacy hosted by the Federal Reserve Bank of Chicago and Visa Inc.

He has an extensive Goldman Sachs background:

He joined NYSE Group following a 22-year career at Goldman Sachs. He served as a Managing Director of Goldman Sachs since 1997 and was responsible for U.S. cash equities operations, including Institutional and Member Firm Client Group sales and client services for … both the New York Stock Exchange and NYSE Arca. Mr. Niederauer was previously a Partner at The Goldman Sachs Group, Inc. (United States) (“GS”) where he held many positions.

PERRY, RICHARD.
Perry is an Obama supporter, adviser and fund raiser. He worked for Goldman Sachs and is on the Goldman Sachs’funded, Hamilton Project’s Advisory Council. He is also CEO of Perry Capital, a hedge fund. Perry owns the full floor penthouse at 1 Sutton Place in NYC and according to the Washington Examiner is one of 15 ” fat cat Wall St. Banker” friends of Obama. These are the same “fat cats” that Obama sometimes flails out at in the press to pretend he’s a populist!

SHAFRAN, STEVEN.
Shafran served as an advisor/aide to Timothy Geithner especially on TARP. All of the advisers on that appear in a very murky fashion. And Shafran, like a lot of other TARP advisers, has extensive ties to Goldman as a executive for years. He’s especially shadowy, however. Here’s a link about him from CBS News.

THAIN, JOHN.
John Thain has served as an adviser to Timothy Geithner. Thain was President and Chief Operating Officer of Goldman Sachs from 1999 to 2003.

TYSON, LAURA D’ANDREA.
An economic adviser to President Obama. Tyson is a Hamilton Project Advisory Council Member. The Hamilton Project as noted above was founded by Bob Rubin and Goldman Sachs and has close links to Obama personally.

III. COMBINED LIST OF GOLDIES TIED TO THE OBAMA GOVERNMENT.
This lists compiles the names above and those in the prior diary on this. For more detail on names not annotated in this diary, see the earlier diary linked here):

ALTMAN, ROGER.
BERKOWITZ, HOWARD P.
BIDEN, JOE.
BRAINARD, LAEL.
BUFFETT, WARREN.
CLINTON, HILLARY.
CRAIG, GREGORY. (revolving door)
DONILON, THOMAS.
DUDLEY, WILLIAM C.
EFFRON, BLAIR W.
ELMENDORF, DOUGLAS.
EMANUEL, RAHM.
FARRELL, DIANA.
FRIEDMAN, STEPHEN.
FROMAN, Michael.
FUDGE, ANNE.
FURMAN, JASON.
GALLOGLY, MARK.
GEITHNER, TIMOTHY.
GENSLER, GARY.
GEPHARDT, RICHARD (aka “DICK”) A.
GREENSTONE, MICHAEL (revolving door to Hamilton Project)
HAMILTON PROJECT, THE
HORMATS, ROBERT.
KAGAN, ELENA.
KASHKARI, NEEL.
KORNBLUH, KAREN.
LEW, JACOB (AKA “JACK”) J.
LIDDY, EDWARD MICHAEL.
LIPTON, DAVID A.
MINDICH, ERIC
MURPHY, PHILLIP.
NIEDERAUER, DUNCAN.
OBAMA, BARACK H.
ORSZAG, PETER.
PATTERSON, MARK.
PERRY, RICHARD.
RATTNER, STEVE.
REISCHAUER, ROBERT D.
RIVLIN, ALICE.
RUBIN, JAMES.
RUBIN, ROBERT.
SHAFRAN, STEVEN.
SPERLING, GENE.
STORCH, ADAM.
SUMMERS, LARRY.
THAIN, JOHN.
TYSON, LAURA D’ANDREA.

RECOMMENDED FURTHER READING:
1. Greg Gordon (McClatchy Newspapers), “Goldman’s White House Connections Raise Eyebrows” April 21, 2010.
2. Fflambeau, “With the Obama Administration Infested With Goldman Sachs People, How Real is the Obama/Democratic Attack on Big Banks” FDL Diary, April 21, 2010.
3. “More Investigations of Goldman Sachs, A Double-Edge Swords for Obama and Democrats”
4. Paul Street’s article showing that Obama held corporatist ideas long before elected and his indebtedness to the interests of big business.
5. Matthew Skomarovsky, “Obama Packs Debt Commission with Social Security Looters”, March 28, 2010 at Alternet.
6. Fflambeau, “A List of Goldman Sachs People in the Obama Administration: Names Attached to the Giant Squid’s Tentacles”

More articles from Larry Rubinoff….